As we explored in Part 1: Advisory board vs board of directors, the purpose of an advisory board is to be an informed and wise counsel; challenging the way businesses do things, and offering a fresh perspective.
At what point does a business owner or manager recognise that an advisory board can be a powerful or useful resource? How can they determine whether they need to establish an advisory board, or simply seek the advice of a trusted individual? Are there certain stages in the life of a business when an advisory board is valuable?
Every business is at a different stage of their ‘growth journey’. Even when it’s clear an extra pair of hands or expertise is required, an advisory board might not be the best option. The process of creating an advisory board requires a high level of planning and engagement, so it is important to make sure your business gaps cannot first be addressed by specific individuals. For example, if the goal is to complete various tasks for an organisation, allocating these tasks to key advisors with specific talents could be more efficient and effective.
Business scenarios where advisory boards can add value
However, there are certain challenges, opportunities and business activities where a group of expert individuals can collectively benefit owners or managers.
An advisory board may prove a valuable resource when a business is:
- experiencing rapid growth
- needing to raise funds
- wanting to build strategic partnerships
- facing major decisions and/or changes in direction
- entering new markets or introducing new products lines
- establishing more formal governance structures involving professional managers
- dealing with family succession issues
- managing the development stages of the business
- assisting with senior staff development
- facing challenges amongst shareholders
- wanting to raise the quality of strategic conversations
- having specific technical and operational issues
Read Part 1: Advisory board vs board of directors – defining the difference
Coming up next – Part 3: How to set up an advisory board