In today’s world, businesses are faced with what can feel like a never-ending cycle of change. Now more than ever, it is essential to have the knowledge and support of as many experts as possible, otherwise, your business may have the potential to lose its footing. For family business owners, this can feel even more challenging due to the intimate nature of running a small business with family. Having external support with experience in a variety of fields can not only keep your business on track but help it thrive. An advisory board for your family business may be the solution you need to keep up with changes and to manage different opinions.

What does an advisory board do?

Small business advisory boards operate as a consultant group, offering structured collaboration between an organization and a group of external advisors. The goal of an advisory board is to provide strategic advice and support to help find solutions to a variety of business problems. Typically, advisory boards include experts in fields that a business doesn’t already have familiarity with through their own people. These fields can include experienced marketers to help grow business, experts in a field your business is moving toward, or leadership consultants to help with succession planning. At its simplest, the purpose of an advisory board is to provide insight into problems and to develop strategies to solve them.

How can family businesses benefit from an advisory board?

Family businesses can face a unique set of challenges when it comes to operating and growing their business. Often, family members don’t see eye-to-eye or they aren’t familiar with emerging business opportunities. With advisors and an outside perspective, family business leaders are able to make more informed decisions when faced with a challenge. Advisory boards also work as aides when crisis situations occur, providing insight and information on how to handle these situations. They can provide valuable connections to other industries, allowing for new networking and fundraising opportunities. More benefits of advisory boards include:
  • Business growth and development
  • Organizational change and transformation
  • Succession planning and leadership development
  • Expansion into new markets
  • Navigating a business sale, exit or acquisition
  • Understanding a specific business problem

How an advisory board differs from a board of directors

Many private small family-run businesses need external support, but they are not ready to create a board of directors or the existing board does not have the experience needed. Boards of directors, or governance boards, are elected by shareholders to make decisions on their behalf, are legally responsible for the management of an organization, and often are financially involved in the business. They typically meet on a quarterly basis and have a set of goals to accomplish between meetings. An advisory board is different from a board of directors for several reasons. Advisory boards are not elected by shareholders and instead are chosen by upper management to provide specialized or targeted advice. They do not have a legal responsibility to the company and do not vote or make decisions on behalf of the organization. Advisory boards usually meet only a few times a year and generally focus only on specific meeting agenda items. That said, advisory board members often are called upon at any time to provide specific insights. In the simplest terms, the roles and responsibilities of advisory boards are to be a support system to business leaders through providing insight and perspective but not engaging as final decision-makers.

Creating an advisory board for small family business

If you are considering bringing in an advisory board for your organization, there are several elements to consider. In most countries, there is no legislation that governs advisory boards, however, an unstructured advisory board cannot perform their job and provide effective advice. Some things to consider include:
  • The number and type of advisory board members
  • The functions of the advisory board
  • The expectations you have for each board member
  • How you plan to execute meetings and create agendas
When looking for members to interview for your advisory board, consider the current gaps in your organization. Do you need an expert in growth planning? Do you want someone to provide leadership development support? You can start looking for these experts through your current network or by reaching out to consultants that offer advisory services. When looking for experts in these fields, it is important to look for individuals with a diverse set of backgrounds. The more varieties of experience your advisory board possesses, the more balanced the opinions and advice of the board will be.
If you are looking for help in creating an advisory board for your small family business, Double Iron Consulting is ready to take on the challenge. With over 25 years of experience in family business, Bill Smith knows the ins and outs of what makes a business successful as well as the technical skills needed to develop a board that works for your organization. Contact us today to learn more.