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small business advisory boards

Does Your Small Business Need an Advisory Board?

“Two heads are better than one.” This axiom is the basic premise behind just about any collaborative venture in which multiple people put their brains together to tackle a problem, and that includes business advisory boards.

In short, an advisory board is a group of business owners and other entrepreneurs brought together to provide advice to another business owner. That advice can vary, from generally operating a business to specific aspects of the job. But the underlying idea is pooling experience and knowledge to plot a course that a small business owner might not have figured out on their own.

But is an advisory board right for your small business? Here’s some more about how these boards work to help you decide.

How Advisory Boards Are Formed, And How They Work

An advisory board is effectively just a group of subject matter experts. What the subject matter is ultimately is up to you — whether you want a group of people who are all skilled in one particular area of business, such as R&D or communications, or you want a well-rounded board that could advise you on any number of subjects.

How each company builds an advisory board will range in the amount of formality, but typically the steps will look something like this:

  • Determine a need(s)
  • Draft a role description, as well as a list of expectations/goals
  • Recruit/hire
  • Revise expectations/goals as your business grows

Important to note is that advisory board members are not full-time employees. These are contractual roles — ones that some people are happy to fill out of the goodness of their hearts. But typically, it is best to provide some sort of compensation. That could be per-meeting payments or in-kind repayment, such as serving on a board member’s own advisory council.

How advisory boards function might differ from company to company. But generally, they participate in regular meetings with predetermined agendas based on the business’s current needs. Depending on the outcome of each meeting, certain advisory board members might have duties outside the meetings, such as introducing company leadership to potential investors or other prospective business partners.

Advisory boards usually have no actual authority, merely providing recommendations to a board of directors, CEO or other company leadership.

Should Your Small Business Use an Advisory Board?

In theory, every business, large or small, could benefit in some way from an advisory board. But because advisory boards typically require both time and money, businesses need to be prudent about determining when it’s appropriate to go this route.

There are a few situations in which small business advisory boards make the most sense. For instance, if your leadership team (which might be just you) is lacking in vital business skill sets, an advisory board can help fill those voids. Similarly, a board can help if your business is struggling in some capacity that your team isn’t equipped to tackle.

And there’s something to be said about the importance of who you know. If you’re in an industry that values association and clout, a board full of prominent names can make your firm look more attractive, including to potential investors.

If you live by the idea that two heads are better than one, consider tapping the expertise of McManamon & Co.’s professional consultants. Our consulting services provide expertise on a wide array of issues, including whether it’s time to bring in an advisory board.

You don’t have to go it alone. Call McManamon at 440.892.8900 or contact us online today!

Tags:  , , , | Posted in Consulting, McManamon & Co., small business