More businesses are setting up Advisory Boards to help with big decisions. But what exactly are they, and why might your business need one?
The basics
An Advisory Board is a group of people who give advice and guidance to your business. Unlike a formal board of directors, it’s much more relaxed. The advice they give is valuable, but you’re not legally required to follow it.
Why have an Advisory Board?
Get expert help without the commitment
Advisory Board members are usually chosen for their skills and experience in specific areas – perhaps marketing, finance, or operations. These experts can support your business without needing to dedicate huge amounts of time. It’s a way to tap into knowledge that might otherwise be out of reach.
Learn from others’ experience
Instead of figuring everything out yourself, you can learn from people who’ve already been there. An Advisory Board can help you spot trends earlier, avoid common mistakes, and make better decisions. This can help you grow faster and more confidently.
Boost your credibility
For newer businesses, having respected professionals on your Advisory Board can open doors. Their reputation helps build trust with investors and customers. People are more likely to back a business that’s supported by recognised names in the industry.
How is it different from a normal board?
Advisory Board members aren’t directors of your company. They don’t have formal legal duties or responsibilities. This can actually work in your favour – some excellent advisors might not want the legal obligations that come with being a director, but they’re happy to help in an advisory role.
Most Advisory Board members volunteer their time or receive modest compensation. They’re brought in to offer fresh perspectives and practical advice based on real experience.
Getting it right
An Advisory Board isn’t a replacement for a proper board of directors. And if you’re going to set one up, you need to be clear about what you want it to do.
Without a clear purpose, things can get messy. Board members might inadvertently act as ‘shadow directors’, which creates legal complications nobody wants.
Before you start:
- Work out exactly what you need help with
- Define what the board will (and won’t) do
- Decide on terms and any compensation
- Choose members whose skills match your needs
Done properly, an Advisory Board gives you access to valuable expertise when you need it most.
Want to learn more about board roles and governance? Governance360 offers practical training to help you understand different types of directors and how boards work. Understanding these basics can help you build the right support structure for your business.