advisory board in business plan

• How to Create an Advisory Board for Your Business

Featured in:

© Shutterstock.com | Andrey_Popov

In this article, we explore 1) what an advisory board is , 2) types of advisory boards , 3) functions of an advisory board , 4) how to create an effective advisory board , and 5) the conclusion .

WHAT IS AN ADVISORY BOARD?

An advisory board is a group of select people who are retained for the sole purpose of providing strategic advice to a business entity. The role of an advisory board is non-binding and informal in nature. In most cases, the advisory board may consist of people drawn from various walks of life, with diverse capabilities and expertise in various areas of a business. Businesses may wish to have advisory boards so they can utilize the expertise of the advisors and enhance their business capability. Advisory boards provide valuable inputs to business structuring and management, and may also provide the latest industry news. They offer guidance and advice on operations, legal matters, finance, manufacturing, organization and the competition to benefit the business.

Advantages and disadvantages of having an advisory board

An advisory board is beneficial to a business, especially a startup, when the business owners do not have much experience in running a business or wish to have a better understanding of a process. They can benefit by aligning themselves with experts in the field and learning through their advice. Since the board consists of people from various professions with expertise in diverse fields, their combined advice and help can make a marked difference to a business.

It can help a fledgling business by identifying business opportunities and strategic partnerships with other businesses, which can be a great boost to any business. It also helps in developing a business strategy for the business by providing direction.

One of the biggest advantages of an advisory board is that it provides a fresh perspective by looking at the business from an unbiased point of view and identifying strengths and shortcomings of business policies that the owners/management of a company cannot often spot.

The advisory board often complements the board of directors by filling in any knowledge gaps. Sometimes, it may be constituted even before the board of directors itself. The advisory board can work as a springboard for the induction of a board of directors, providing the business owners an opportunity to observe the advisors and assess their chemistry and capabilities before inviting them to the main board. The advisory board is also more efficient as the number of people on the board can be contained and changed without much hassle. It helps the executives to test out their ideas without fear, as the board is there to advise and not to govern. This means less stress and tension for the executives. Having a stalwart of the industry as an advisor for a company provides great leverage for a startup. It builds up the credibility of the company as the reputation of the expert helps the business he/she is advising.

Even though the advantages far outweigh the disadvantages, an advisory board has its own drawbacks. The most important one is that it has no fiduciary responsibility or legal liability and can sometimes provide advice that may not be totally safe for the business. The other disadvantage is that a member of the advisory board is not an employee of the company and may work for little or no compensation. This can often lead to a lack of commitment. It is common for a person to be on many advisory boards of different companies, and this can create a conflict of interest, especially if it is an industry expert who is well sought after by other businesses in the same line of work.

Finally, the success of an advisory board depends a lot on the people that constitute it. Thus, it is incumbent upon the owner of the business to choose the members carefully.

Does your business need an advisory board?

If you are wondering about the usefulness of an advisory board, then you should stop worrying . They are essential, and more so in the initial stages when there are gaps in a business’s knowledge bank. It is difficult to find people for all the key positions and also the companies may not be able to afford such personnel initially. Hence, it is better to look for an advisor who would provide guidance to the team without getting full-time pay. Establishing a strong advisory board and utilizing it well may often mean the difference between failure and success. Naturally, the decision for whether or not a business requires an advisory board is based upon different criteria for each enterprise. Virtually any company or business may benefit from the perspective and wisdom of an experienced collective of outside advisors. Such a group enables a CEO to have mentors, a sounding board, and the space to share the successes and the problems of business operation with objective individuals, thus making the top a less lonely responsibility. As cited in research, the predominant reason in creating a board of advisors is to induct external expertise into the company. Other key reasons are as follows:

• Every CEO or entrepreneur needs help to refine a business plan or a product idea .
• Advisory boards supplement the core competencies of an enterprise, thus avoiding any dilution.
• Experienced advisors help you to avoid mistakes, or make negative business decisions.
• Your advisory board may concentrate on a specific task, thus it becomes a simplification asset.
• Interested advisors become advocates for the business, which translates to access to capital.
• Competitive insight means advisors increase knowledge regarding potential competitors.
• Advisory boards help in making key decisions when researching and launching products or services as well as refining business plans.

