Step-By-Step Guide: Why Small Businesses Need Advisory Boards & How To Create One


Creating an advisory board is like assembling your own council of wise elders, each bringing their unique spell book of experience, connections, and insights to your round table.

It's not just about adding prestigious names to your website; it's about crafting a brain trust that propels your business forward with strategic guidance and industry know-how.

And here's the kicker: setting one up isn't as daunting as it sounds. With a few smart moves and a bit of know-how, you can unlock a treasure trove of advice and support.

As we dive deeper, I'll share not just the why but the how, drawing from a blend of data-backed insights and my own journey through the entrepreneurial trenches.

If you are looking for experienced Board member, check out this program by Veblen. The Veblen Director Program takes successful business people from around the world and trains them to be outstanding Board members.  As part of their training they will spend at least a year advising small businesses like yours.

The insights and the contacts that you will make during this year could be the catalyst you are looking for to elevate your business to the next level.

Whether you're a fledgling startup or a small business on the cusp of growth, the wisdom of an advisory board can be your secret weapon. Let's explore how to turn this hidden advantage into your business's guiding star.

The Role of Advisory Boards in Small Business Success

Exploring through the business world is no small feat, especially for small businesses vying to make their mark. It's like trying to sail through foggy waters without a compass. Here, I'll investigate into why an advisory board acts as that compass, offering direction and ensuring your business doesn't stray off course.


Defining an Advisory Board

So, what exactly is an advisory board? Imagine having a dream team – a group of seasoned professionals you've handpicked, each bringing their unique expertise, insights, and network to the table. 

They're not there to call the shots but to guide, advise, and support you in steering your business towards its goals. Unlike mentors who offer one-on-one advice, an advisory board provides a collective wisdom that's hard to find elsewhere.

Why should you, as a small business owner, care about creating one? Because it can transform the way you operate. I've seen firsthand how an advisory board can breathe new life into businesses, sparking innovation and driving growth. 

They offer an outside perspective that's invaluable, questioning your assumptions and pushing your boundaries. It's like having your own panel of experts, ones who've been where you aim to go and can help you navigate the pitfalls.

Advisory Board Vs. Board of Directors

This is where things get interesting. Often, people confuse advisory boards with boards of directors, but there are key differences you should be aware of. A board of directors has legal governance over a company – they make decisions that directly affect the company's direction and are legally accountable for its outcomes. 

In contrast, an advisory board doesn't have any legal authority or decision-making power. Instead, they're there to offer advice and support based on their expertise and experience.

Why does this matter? For small businesses, an advisory board offers flexibility. Without the legal strings attached, you can fashion an advisory board to meet your specific needs, whether that’s tapping into a new market, refining your product, or scaling your operations. 

The informal nature of these boards fosters open, candid discussions – something that's crucial for innovation and problem-solving.

Let me give you an example. I once worked with a small tech startup facing stagnation. The introduction of an advisory board, consisting of industry veterans and tech innovators, was a game-changer. 

Their collective advice not only helped the startup pivot successfully but also opened doors to new partnerships and funding opportunities. It was a clear demonstration of the power of external, seasoned perspectives in overcoming business challenges.

Creating an advisory board may sound daunting, but it's more achievable than you might think. It's about identifying what gaps exist in your current knowledge and network and then seeking out individuals who can fill those gaps. 

These advisors become your eyes and ears in the industry, providing insights and connections that can accelerate your business's growth.

Why Small Businesses Need Advisory Boards

Diving into the world of entrepreneurship, we often picture ourselves as captains steering our ships through the vast, unpredictable ocean.

Imagine, though, if you had a crew of seasoned navigators, each with their own compass, maps from journeys past, and tales of weathering storms you've only read about. That's essentially what an advisory board is to a small business. 

It's not just a luxury; it becomes a necessity when the waters get rough. Let's break down why and how.

Exploring Business Challenges

Have you ever faced a challenge so daunting that you wished for a genie to guide you? In the business area, advisory boards are the closest thing to that. Let's be honest, the path of entrepreneurship is littered with hurdles - some we anticipate and others that blindside us. 

