Contrary to popular belief, having an Advisory Board for your startup is a perfectly normal thing. In fact, it’s a great strategy when you are lacking experience and want to grow quickly. High performing boards can help with ownership succession, leadership training, business performance, and business strategy.
When considering members for your board, consider the following criteria:
- Independent of the business, family, and key employees
- Critical thinkers
- Experience on effective boards and with family businesses if possible
- Companies that look like what you want yours to look like in 3 to 5 years
- Faced issues you will face (growth, technology, distribution, etc.)
- Not your attorney, CPA, wealth advisor, etc.
- Open dissent is critical
When first starting your Advisory Board, it’s a pretty informal thing. Small get-togethers with a focus on how the owner(s) of the business can continue to learn and grow. An Advisory Board is typically non-binding, has no fiduciary responsibilities, no liability and is typically lower in cost to assemble/maintain.
As time moves forward, your Advisory Board may turn into a Legal Board. This essentially means your meetings become more formal, and the focus is more towards the longevity of the business, rather than just focusing on improving you as the owner. A legal board has a fiduciary obligation to their shareholders, has the ultimate legal authority for the company, and they have the ability to hire/fire the CEO.