Competitive Advantage 101: Create a Successful Advisory Board
In a world where markets change in nanoseconds, up-to-date knowledge is a major source of competitive advantage. Business owners are often so wrapped up in the day-to-day issues facing them that it’s hard to keep up operationally, let alone strategically. This can stymie the ability of the business to grow, complicate decision-making to the detriment of the business, and keep the company from recognizing new, profitable ideas. Is there a creative and cost-effective solution to this problem?
Setting up an Advisory Board of experienced industry executives can provide a significant advantage over competitors that are relying solely on internal talent. For businesses, no matter the size or stage, an experienced and well-connected board of advisors can help your business grow and prosper in ways you’ve never imagined.
As more and more executives who have successfully led companies to lucrative exits, are retiring and looking for something meaningful to do on a part-time basis, you can put their vast talent and experience to work for your company – and at a surprisingly reasonable cost.
What is an Advisory Board?
An advisory board is an outside group that is informally organized to provide business owners and corporate leaders with support, advice and
assistance. While formal boards of directors have legally defined responsibilities and fiduciary duties, advisory boards have no formal power or binding legal authority. They serve at the pleasure of the business owner or CEO.
Benefits of an Advisory Board
There are several advantages that companies with advisory boards have over their competition. A board offers your business:
• An unbiased outside perspective.
• Increased corporate accountability and discipline.
• Enhanced CEO and management effectiveness.
• Greater credibility with investors, vendors and customers.
• Help in avoiding costly mistakes.
• Rounding out skills and expertise lacking in current management team.
• A sounding board for evaluating new business ideas and opportunities.
• Enhanced community and public relations. Listing high profile names on the website gives the company instant credibility
• Improved marketing results and effectiveness.
• Strategic planning assistance and input.
• Centers of influence for networking introductions, specifically for sources of capital, customer introductions or recruiting of executives.
• Help anticipating market changes and trends.
Over 80 percent of all private companies are operating without a board of advisers or board of directors. Odds are your competitors do not have one. Because of this, developing an Advisory Board can give your company a distinct advantage over your competition. This is particularly true for start-ups and family run businesses. Often these companies need fresh perspective to help expand their operations.
I already have a Board, why do I need an Advisory Board?
Unlike a board of directors, an advisory board does not have a legal, binding vote; it is what its name says: advisory. Industry luminaries are more likely to be willing to serve on an Advisory Board, as there is less legal exposure.
I already have Paid Professionals working for my company, why do I need an Advisory Board?
In all companies, there are certain functions that can best be performed by paid professionals. Examples are:
• Outsourced accounting and payroll services;
• Legal services; and
• Marketing services like logo design, literature creation, etc.
These individuals may not be the right people, however, to provide you with specific industry experience, strategic advice, and completely unbiased input.
There is more to learn on compensation, motivation and engaging your Advisory Board to ensure you get the most benefit. Stay tuned for Part 2.
Gillian Parrillo
Sacramento Executive.com
