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Advisory Boards: Just Another Form of Tough Love

bank meeting 123rf 9821832_sI had a call yesterday from a client who was getting ready for his second advisory board meeting.  He wanted to talk to me because he know I had been on several clients’ advisory boards in the past and had even had one for my own company for several years.

His concern was that his last board meeting didn’t go very well.  He laid out his dreams and ambitions to the board and they shot him down.  He wanted to know how he could better prepare for the next meeting.  It reminded me of a similar meeting I had with my board that didn’t go as I planned either.  I had my own dreams and ambitions and my board didn’t like them either.

Why Form An Advisory Board

So why do it?  Why put your hopes and dreams out there only to get beat up, criticized and questioned?

You don’t do it for love.  If you want to be loved, buy a dog.  Don’t form an advisory board.

Most entrepreneurs are surrounded by friends and staff and people that don’t have all the facts but are encouraging nonetheless.  You surround yourself with people that give you positive reinforcement.  Your employees are always agreeable (they have a vested interest, after all).

But what you really need to succeed is some honest criticism.  It’s not your successes that kill you, but your mistakes.

The purpose of an advisory board is to give you that honest feedback.  They should question your actions and help you make better decisions.  Their role is to be skeptical of what you present to them.  You want them to find the flaws in your logic.  No one else will do it.

Working with an advisory board can be a very humbling experience.  You basically show them everything – your financials, your dreams and your shortcomings.  If you want to make it a sales job then don’t do it.

The reason to form and advisory board s to be able to lay it all out there, make yourself vulnerable and to open yourself up to criticism before you take action.  Consequently, the actions you take will be more successful.

Don’t have an advisory board yet but interested in setting one up?  Check out our article Form an Advisory Board for details including a video on how to go about it.

To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

Advisory Boards

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Advisory Boards

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Benefits of Advisory Boards

Advisory Board Definition

The definition of an advisory board is a group of business executives who meet on a consistent basis to provide leadership, support and constructive feedback to the executive leadership of a company. Furthermore, an advisory board’s purpose is to assist you in leading your company. But unlike a traditional board of directors which represents the interest of a company’s shareholders and to whom the President or CEO reports, an advisory board exists as an advocate, supporter, and resource for the President or CEO.

Benefits of Advisory Boards

The benefits of creating an advisory board include the diversity of opinion and experience it can bring to facilitate an improvement in the leadership of a company. These qualities are not typically present in the traditional board of directors. Advisory board benefits also include the following:

Tips on Advisory Boards

As the leader of an organization, it is important to understand the advisory boards’ roles and responsibilities. In addition, understand what your expectations are of an advisory board. For example, it may be to consider establishing a relationship with a company that would be considered synergistic with your company. It may be to identify a source that can provide an outside perspective on the industry that you do not have in your company. Also it can be to have someone who can provide technical knowledge that you do not have in your company. It is important to be clear on what your expectations are from an advisory board.

Advisory boards offer you the opportunity to engage with a group of experienced professionals regarding the issues facing your company on a routine basis. It also gets their perspective on the performance and outlook for your company and its industry, at a nominal cost.

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benefits of advisory boards

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benefits of advisory boards

See Also:
Ten In-House Secrets for Reducing Your Company’s Legal Costs
General Counsel on the Board
Red Herring
How to Form an Advisory Board
Advisory Board Best Practices

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Advisory Board Best Practices

See Also:
How to Run an Effective Meeting
Future of the Accounting Workforce
How To Train People For Success
Advisory Board Agreement
How to Hire New Employees
How to form an Advisory Board

Advisory Board Best Practices

Best Practices of advisory board management include setting an agenda, communicating with members and soliciting recommendations. Once you set up your advisory board, all of these goals can be relatively easy to achieve.

Advisory Board Agenda

Meetings are typically a routine – a pre-planned event with an advisory board meeting agenda. They are usually a lunch meeting that lasts into the late afternoon or it can be an early dinner meeting that lasts into the early evening. You can hold these meetings in a private room at a restaurant or club. You want it to be somewhere that is quiet and where you and the advisory board members can have an uninterrupted conversation with food and drink provided.

Advisory board meetings typically last between three and four hours, depending on how full the agenda is for a meeting. It is a good idea to publish an advisory board meeting agenda in advance. If members are required to read or prepare anything, then they will have enough time to be ready for the meeting.

