Advisory Boards 101: Does Your Business Need One? 5 Pros And 3 Cons

An advisory board is a group of individuals who provide non-binding advice to businesses, institutions, and foundations. Unlike the board of directors, advisory councils are informal and have flexible management and structure. They don’t have the authority or legal responsibility to issue directives or make changes to the operations of a business.  

The advisory board focuses on specific programs, offering guidance and support to your business to ensure success. They evaluate the business program to see how it may perform before giving solid advice. Business advisors act as the bridge between your business and customers. They help gather data on the market gaps available and the techniques you could use to drive more sales. 

If you’re wondering if your start-up needs an advisory board, here’s a brief guide on everything you need to know about them and why your business needs one.

Why You Need An Advisory Board

All business owners need advice from people with more experience to deepen their thinking and develop clever solutions for their company. An advisory board advises organizations to ensure they thrive in the current market competition and demand. They focus on specific aspects of the business and provide the expertise you didn’t have the resources to acquire. 

If holding a face-to-face meeting with your advisory board isn’t possible, consider creating virtual advisory boards where you can meet with your advisors irrespective of their location. 

If you own a start-up or a growing business and you’re in a dilemma of whether or not you need an advisory, here’s a list of its advantages and disadvantages to help you decide:

Helps With Crisis Management

A growing business is likely to bump into problems that may result in a crisis if not properly managed. The board of directors may get in trouble with people questioning their effectiveness and ability to govern and make the right decisions for the business. However, with the right advisory board, the directors can produce prudent solutions to prevent a tsunami.

Assists In Networking With Professionals

It could be exhausting for you to meet up with other leaders after work hours at a function or event to create a pool. With an advisory committee, you get leaders from different specialties. It enables you to connect with leaders and individuals with all sorts of experience and abilities.  

Also, every member is likely to have a list of experts and professionals like vendors, investors, clients, lawyers, and others who are highly qualified. You can use these contacts to your advantage when you require these services.  

Offers Diverse Opinions

Different members have different talents, personalities, and experiences in business or other related activities. They can offer varying ideas and opinions on tackling business crises or improving your products and services. Either way, it may be a win-win situation for you.

Provides Branding And Marketing Insights

Members of the advisory board are closer to consumers than the business itself. They can study, research, and analyze the market to find out consumer preferences and give ideas on how best you can penetrate the market. An advisory board advises you on the best marketing strategies and tools.  

Product differentiation is vital for the success of your business. With an effective advisory board, differentiating your product is a piece of cake. You get many ideas from bright minds in the room, which is a great way to grow your business. However, forming this board might be challenging for you as a start-up. You’ll need to look for specific attributes in the members you select.  

Builds Credibility

An advisory committee gives you credibility with investors, consumers, and other businesses. It’s because a pool of different service providers and professionals believe in you and what you’re doing with your business. As such, you can get certain privileges you may not get if you didn’t have an advisory board.  

Cons Of Having An Advisory Board

Advisory boards will help your business grow, but there are downsides to creating one for your business. Here are five disadvantages of advisory boards:

Bad Advice

Getting diverse opinions is a benefit these members offer to your growing business. However, you may receive incorrect information or advice that may lead to losses. It’s, therefore, necessary to carry out your research on the information provided before making a decision.

Hidden costs

Members won’t come all the way to offer advice and tips that could make your business successful and leave empty-handed. You may have to provide some incentives as a token of appreciation for their work. Also, you may have to redirect some resources from other business departments to make it successful.  

Difficult To Form

Finding willing participants can be difficult, and it’ll consume a lot of time because most councils offer unpaid services. Also, the responsibilities of being an advisory board member, even though informal, may require the members to invest their time and resources. It makes it nearly impossible to find members.  

Conclusion

An advisory board can help your business grow by offering valid pieces of advice. They also help with market analysis and create a pool of professionals with all expertise. However, there are also some disadvantages of having one. They may require a lot of resources to plan and run a successful project. But the good outweighs the bad. Just ensure to do adequate research before making this decision because it can impact your business.

John Gert

John Gert is a manager of a fast-growing production company in New York. He was born and raised in Minnesota but later relocated to New York to follow his career path. With such passion, he’s not willing to leave any stone unturned.