This is the 2nd article in our 5 part series about advisory boards. The 1st explains what is an advisory board, the 3rd discusses how to select the board, the 4th explains the difference from a Board of Directors, and the 5th explains the legal documents required. An advisory board is an informal panel of independent people who give non-binding strategic advice to business owners, founders and managers.
An advisory board gives owners, founders and managers an independent view. This is particularly important in a small business where you have limited personnel and therefore a limit on knowledge and skills. The advisory board Terms of Reference set out who is each member of the board.
An advisory board gives senior people a safe place to discuss major issues. As a business grows, it will face new challenges, and key decisions like whether to continue on an existing path or pivot to a new direction. In a small team, there can be considerable time and money invested in a specific product, service or approach. Taking a matter to an advisory board requires a level of research and rigour, to raise the issue. It is invaluable to obtain independent advice on.
You can choose members of the advisory board for their different knowledge in different areas. For example, some may know the industry in which you operate, others may know the type of customers you seek.
An advisory board gives you a broad pool of knowledge and advice to draw on. It can give your business access to the expertise of people that your business would not be able to afford to employ.
The advisory board is a learning and testing forum, not a decision-making body. It is important that the Terms of Reference and the Advisory Board Agreement make it clear that the advisory board advice is non-binding and the company is not obliged to and does not follow the direction of the advisory board.
In conclusion, with the right legal parameters to protect the company and the members, an advisory board can be a considerable source of learning, knowledge and assistance for growth for your business. For assistance in setting up an advisory board and drafting the appropriate legal documents, contact LegalVision on 1300 544 755. Our team of business lawyers are happy to provide you with an obligation-free fixed-fee quote today.
Click here for Part 1 on advisory boards.