TYPES OF ADVISORY BOARDS

There can be many different types of advisory boards based on the expertise of the members or the purpose for which they have been created. Some advisory boards include:

Science Advisory Board (SAB)

A Science Advisory Board is comprised of people who are experts in any field of science. You will generally find scientists, doctors, technologists and researchers on SABs. Their duties are to advise the organization about the scientific impact of an action. Such boards are often associated with environmental agencies, the United Nations, etc. Almost every biotech enterprise has an SAB, and they can be extremely valuable in helping to shape a portfolio or program, even to raise the visibility of a startup.

Medical Advisory Board (MAB)

Generally, the members of an MAB are prominent scientists and luminaries in bio-medical research institutions, who constitute the principal advisory group for the scientific programs of an institute, pharmaceutical or medical research organization. Other MABs may be populated by physicians and medical experts, though this naturally depends on the nature of the entity being advised. Typical roles of an MAB may include advising on the long-term strategy of an institution for achieving its goal of promoting biomedical research and science education or overseeing proposals for future research and grant programs.

Technical Advisory Board (TAB)

The TAB is normally established when there is need for technical advice. Technologists, innovators, and field leaders in technology normally populate this board. The purpose of the board is to provide guidance regarding implementation of technology policies of an entity, which could be a government agency or a technology firm, in order to develop cutting edge technological products and services.

The contact network of technical and technology advisors is very different from that of business advisors, and therefore may or may not match with the introduction the entity seeks. Before engaging a TAB member for the purpose of accessing their network, ensure it is the right network.

Content Advisory Board (CAB)

A CAB may be required, for example, in a publication, a magazine, an online portal, blog or broadcast outlet. The board is comprised of industry figures who contribute expertise, guidance, and knowledge to the print magazine, digital publication, or broadcaster’s editorial staff. Drawn from the relevant industry, these individuals can ensure that an outlet meets the requirements of its readership or viewership by authoring articles, producing webinars, critiquing current content or advancing story ideas and topics for future coverage.

Startup Advisory Board

The two most likely reasons a startup would create an SAB are firstly, for ‘advisory value’, i.e., the individual being invited has experience and knowledge and therefore may act as an advisor to your startup. Secondly, SABs are helpful for ‘brand value’. The target individual has ‘brand’ and thus credibility. By inviting that person to an advisory board, one logically hopes that some of their credibility will rub off on the startup.

If the startup has a high degree of technical complexity, then it may well require a brain trust to help to get a product out the door and also turn around technology issues. In this case, individuals with great expertise but perhaps less brand value, may be the order of the day.

Fundraising Advisory Board (for non-profit companies)

Fundraising advisory boards are often a positive way to rejuvenate the energies of a non-profit organization’s advancement and leadership experience. They can help to give clarity and focus regarding where the organization is heading and how it will actually arrive there. Opportunities are expanded for attracting new talent, perspective, and participation with members who are honored by the invitation and eager to contribute. Such advisory boards may consist of socialites, wealthy individuals with a bend towards philanthropy, social and charity workers of good standing within the community, events managers, finance experts, etc.

Programmatic Advisory Board (for non-profit companies)

Programmatic advisory boards can be formed if a non-profit has perhaps mostly wealthy members who view their role as primarily fundraising, yet have scant experience of those issues in which the non-profit is involved. Most of those board members are neither well-connected to the low-income client population, nor are they experts in the primary work of the non-profit. The programmatic board is composed of low-income clients, social workers and others who are experienced in the programs and are qualified to collate information and feedback on the non-profit programs.

FUNCTIONS OF AN ADVISORY BOARD

There is no empirical rule as to how an advisory board must operate. It may meet irregularly, provide high-level and long-term strategic insight; or its function may be like that of a business development consultant, seeking to create introductions, to open doors and to generate new leads .

