That advice can come via a single mentor or can come by way of an advisory board. Many small businesses, especially those spinning out of university, don’t have the money they need to hire the top consultants or a senior team to guide the business. However, there are a number of people within the business community who have a tonne of experience and are often willing to get involved in small businesses to give something back to the community.
But what is the difference between an advisory board and a normal board and who should be on it?
Advisory board vs board of directors
The main difference between the two are the formalities. An advisory board has no legal responsibilities and won’t be convened as frequently as a regular board. It has very little decision-making power and is unlikely to benefit from any official remuneration (other than the odd lunch or spot of dinner).
A board is responsible for the strategic direction of the organisation and assume overall control for key decisions such as funding, staffing structures, accounts, and so on.
The Board is not your friend, it can be but not often. They are there to represent the interests of shareholders, and sometimes stakeholders, so are very much driven by ROI and the CEO’s role in delivering that. To the external and public eye too much change and instability on the board is not good and affects your personal, employer and investor brand.
Who should sit on your advisory board?
The lack of formalities shouldn’t detract from the strategic approach you must take in building your advisory board. While they have no official capacity, you are looking for advice and support in areas you do not excel in. So, make sure you deliberate your choices carefully.
Start with an expert in your field. If you are creating a very technical product think about the most prominent thought leader in this space, those who may have a published history and good track record around this area and can lend credibility to your product.
Make sure it is someone that will tell you the truth. While it is nice to include family or friends, these are not the advisors that will help take your business where you want it to go. They are the people you turn to when you need encouragement and support.
Your advisers are there to provide objective, honest feedback to your situation. They are the ones who will tell you point blank, “your financials are terrible” or “marketing is not your area, don’t try it”. While this direct feedback can be a little hard to swallow, it is far better to get this and adapt than to go so far and then fail.
These advisors can’t have a financial interest in the company. This immediately changes their advice as they are no longer just interested in your benefit, they have skin in the game and their interests take precedent.
Finding the right advice
Advisory boards are vitally important to any small business spinning out of university. A tribe of trusted, honest and constructive advisors could make all the difference to your success. For the sake of a lunch or two it could save you millions in the future and easily see your business succeed and your ambitions realised.