An advisory board serves as a collective brain trust, providing a safety net when you're walking the high wire of business decisions.

I remember when I first started out, the market shifted in a way I hadn't foreseen. It felt like a punch to the gut. That's when my advisory board stepped in. With their diverse backgrounds, they'd seen it all. Together, we navigated through the storm, pivoting in a way I wouldn't have imagined on my own. 

Their shared experiences became my lighthouse, guiding me safely to shore. This wasn't just about overcoming challenges; it was about transforming them into stepping stones.

Accessing Expertise and Perspectives

Why listen to one when you can benefit from the wisdom of many? An advisory board brings together a world of expertise and perspectives that can illuminate paths you didn't even know existed. 

These seasoned professionals don't just offer advice; they provide access to a wealth of knowledge across various domains - be it marketing, finance, or operations.

I've found that having access to such a diverse set of minds can be the difference between a good decision and a great one. For example, before launching a new product line, I was confident in my approach. 

My advisory board suggested a slight pivot, highlighting angles I hadn't considered. Their insights were based on years of experience - it was like having a cheat sheet to success. The launch exceeded our expectations and opened doors to opportunities I hadn't envisioned.

Enhancing Credibility and Connections

Let's face it, in the business world, who you know often matters as much as what you know. An advisory board doesn't just boost your company's credibility; it broadens your horizon of connections. 

Think about it – these are individuals who've built reputations and networks over years, even decades. Their endorsement can act as a powerful seal of approval to potential partners, customers, and investors.

I recall a time when we were seeking investment. On paper, we were a promising prospect, but it was the involvement of our advisory board that turned heads. Their belief in our vision and their willingness to back us publicly spoke volumes. 

It wasn't just about the financial investment; their connections opened doors that would have otherwise remained closed to us. Suddenly, we weren't just a small business; we were a small business with formidable allies.

So, why should you, as a small business owner, care about forming an advisory board? It's simple, really. In the journey of entrepreneurship, having a group of experienced individuals in your corner can make all the difference.

They provide guidance through storms, illuminate diverse pathways with their expertise, and lend credibility that amplifies your voice in a crowded marketplace. If you're setting sail into the uncertain waters of business, an advisory board can be your North Star.


Structuring Your Advisory Board

When it comes to structuring your advisory board, I've learned that getting the foundations right isn't just important—it's essential. With my own experience and the stories of countless other small business owners I've encountered,

I'm here to guide you through creating an advisory board that not only works but also enhances your business's potential in ways you might not have imagined.

Identifying the Mission and Goals

Why start with the mission and goals? It might sound a bit backward, but hear me out. By pinpointing exactly what you're aiming for, you create a beacon for your advisory board to follow. 

I remember sitting down with a piece of paper, jotting down where I saw my business in the next five years. It wasn't just about revenue—it was about impact, growth, and the kind of legacy I wanted to leave.

This clarity didn’t just help me; it served as a guiding light for my advisory board. We knew where we wanted to go, which made it easier to chart the course. 

So, when you’re setting up your advisory board, ask yourself: What’s the core mission? What specific goals will lead to its achievement? This approach helps ensure everyone’s rowing in the same direction from the get-go.

Selecting the Right Members

The challenge of selecting the right members for your advisory board can feel like trying to assemble a dream team. And in many ways, it is. The key? Don't just look for big names or impressive titles. Look for alignment with your vision and values, coupled with the skills and experiences your business needs to reach its next milestone.

I've found that the most impactful members of my advisory board were those who genuinely cared about the mission. They brought not just expertise, but a passion for what we were trying to accomplish.

Whether it was a seasoned entrepreneur who had navigated similar waters before or a subject matter expert who could provide deep technical insights, each member added value because they were there for more than just the title.

Determining the Size and Scope

So, how big should your advisory board be, and what should its scope cover? Here's the not-so-simple answer: it depends. But really, it does. 

My first advisory board consisted of just three people, and that small, tight-knit group was exactly what my business needed at the time. As we grew, so did the board, evolving in size and scope to meet the changing needs of the business.

