An Advisory Board is one or more ‘independent’ people who provide advice and support to CEO/owners/directors of a company to help you make better decisions and develop a long-term vision for your business. Unlike a formal board of directors, it has no decision making powers, so has more flexibility to focus on strategic matters.
An Advisory board provides strategic advice, acts as a sounding board for ideas and bring different perspectives to the business. Properly structured as per the AABi way, it provides focus, strategy and accountability for business success.
The Role of an Advisory Board?
The role of an advisory board is structured to suit the business objectives but typically include:
- Bring fresh eyes and perspectives to the business
- Focus the owners/MD on strategic issues or risks facing the business
- Develop an understanding of the business, market, industry trends and challenges
- Provide “wise counsel” on issues raised by the owners/directors or management
- Provide the directors and management with insights and ideas which can only come with distance from the day to day operations
- Encourage and support new ideas and fresh thinking
- Act as a mentoring resource for CEO and key executives
- Encourage the development of a governance framework that enables continued growth whilst not stifling the vison of the owners/founders/CEO
- Challenge and hold accountable directors and management to consider options for growing the business
Benefits of an Advisory Board
- Draw on the skills and knowledge of people who have practical and deep experience in building business
- Provides a sounding board for new ideas
- Provides focus, challenge and accountability for business success
- Build and enhance the company’s brand, reputation and credibility in the marketplace
- Present a professional image in the eyes of the clients and suppliers
- Provide an additional level of comfort to financial institutions advancing funds knowing that those borrowings are being managed properly
- Recruit and select high performing employees by building an outstanding culture and a passion for growth
- Use and tap into the advisor’s business networks in order to increase sales and develop strategic partnerships
A study by The Business Development Bank of Canada of 1000 SMEs in 2015found:
- Annual sales were 24% higher on average between 2001 and 2011 at businesses with an advisory board, compared to companies that didn’t have an advisory board but had similar characteristics.
- Sales grew by 66.8% on average in the first three years after a company created an advisory board. This compares with 22.9% sales growth in the three years before the board was formed.
- Productivity increased by an average of 5.9% in the first three years after a board was formed compared with 3.2% in the previous three-year period
