The advisory board of a company can assist in meeting business requirements and devising long-term strategies. Effective advisory board members will be highly experienced individuals that can provide their expertise and direction to your company. They are well-versed in your field and have the experience of professionals in fields such as marketing, finance, law or. Advisory boards are typically made up of volunteers that are eager to assist you. They could be members of the board or recruiters from outside. They meet frequently or semi-regularly. Typically, they meet six to eight times a year. They could also serve as mentors for the CEO and the leadership team.
Typically, the members of an advisory board are not paid for their time, but they are reimbursed for the expenses associated with meetings. Furthermore the size of an advisory board is flexible which makes it much easier to form and expand based on the needs of the company. A traditional board of directors is more formal than an advisory board which can reduce liability risks.
It’s crucial that a company establish clear guidelines for their advisory board to ensure that members don’t become the board of directors and assume all the associated liabilities. This means writing a written clarification of the advisory board’s responsibilities by way of the board resolution or their bylaws. This will allow them to hold them accountable, and prevent confusion. As a business expands it’s typical for advisory roles to be more formalized and eventually become an entire board of directors. This happens typically when a company is acquired by investors or reaches a certain level of operations.