A common mistake I've seen is thinking more is always better. In reality, the effectiveness of an advisory board often comes down to its focus and cohesion. Keep it lean enough to remain agile, yet diverse enough to offer a breadth of perspectives. 

And when it comes to scope, ensure clarity around their roles—advice, networking, mentorship—tailored to propel your business forward.

As you structure your advisory board, remember, this journey is unique to you and your business. There's no one-size-fits-all formula, but starting with a clear vision, selecting members who share that vision, and defining a manageable size and scope are fundamental steps. 

From my experience, getting these elements right can transform your advisory board from a good idea into a great asset.

Establishing an Advisory Board

Crafting an advisory board is akin to growing a garden. Just as you need the right mix of sunlight, water, and soil for your plants to thrive, your small business needs a blend of expert advice, diverse perspectives, and strategic guidance to flourish.

Ever wondered why some businesses seem to navigate challenges with grace while others stumble? Often, the secret ingredient is their advisory board. So, how do you cultivate this resourceful garden? 

Let me take you through the steps, drawing from my own journey and the wisdom of those who've walked this path.

Step 1: Clarify Your Business Needs

First things first, let’s get real about what your business actually needs. Picture this: you're embarking on a road trip. You wouldn’t start without knowing your destination, would you? Similarly, identifying the specific challenges and opportunities your business faces sets the stage. 

For me, it was realizing that while I had a solid grasp on the creative side of things, my financial acumen was more, let's say, abstract. Recognizing this gap was crucial in shaping the advisory board I needed. It's about understanding that no one is a superhero, and that's perfectly okay.

Step 2: Define Member Roles and Expectations

Now that you've pinpointed your destination, who do you want riding shotgun? This step is all about crafting the roles and expectations for your advisory board members. Think of it as casting for a blockbuster movie. Each actor needs to know their part to bring the story to life. 

In my case, I needed a financial guru to demystify the numbers, a marketing whiz to amplify our brand, and a technology sage to future-proof our operations. Clear roles mean everyone’s on the same page, and there's less drama down the road.

Step 3: Recruit and Onboard Advisors

With the roles set, it's time to find your cast. This stage is thrilling but demands a mix of patience and persistence. I remember reaching out to potential advisors, feeling a bit like I was asking for a prom date. But here’s the thing: the right people will see the value in joining your journey. 

It’s not just about what they can offer you; it’s also what they gain from the experience. During onboarding, I focused on building genuine connections, setting the scene for open communication, and ensuring alignment with our mission. Remember, it's a two-way street.

Step 4: Set Clear Objectives and KPIs

What does success look like, and how will you know you're on the right track? Setting clear objectives and key performance indicators (KPIs) is like having a roadmap for your journey. For me, it wasn’t just about hitting revenue targets; it was about sustainable growth, innovation, and employee engagement. 

These benchmarks help keep everyone accountable and focused on the bigger picture. It’s about crafting a story of success that everyone contributes to and believes in.

Step 5: Draft Agreements and Define Terms

Finally, let’s talk about making it official. Drafting agreements and defining terms might seem daunting, but it's about ensuring everyone's protected and on the same wavelength. Think of it as relationship insurance. 

For my advisory board, this meant clear outlines on time commitments, confidentiality, and any compensation or equity arrangements. It wasn’t about bureaucracy; it was about mutual respect and professionalism. Having this foundation has been key to fostering a trusted and productive advisory relationship.

Establishing an advisory board isn’t just a strategic move; it’s a transformative journey that requires clarity, communication, and commitment. As I navigated my own path, the lessons learned and connections forged have been invaluable. So, why should you care about this angle? 

Because in the tumultuous seas of business, an advisory board can be your lighthouse, guiding you to success. 


Running Effective Advisory Board Meetings

Crafting the perfect advisory board meeting is like hosting a masterclass in strategic growth. You've got the brains, the vision, and the plan – now, it's all about execution. Let’s jump into making those meetings not just good, but legendary.

Preparing Agendas and Materials in Advance

I remember vividly the first time I prepared for an advisory board meeting. I was as green as they come, thinking that enthusiasm would compensate for my lack of preparation.