Successful advisory boards are sure about their duty. Clearly establishing and communicating the roles and expectations of the advisors and articulating their mandate and purpose is crucial. Some features of a typical mandate may be:

• Advising on a specific aspect of business such as product direction, marketing, contact network expansion or customer service.
• A board may consist of customers and prospective customers who contribute insights into product development and marketing issues.
• Developing an understanding of the specific business and marketplace, and gauging future trends while providing timely knowledge about competitors, upcoming political, regulatory and legislative developments that could have an impact of the company.
• The owners, directors or management may raise issues and seek objective advice and creative thinking from the board, regarding a new strategic position.
• Offering the directors and management insights and practices which may only be possible to observe at a distance from the daily operations, thus helping to see the operations afresh with an open mind.
• The board may be general in scope or focused upon a specific industry, market, or issue, thereby supporting and encouraging the adoption of current business ideas such as the inculcation of cutting edge technology, or the decision to go global.
• Acting as a resource for executives who can present their ideas and strategies to the board for their advice and feedback.
• Encouraging, without stifling the vision or spirit of the founders, the development of a framework of governance that facilitates continued growth.
• Actively monitoring the performance of the business to improve business and subsequently challenge the management and directors to consider options for the same.
• Helping the executives think outside the box . Advisors who are familiar with different geographies and hail from different intellectual disciplines regularly provide keen insights into key economic and geopolitical challenges.

HOW TO CREATE AN EFFECTIVE ADVISORY BOARD

Creating an advisory board is not very difficult once you have decided that you need a board of advisors. Here is a step-by-step process for creating an effective advisory board.

Step 1: Define the purpose and the goals of your advisory board.

The first thing to do before forming an advisory board is to critically assess one’s own area of knowledge to discover where knowledge augmentation is required. Once that has been identified, then the entrepreneur should start looking for people who will fill the gaps and provide valuable inputs. Having advisors at the startup stage is very useful as you can forgo hiring executives whom you have to pay a salary in favor of advisors, who needn’t be paid up front, but work for an honorarium or share in the company.

Step 2: Look for doubters (and leverage your network to find the right members).

While looking for the right experts to advise you, look for people who know their work and have the gumption to tell you to your face what they feel about a particular matter. Outspoken and bold people will give you sound advice and will not be afraid to stand by it. Such impassioned advisors are your company’s best friend. While you may be tempted to avoid people who give harsh feedback, you need to understand that these are the advisors who are likely to be the most honest. So instead of avoiding them, you should recruit the doubters.

Finding the right members may seem like an uphill task, but if you look in the right places you will find them. Take advantage of your own network to find the right people to populate your board. Since such people are familiar with you, they may be more willing to fill the spot. In case, you cannot find a person with the desired qualifications, ask your personal and professional network to give you references for people who might fit the bill. It is essential that any potential advisor be genuinely willing to help an entrepreneur and there should be a positive relationship between the two of you.

Step 3: Select the right people for your advisory board.

Selecting the right people is the key to an effective advisory board. The composition of the board will depend on an organization’s priorities and goals. One may not be able to create a comprehensive advisory board in one broad stroke.

Although it is prudent to establish diversity on the advisory board, it is equally important to have dedicated and committed advisors who will ensure the stability of the business. When considering the composition of an advisory board, the company should decide what skills and experience rightly belong there as foundational, and what type of minds could add their input as creative catalysts.

It is recommended by experts that you not ask professional advisors, such as accountants, lawyers, and bankers, to participate, unless your strategy is dominated by their fields of expertise. Alternatively, consider finding advisors who are in full-time jobs and yet are intrigued by the approach. It is preferable to have an advisor who is not earning a living from your business. It is also preferable to induct a board that does not include family, friends, or anybody with an emotional stake in the enterprise.

Make sure that the advisors you choose are sharp and experienced while also keen to share. Moreover, they should dovetail with the personalities in the room, including your own. The key features to look for in an advisor are:

• A strong personality and not afraid to give honest feedback.
• The skills that they have and how they will be utilized for the benefit of the enterprise.
• A commitment to the development of the enterprise.
• A degree of mutual trust and respect.
• Someone who knows their subject and commands respect not only for their knowledge but also their personality.

Step 4: Structure your advisory board (forget the size and focus on the expertise).

While creating your advisory board, it is essential to pay attention to quality not the quantity. You don’t need many advisors; you need advisors who are experts in their fields. Naturally it is vital to articulate a clearly defined purpose for an advisory board or group. If there is no clear-cut vision behind the structure of the board, it may lead to confusion and ineffectiveness. At the beginning, when developing it, you must answer some basic and pertinent questions:

• Who would you like to see on your board?
• What would be the size of the board?
• What will be your focused objectives?
• How can you construct an agenda that supports your objectives?
• What expected outcomes are envisaged?
• How will success be measured?
• How will the board meet: when and for what duration?
• How will you compensate the board?

