Surrounding yourself with people who are better than you at almost everything is a mark of a true entrepreneur. While advisory boards aren’t for everyone, used strategically they can propel you faster towards your goals.
A Board of Directors is primarily focussed on governance, whereas an Advisory Board’s (AB) focus is typically on developing and advising on the execution of strategy in the areas listed below.
4 Reasons To Form An Advisory Board
1. Fast Growth
Pursuing fast growth is obviously very exciting but also creates a lot of problems. Issues need to be addressed at least as quickly as they occur or you risk stunting your growth.
2. Raising Capital
Typically private investors are interested in who’s in the business and why. An AB of industry experts and specialists reduces risk and increases appeal for potential investors.
3. Strategic Exit
As opposed to a financial exit where valuation is based on historical earnings, a strategic exit bases value on what the acquirer can likely achieve in the future. A well formed AB will make introductions to potential acquirers and help prepare the business for sale.
If your business is in trouble an AB can be formed to advise on turnaround and keep you accountable to the many hard decisions you’ll have to make.
2 Reasons Not To
1. Business as Usual
If you’re not looking to pursue significant growth or change then an AB will not work for you as they will inevitably push you to do more than you want to and resign if you don’t.
2. Don’t Like Accountability
If you struggle to take advice and don’t like having to demonstrate progress to anyone, an AB will prove to be a regular, unpleasant experience.