Spoiler alert: it didn’t. I learned quickly that preparation isn’t just half the battle; it’s the entire war. Crafting a clear, focused agenda is your first step towards a meeting where every moment counts.

Why should you care? Because every advisory board member Carries Weight. Their time is your goldmine and setting their sights on clearly defined topics, objectives, and discussions points ensures that not a minute is wasted. 

I now make it my mission to distribute materials at least a week in advance. This includes progress reports, financial updates, or any relevant data points that help contextualize our discussions. The difference? Engaged advisors who come ready to tackle the issues head-on, armed with insights and not just reactions.

Facilitating Engaged and Productive Discussions

Here’s where the art comes in - turning those discussions into a breeding ground for actionable insights. Picture this: you’re in a room (or a Zoom) filled with some of the most experienced minds in your industry. Your job? Make sure everyone leaves feeling like their input has been heard and valued.

But how do you keep an advisory board full of strong personalities and divergent views on track? Simple, you play conductor to this orchestra of ideas. I've found success by posing strategic questions and challenging assumptions, nudging the conversation back on track when tangents arise. This isn't about dominating the dialogue; it's about curating it.

Another game-changer for me was the realization that conflict isn’t an enemy; it’s an asset. The right kind of conflict pushes boundaries, challenges the status quo, and forges pathways to innovative solutions. 

I ensure there’s room for debate, encouraging advisors to "spar" respectfully. Believe me, some of our biggest breakthroughs have come from these heated exchanges.

It's important to close each meeting with clear action items. What tasks are assigned, and to whom? What are the deadlines? This accountability turns spirited discussions into steps forward for your business.

Common Pitfalls to Avoid When Creating an Advisory Board

Exploring the creation of an advisory board is reminiscent of steering a ship through foggy waters. The process teems with potential missteps, each capable of derailing your journey.

I'll share from my own experience, plus pepper in some advice that might just illuminate your path. You're not just looking for any beacon of light, right? You need the one that guides you safely to shore.

Overlooking Indemnity and Legal Protections

First off, let's talk protections – not the most thrilling topic, I know, but bear with me. I learned early on that not all superheroes wear capes; some come clad in contractual indemnity protections. 

Imagine you're inviting advisors to join your board. In their enthusiasm, they dive headfirst into the murky waters of your business challenges. 

Now, if a lawsuit arises pointing fingers at your advisors, guess who's caught in the crossfire? Yep, without a solid indemnity agreement, both your advisor and your business could be swimming with the sharks.

I once thought this was overkill – until a colleague found themselves in legal hot water without a contractual life raft. It wasn't pretty. So, ask yourself, is your advisor's protection a priority? If you nodded yes, it's time to chat with a legal expert. 

And don't forget to inquire about extending your directors and officers' insurance to cover advisory board members. It's a simple step that could save you tons of headache.

Failing to Set Clear Expectations Around IP and Non-Competition

Here's a sticky situation you might find yourself in: you've got a brilliant advisor on board, sparks are flying, ideas are flowing, and then – bam – you hit an intellectual property (IP) snag. 

Picture this: your advisor, brimming with industry ideas and maybe even some of your secrets, decides to wander into the sunset... and straight into the arms of your competitor.

Crafting An Effective Advisory Board

Crafting an effective advisory board is a strategic step that can propel small businesses into new realms of success. I've shared insights on assembling a board that brings diverse expertise to the table, ensuring meetings are productive and that legal bases are covered to safeguard your business's future.

Remember, the right advisory board is more than a group of consultants; it's a powerhouse of support, innovation, and insight. By avoiding common pitfalls and focusing on clear communication and legal protections, your advisory board can become a pivotal part of your business's growth strategy. 

Let's embrace the journey of building an advisory board that aligns with our mission and propels us toward our goals.

If you need extra help with your Advisory Board, this is an exciting new program that can help set your business in the right direction. To learn more about the Veblen Global Advisory Board program, click here now.

Scott Hall
Owner at Better Online Info LLC

Call or Text me at (877) 76-SCOTT