If there’s one thing I’ve learned in all my years of running businesses, it’s that every entrepreneur can benefit from quality advice and diverse perspectives. There’s just too much that goes into building a successful business for any one person to do it 100% on their own. That’s why so many business owners are interested in creating an advisory board.
An advisory board, comprised of experienced professionals, offers more than just entrepreneurship advice. It provides a sounding board for ideas, a source of seasoned guidance, and a network of expertise that can help navigate the complex challenges of running a business.
Whether you’re trying to overcome a challenge that’s threatening the success of your business, refine a business strategy you’re considering implementing, or make a pivotal decision, the right advisory board can provide the insights, experience, and guidance necessary to get through it all with confidence.
The problem is that building an effective advisory board from the ground up can be incredibly challenging. If you don’t get every aspect just right, you risk creating a group that lacks cohesion, direction, and the ability to positively impact your business.
I’ve put together this guide to walk you through everything you need to know about creating an advisory board, from the initial steps of defining its purpose to the nuances of leveraging its full potential. I’m also going to talk about an alternative approach to building your own advisory board that can save you time, money, and stress.
Understanding Advisory Boards
Before we go through the steps of creating an advisory board, I think we need to clear up a few things about what they are, their role, their composition, and so on.
An advisory board is a collection of individuals brought together to offer expert advice and support to the management of a company.
Unlike a formal board of directors, an advisory board doesn’t have legal decision-making authority, nor does it have any fiduciary responsibilities. Its primary role is to provide insights and recommendations to help a business grow and navigate through challenges.
Advisory boards play a big role in the strategic planning of a business. The members of the board offer a ton of knowledge and experience that can be invaluable in navigating all of the various challenges that come with running a business.
The diversity of expertise and industry knowledge that advisory board members bring can help a business owner see their company from new perspectives, uncovering opportunities and identifying risks that might not have been apparent.
One of the things I preach all the time is that the composition of an advisory board is critical to its effectiveness.
Ideally, it should consist of a diverse group of individuals with complementary skills and experiences that align with the company’s current needs and future goals. You want people from a variety of backgrounds so that you can benefit from a broad spectrum of insights and perspectives.
This diversity not only enriches the advice and solutions provided but also ensures that multiple aspects of business challenges are considered.
Challenges in Forming an Advisory Board
While the benefits are significant, forming an advisory board can be pretty challenging.
Identifying and recruiting the right members, defining the board’s scope and objectives, and managing the dynamics within the group require a thoughtful approach and ongoing effort.
Additionally, ensuring that the advice you’re getting is actionable and actually aligns with your company’s vision isn’t always so easy.
A little later on in this article, I’m going to share an alternative approach to building an advisory board, but before I do that, let’s cover the steps you’ll need to take if you’re trying to create a board from the ground up.
5 Steps for Creating an Advisory Board
Step 1: Define the Purpose and Objectives
Before you start reaching out to potential advisory board members, you need to have a clear understanding of what you want the board to achieve.
Are you looking for strategic guidance, financial expertise, market insights, or something else?
Defining the purpose and objectives of your advisory board will help you pick the right members and set the agenda for your meetings.
Step 2: Identify Potential Members
You obviously don’t want just anybody on your advisory board.
Look for individuals who not only have the expertise and experience that align with your board’s objectives but also possess the soft skills necessary for constructive collaboration.
Consider diversity in all aspects – industry experience, functional expertise, cultural background, and more – to make sure you’re getting a wide range of perspectives.
Step 3: Set Up the Structure
Decide on the size of the board, the frequency of meetings, and the duration of membership terms.
A smaller board might meet more frequently and offer more intimate and detailed guidance, while a larger board might provide a broader range of perspectives but meet less often.
In my experience, I think 8 members (plus a facilitator/Board Chair) is the ideal size for an advisory board.
Why? Because it strikes the perfect balance between diversity of thought and manageability of discussion. It’s small enough that every member has enough space and time to share their insights and perspectives, and it’s large enough to offer a wide range of expertise and experiences.
This size also allows for more focused and productive meetings, where decisions can be reached more efficiently without getting bogged down by too many conflicting opinions.
Step 4: Prepare for and Conduct Meetings
To get the most value from your advisory board meetings, you need to come prepared with specific issues or questions you want to address.
These meetings can’t be a free-for-all. They need to be structured and have a clear agenda that’s sent out ahead of time so that everyone can show up prepared.
Facilitate open and structured discussions to ensure that every member has the opportunity to contribute.
Step 5: Act on Advice and Provide Feedback
The real value of an advisory board comes from acting on the advice you receive and the way you implement it.
After all, the best advice in the world is useless if you don’t actually use it.
Keep your board informed about the outcomes of their recommendations and how they’ve impacted your business.
This feedback loop will keep members engaged and invested in your success.
An Alternative Approach: Joining a Peer Advisory Board
The reality is that creating your own advisory board requires a lot of time, effort, and resources.
In my experience, the typical small business owner who’s deep in the weeds of building a business just doesn’t have the time or resources to build a board from the ground up.
That’s why I’m such a strong advocate for peer advisory boards.
Peer advisory groups provide all of the same benefits as a traditional advisory board, including diverse perspectives, expert advice, and accountability, but without the challenges of forming and managing your own board.
Members of peer advisory boards are typically non-competing business owners who share similar challenges and goals, offering a unique blend of support and insight.
This streamlined approach to advisory support eliminates all of the various logistical hurdles of forming a traditional board, such as finding the right members, scheduling meetings, and managing group dynamics.
This makes it perfect for entrepreneurs who need to focus on their business rather than on managing another entity.
A Final Word
Whether you’re thinking about creating an advisory board or joining a peer advisory group, the important thing is to ensure you’re not isolated as a business owner.
The right board can provide you with the insights, support, and peer accountability you need to make informed decisions and drive your business forward.
If you’re interested in exploring how a peer advisory board can benefit your business, Six Figure Dinners is here to help.
Our community of entrepreneurs and business owners is committed to mutual growth and success, offering a supportive environment for sharing knowledge and experiences.
Ready to unlock the full potential of your business with the support of a peer advisory board?
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