A guest columnist from the Association for Consulting Expertise responds to a reader’s question about the best way to create an advisory board, and its role in a growing company.
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Q: My business is evolving rapidly, and I need experienced advice that I do not have internally. Many of the decisions I need to make require advice from a number of perspectives. Is there a way to assemble an advisory team to help me with these decisions?
ACE Advises: Access to the right experts at the right time can improve your chances with investors and lenders. For example, Maine Angels, a group of accredited private equity investors who invest in and mentor early-stage companies, often suggests areas where they feel businesses should add expertise before adding them to a portfolio, says member Barbara Lamont. Joe Powers, of the Maine Venture Fund, agrees. “We look at expertise missing from the founding team.”
Advisory boards can provide committed expertise when you are not ready to add owners, cannot afford to hire the specific expertise you need, and the experts you might want on your governing board are unwilling to take on overall oversight of the business.
An advisory board is not a governing board. It does not provide oversight. The time commitment is less. Advisors have fewer conflict of interest issues should participation develop into contractual relationship. Compensation can be nominal in early stages.
Brian Harris of MedRhythms, a Portland-based digital therapeutics company, says his business had an advisory board from the beginning. “We had five advisors…and only four employees, but we needed guidance on structure,” he says. MedRhythms continues to use dedicated advisory boards for product development.
In fairness to everyone, if you create an advisory board, do it right. The overall commitment can be documented in short memorandum of understanding defining the scope of the board’s activities, the time involved, meeting frequency, and what management needs to prepare and provide before each meeting. The added formality increases the chances of success.
For more on this topic, see “Making an Advisory Board Part of Your Network” at consultexpertise.com/blog/9851331.
Carrie Green Yardley is an attorney at Yardley Esq. PLLC, a law firm providing services to small businesses and their owners from startup through estate planning. She can be reached at carrie@yardleyesq.com.