Not everything will be clear at the outset, however after an initial meeting or two with the advisory members, the goals will be clearer and the roles of each member defined. It is essential to have a free-ranging discussion of possibilities, evaluation of ideas and prioritization of objectives to determine the ways to utilize the available resources of the advisors. It is incumbent upon the enterprise to design an experience for the advisors that is stimulating and well-organized; this will help ensure that members feel that their advice is valued and applied.

Step 5: Communicate your expectations to the members of the advisory board.

The entrepreneur is obliged to communicate the value that he wishes to derive from the advisory board. You will do well to communicate to the members what it is that you expect from them as advisors and what value you are seeking from their inputs. It is about expectation and context. The value that members can add is commensurate with what the advisory board needs and aspires toward. Ultimately, it is a question of where their specialty lies and the particular skills they bring with regard to that expertise. For some advisors, one may be happy to simply have their name on the web site, like a patron, while for others, you may wish to consult with them regularly.

Step 6: Appreciate and compensate the work of your advisory board.

Members need to be compensated for their time and advice. This needs to be done in a manner that is neither a big burden on the company nor too little for the board members to feel underpaid. You need to consider the value an advisor brings to the table when determining compensation. Some advisors may be honorary members and may not demand compensation beyond having their name prominently associated with the company, but these are few and far between. Others like to be paid for their time and expertise. So, if your business is up and running, then show respect to your advisors and compensate them. If you are paying your advisory board, you will be more likely to take the advice proffered more seriously and prepare better for the meetings.

It is highly likely that any person you induct onto your board as an advisor is a busy and sought after person. So you need to provide some value in return for time spent counseling and finding solutions to your problems. This is not an easy task as advisors are paid for results. They are not paid for their inputs; they are remunerated for their outputs.

Some companies prefer to give a percentage of the equity , if they find the advisor invaluable to them. This ensures that the advisor is duly compensated, and his/her interest in the company is stoked as the profitability of the company is of personal benefit to them. This is better than paying in cash as, if one pays in cash and wants that service repeated, then a repeat payment will need to be made to the advisor. If however, the advisor’s service is remunerated via equity, then the payment is one time only, but the business keeps getting the service ad infinitum. Equity can be a reward for service that keeps on paying the business dividends. The shareholders may own the company, yet the company also owns them.

Step 7: Ask for honest and direct advice and maximize the valuable advice from your advisory board.

There has to be a degree of honesty and openness in the board. Frank and honest opinions matter a lot, and you should be able to handle opinions if you wish to improve your performance. Ask them to identify the problems and then give you an honest evaluation and solutions to the problems. Encourage the advisors to share the mistakes they made in getting to their positions as experts, so you can avoid those mistakes and learn from their experience. In order to get valuable advice from your advisors, you have to know what you want from them. You have to put forth questions for them to answer, find scenarios for them to offer solutions, involve and inform them in your business. The more they see of your business the more they will be able to offer by way of useful advice.

Step 8: Meet or communicate regularly with your advisory board (using a traditional set up of meeting in person, conference call, or other methods).

Once your advisors are on board and ready to be of service, the board members should be prominently featured in all your corporate profiles. You need to communicate with them regularly, and follow through on the stated commitments. They should have information regarding the latest developments in your business. This can be facilitated by emailing all relevant reports to the advisors. Sometimes, you may need to communicate with a certain member of the advisory board for a specific reason; you can facilitate this by inviting the member to a meeting, either in person or through phone calls, or video conferencing . This can take place anytime that you need the services of the advisor.

Experts say that an advisory board should meet at least once every quarter. There are some companies who like to convene their meetings more often. There is no set rule for the scheduling of meetings, each business should examine their own needs and decide upon the timing and the venue, and give advance notice to the board members so they can ensure attendance.

The board meeting must aim to be result-oriented. The meeting minutes must be collated and circulated to the company’s top management and should preferably include the recommendations of the panel regarding key issues.

Step 9: Keep your advisory board up to date.

