An advisory board can help your business fulfill its business requirements and develop long-term strategies. Effective advisory board members are highly experienced individuals that can bring their expertise and provide direction to your company. They are people who know the industry and have background in professional realms such as finance, law or marketing. Advisory boards are usually comprised of people who want to help you. They may be current board of directors members or they could be external recruits. They meet often or semi-regularly. They typically meet six to eight times a year. They could be mentors for the CEO and the leadership team.
The majority of the members of an advisory board aren’t compensated for their time, however they are paid for expenses incurred in meetings. Moreover the size of an advisory board can be adapted, which makes it easier to establish and expand based on the needs of the company. In addition, an advisory board is more informal than a regular board of directors, which helps to minimize the risk of liability.
It is important that companies establish clear guidelines for their advisory committee so that members don’t become an executive board and take on all of the liabilities. It is essential to clearly define the role of the advisory board, for instance, in a resolution of the board or bylaws. This will make it easy to hold them accountable and also avoid confusion. As a company grows the advisory roles are typically formalized, and eventually become a fully-fledged board of directors. This usually happens with acquiring investors or reaching a certain amount in its operations.
