Advisory Board - Clear guidance in troubled times

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by Per 

September 22, 2022

An external perspective for key issues

As a business owner and manager, you need to make a series of big and small decisions every day. When times are uncertain, it becomes more difficult to make the right decisions. With a clear picture of where the business is going, decision-making becomes more efficient, faster and more correct in terms of long-term objectives.

Regardless of the form in which you run your company, you will at times be faced with a number of particularly important issues. These may include strategic considerations, economic conditions, risk, finance, growth, staffing challenges, etc. It is important to have a forum - an Advisory Board - for confidential discussion of these issues.

Advisory Board - What is it and when is it a good solution?

 An advisory board supports owners and management, but does not need to spend time on formalities, like a board of directors, but is fully dedicated to solving priority problems.

You could say that an advisory board is in some respects equivalent to a board of directors, but with the major difference that the board has statutory obligations and rules with strict responsibilities and oversight, legally and financially.

An Advisory Board contributes to the growth of your business. The workload as an advisor can also be more flexible, and more operational for limited tasks.

At what stages is it a good solution?

Who is involved as an advisor?

Many early-stage companies and small organizations choose to have an active Advisory Board without the formality of a traditional board. And often the board and its participants appear more anonymous.

Entrepreneurs, especially in start-up or small companies, often retain control of their business, and choose not to set up a board of directors with formal responsibilities and powers. In these cases, an Advisory Board is a more appropriate solution.

The most common participant in an Advisory Board is a person with complementary experience and specialist knowledge who supports the management, CEO and owners.

Who bring industry experience and can open doors to new business opportunities. This may involve a few or a handful of people, who come together for well-prepared working meetings on a number of occasions during the financial year.

Areas of responsibility covered by the Advisory Board

How much work is involved?

An Advisory Board can be more operational and is often given selected responsibilities, such as

  • developing an understanding of business, market and industry trends, formulating future scenarios
  • advise with an external perspective on issues raised by owners/directors or management.
  • provide unbiased insights and ideas based on actual experience
  • act as a resource for managers
  • provide networking
  • provide knowledge for governance that enables sustainable growth of the company
  • monitor business performance
  • challenge management to more aggressive objectives

The basis for an Advisory Board is regular meetings of 4-10 times per year, and a fixed agenda that is followed up and monitored in the form of an action plan. The meetings should be prepared with material sent out in advance just like a traditional formal board.

Confidentiality applies to the information discussed at meetings.

More answers and questions about the Advisory Board

  • At what stages is an Advisory Board useful?
  • What are the real differences with a formalized board.
  • How to put together the right participants and where to find them?
  • What are the advantages and disadvantages of an Advisory Board?
  • How does an Advisory Board team work?

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About the author

Per

Per Möller has many years of experience from roles as CEO, business area manager, senior management consultant, working for both small and medium-sized companies in the private sector. Several of the roles have included difficult situations where the business has had to be restructured and change direction, with effects on staffing and evaluation of parts of the business. In several other roles, Per's task has been to increase sales with business development and sales development, from product development to introduction to new markets.
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