Establishing an Advisory Board is a key step for companies seeking structure, innovation, and sustainable growth. Unlike a Board of Directors, an Advisory Board plays a guiding role without decision-making power, but can have a significant impact on professionalizing management and defining business strategy. For family-owned and mid-sized businesses, this structure can provide a competitive edge and pave the way for long-term success.
Steps to forming an Advisory Board
- Define objectives and structure
Before forming a board, it’s essential to clarify its purpose. The board may support strategy, innovation, succession planning, market expansion, governance, or other priority areas. It is also important to establish clear operating guidelines, such as the number of members, meeting frequency, and evaluation criteria. - Select the right Advisors
Advisors should be selected based on their experience and alignment with the company’s strategic needs. A diverse mix of profiles with knowledge in different areas is vital to broadening the business perspective. It is advisable to seek professionals with experience in governance, market dynamics, innovation, and strategy, ensuring a multidisciplinary board. - Formalize and define guidelines
The company should formally document the creation of the board by outlining clear rules, including term limits, responsibilities, compensation, confidentiality, and meeting procedures. A well-structured internal charter helps ensure efficiency and alignment of expectations. - Operation and evaluation
Meeting frequency should match the company’s needs: monthly, bimonthly, or quarterly. Additionally, implementing a performance evaluation system for both the advisors and the board as a whole helps ensure that the board delivers real value to the business.
Conclusion
Forming an Advisory Board is a strategic decision that can strengthen management and elevate the company to a new level. To maximize its impact, it is crucial to select advisors with diverse backgrounds who can offer insights beyond just financial or legal areas. Including professionals with an innovative mindset and a focus on growth and expansion can provide fresh perspectives, helping the company anticipate trends and make more informed decisions. Companies that adopt this practice demonstrate management maturity and greater adaptability in a dynamic market.