The expected outcome of the advisory board meeting is for you to get some recommendations, advice, and perspective. It is not necessarily to make decisions as in a traditional board meeting, with votes taken on motions and minutes of the meeting taken and published.

Advisory Board Communication

You can include advisory board members in the distribution of your monthly financial and operational reports for the company, in order to keep them up to speed on how the company is progressing. This can be beneficial if your advisory board meets on a quarterly basis. You can communicate via email. Furthermore, some advisory boards will have members who engage in discussion between meetings, via email or in person. In addition, advisory board members may meet individually with the company’s president or CEO in between advisory board meetings.

To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

advisory board best practices

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advisory board best practices

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Advisory Board Agreement

See Also:
Advisory Board Best Practices
Benefits of Advisory Boards
Form an Advisory Board
How to Manage your Lawyer
How to write an Action Plan

Advisory Board Agreement

Whereas ____ (Company Name) (Company) desires to have ____ (Board Member) (Member) participate as a member of the (Company Name) Advisory Board (Board) and Member desires to participate in such a capacity, this advisory board agreement establishes the business relationship between Company and Member.

Scope of Advisory Board Agreement

The sole purpose of the Advisory Board Agreement is to provide the CEO of Company with the varying perspectives of the respective Advisory Board Members. The CEO of Company will choose all topics discussed at Board of Advisory meetings. The Board of Advisors will not provide a consensus or vote on a course of action for Company. Member agrees to interact with Company in an advisory capacity only and will have no responsibility or authority in the operations of Company’s business. The use of any information, perspectives or opinions provided by members of the Board will be at the sole discretion of the CEO of Company.

In deciding to take action on topics discussed at Advisory Board Meetings the Company absolves Advisory Board Members of any and all responsibility and liability. Company bears the sole responsibility of deciding what recommendations made by Board of Advisors or Board Member to accept or reject. Company also bears the sole responsibility regarding any implementation and/or success of any recommendation made by Board of Advisory or Board Member.


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Frequency of Advisory Board Meetings

The Advisory Board will meet three (3) or four (4) times a year. Company will notify Members the first (1st) of each year the dates of the meetings for that year.

Member Remuneration

Company agrees to pay Member (??) hundred dollars ($??.00) for each Advisory Board Meeting attended.

Termination

Either party can terminate this Board of Advisors agreement with thirty (30) days prior written notice.

Termination notices will be mailed to the following addresses:

______________ (Company)
______________ (address){BR} ______________ (city & state)
______________ (Member)
______________ (address){BR} ______________ (city & state)

Confidentiality

Company will make Member aware of all conversations and/or materials that are deemed confidential. Any information in the public domain will not be deemed confidential.

This Advisory Board agreement deems the terms and fees of this Advisory Board confidential.

Governing State LAW. This Advisory Board Agreement is executed pursuant to, is intended to be performed under and shall be governed in its interpretation and effect by the laws of the State of (?).

______________ (Company)
______________ Date

______________ (Advisory Board Member)
______________ Date

If you want to learn more financial leadership skills like having an advisory board, then download the free 7 Habits of Highly Effective CFOs.

advisory board agreement

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advisory board agreement

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Does Your Company Have an Advisory Board?

Does your company have an advisory board that meets with senior management on a periodic basis? If you don’t, then why not? This past week I spent 5 hours in a advisory board meeting that we scheduled to last 2.5 hours. We spent that time not because the management asked us to, but because we were accomplishing so much as a group that everyone didn’t want to quit. How did this company get so much out of a talented group of people for so little? Wouldn’t you like advice in taking your company through difficult or challenging times?

Does Your Company Have an Advisory Board?

About 3 years ago a client of mine approached me to be on an advisory board they were forming. It was to consist of six advisers in addition to senior management. We meet every quarter to discuss issues facing the president of the company and a recap of the accomplishments for the previous quarter.

After a year of getting as much out of the meetings to help our company as I was giving the client, I decided to form an advisory board for our company. We have been meeting for about two years. During this time, the advice given to me has paid dividends many times over.

I am surprised many companies and entrepreneurs don’t have their own advisory boards. There is a certain amount of vulnerability that comes with strangers looking at your financial results and criticizing you. However, the value that comes with the honesty is worth the pain. In 2009, you should consider forming an advisory board for your company. You will wonder why you didn’t do it sooner!

Does Your Company Have an Advisory Board

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