Frequently Asked Questions
What is an Advisory Board?
An Advisory Board is a simple, formalised, collaborative support environment for the business owner(s) which gets together on a regular basis in a board type setting. It is a structure that enables the business owner to get all the advice required at one time, in one place, and with the benefit of all advisors hearing from and discussing with each other.
Which businesses are ideal for an Advisory Board?
Typically business that take advantage of Advisory Boards are; successful and established in business, employing staff, on a mission, experiencing change or growth or seeking new opportunities. However, there are no rules around who can employ an Advisory Board. Rather it comes down to the business owner’s motivation and appetite for growth.
What does an Advisor bring to the table?
Advisors act as a sounding board and bring their experience, networks and knowledge to the company and the business owner. In addition advisors bring:
- General abilities
- Strategic thinking
- Technical skills
- Personal characteristics and interest
What is Governance?
“A system by which a company is directed and controlled in order to protect the shareholders’ interest” – Gibson Sheat.
In a medium or large sized business, governance allows the business owner to step outside of their day to day operational role and seek help from a trusted Advisor. This outside perspective is utilised during a stage of growth, or transition. An Advisory Board provides a formal structure without the rigidity of a board of directors.
How are decisions made in an Advisory Board?
The business owner or CEO makes all decisions. The advisors are only there to provide support and advice.
When should exiting someone from an Advisory Board be carried out?
When they have contributed all that they can in relation to the changing needs of the company. This new gap can be left as is or replaced with someone who possesses a new set of skills and experience to assist the business in their next steps.
What is the difference between a Board of Directors and an Advisory Board?
- A Board of Directors is a governing body with legal responsibilities while an Advisory Board is formed by the business owner to provide advice, guidance and support.
- A Board of Directors works for shareholders while an Advisory Board works for the business owner.
- A Board of Directors focuses on Governance while an Advisory Board focuses on strategic and operational issues.
- A Board of Directors possesses full authority while an Advisory Board has no formal authority.