Increasingly, business owners are starting to hear more about an “advisory board”, but what is an advisory board? At its core, an advisory board is a group of external experts assembled to provide informed guidance, diverse insights, and strategic advice to an organisation’s leadership. Unlike a legal board of directors, which typically has direct governance responsibilities, an advisory board doesn’t have official authority over company affairs or formal legal obligations. Instead, it acts as a reservoir of expertise and perspective to support the company’s mission and vision.
There are several reasons a company might opt to establish an advisory board:
- Expertise and Knowledge: No matter how seasoned an entrepreneur or executive team is, they can’t be experts in everything. An advisory board fills those gaps by providing knowledge in areas that supplement the executive team. This often includes technology, financial management, people management, international markets, and specific industry experience.
- Networking and Opportunities: Members of an advisory board often come with an extensive professional network. Their introductions can lead to new partnerships, customer relationships, or even potential investors. This is also particularly valuable if you’re considering exiting your business.
- Credibility and Validation: Having recognized industry leaders or subject matter experts on an advisory board can significantly bolster a company’s standing in its industry or market. It also supports the sale process if you’re exiting your business and can lead to higher business valuations.
- Objective Perspective: Because advisory board members aren’t typically involved in day-to-day operations, they can provide an outsider’s perspective, helping companies identify blind spots and areas of opportunity. We know we should make time to work on the business rather than in the business – an advisory board provides that opportunity.
- Accountability: While the primary function of an advisory board is guidance rather than governance, its mere presence can instil a sense of accountability in owners and top executives. Regularly presenting company progress, challenges, and plans to a group of seasoned professionals can encourage better preparation, deeper reflection, and more strategic thinking, knowing that these will be discussed and dissected by the advisory board.
(You can read more about the benefits and the business case for an advisory board here.)
In summary, when considering “what is an advisory board?”, think of it as a strategic tool that offers guidance, broadens horizons, and propels growth. Whether a company is navigating rapid growth, looking to penetrate new markets, or facing complex challenges, an advisory board can be a valuable asset to ensure informed decisions and long-term success. If you’re contemplating strengthening your company’s strategic arsenal, perhaps it’s time to think about setting up your own advisory board.
Board associates is experienced at creating and running advisory boards for companies across a broad array of industries. If you’d like to explore how an Advisory Board can drive strategic growth for assist business, please contact us to schedule a call with one of our experienced Advisory Board Chairs.
Graduate of the Australian Institute of Company Directors and Chairman of a number of family and private enterprises, Matthew is the founder of Board Associates and specialises in innovation and strategic marketing.