Keep your advisory board members informed of the company’s activities in between the meetings. It would be wise to send copies of the monthly financial and operational reports to the advisors, so that they are kept up to speed on how the enterprise is progressing. This also helps the advisors in spotting any problem areas that they can discuss during the next meeting. The fact that the members have agreed to be on the board implies strongly that they do care about the welfare of the company. If they are consistently updated on the goings-on of your enterprise, they will be of greater value to you.

Step 10: Respect the input and advice from your advisory board, but fire the members who bring no value.

It is essential to respect the time that the advisory board spends on addressing your problems. If you are not willing to execute the advice of a board of directors or an advisory board, then it is better not to establish one. In giving a commitment of their time, the greatest disrespect to any board is to take that time and do nothing with it. Not only will one’s credibility dissolve with that board but also with any future board members too. You are not obligated to accept all the advice given by the advisory board, as it is not a statutory body, but you are obligated to give due thought to the advice and then accept or reject it.

But also, you cannot squander company equity with unproductive advisors. Waste no time on advisors who will not return your telephone calls, attend meetings or put forth any worthwhile suggestions. An advisory board has no place for bad advisors. It is best to find a way to let them go without too much fuss. To this effect, you may even consider creating short-term agreements with advisors regarding specific deliverables, akin to a typical consultant contract. If the advisor performs, then renew the contract. If no performance has been delivered, then let it fizzle out.

ADVISORY BOARD VS. BOARD OF DIRECTORS

The board of directors is a statutory body that has a legal obligation and acts as a fiduciary for the shareholders. They simultaneously monitor the organization and its management to impart their duties as fiduciaries toward the shareholders. If required, company directors can, and often do, replace a CEO.

Conversely, advisory boards, as a consultative group, may be created, sustained or dissolved at the discretion of the company CEO. Advisors do not have any power to wield, let alone to instruct executives or direct an organization.

Advisors are usually a useful asset for the main board to challenge its own assumptions or policies, particularly regarding a specialist skill or technical matter. Members can focus upon and occasionally challenge research and intelligence work carried out by the enterprise.

Proper structuring of a board of company directors or advisors is an important element to determine the success of an enterprise. The members of both the boards are people upon whom the business relies to vote on key decisions, or for inspiring strategic direction. It is essential that the role of each board is understood, and thus correctly established.

You may consider having a board of directors if you can abide by the requirements that are legally entailed with a statutory board. When there is a legal imperative, directors have a deeper and broader sense of responsibility to the stakeholders, and to the health of the company or institution, especially in an emergency.

Advisory boards provide slightly less benefit than a board of directors. Many long-time small-business advisors constitute a board of directors. An advisory board can give its best advice without worrying if that advice is going to come back and bite them. This certainly does change an individual’s perspective.

The advisory board is a mechanism that offers long-term guidance. The main point of an advisory board is to garner expertise from outside. Advisors should provide knowledge, understanding and strategic thinking to an industry or the management of a company. Whatever their role, advisory board members must also be utilized for the value of their network.

‘Advisory service’ differs from an advisory board, as this offers short-term guidance, by payment. Startups regularly require advisory services to guide them in establishing a business. Guidance is usually required at the outset. Hence, short-term help that provides services relating to the development of a business plan and financial projections can be invaluable. The goal of advisory services can be to assist the startup entrepreneur with the materials and requisite knowledge to raise funding while also ensuring that the business simultaneously grows its product and clientele.

Subsequent to the initial phase, some advisory services help startups to induct advisory board members by utilizing their existing contacts with professionals. As a startup, you may want to begin with an advisory service rather than a full-fledged board.

Comments are closed.

Related posts

M&A: Handling A Carve-Out

M&A's are not the easiest processes to carry out. There are many facets to pay attention to and so …

How to Market an eBook Like a Pro

Writing an eBook is quite a challenge in itself, but the project doesn’t end when you press the …

join cleverism

Find your dream job. Get on promotion fasstrack and increase tour lifetime salary.

Post your jobs & get access to millions of ambitious, well-educated talents that are going the extra mile.

First name*

Company name*

Company Website*

E-mail (work)*

Login or Register

Password reset instructions will be sent to your E-mail.

This site uses cookies to store information on your computer. Some are essential to make our site work; others help us improve the user experience. By using the site, you consent to the placement of these cookies. Read our  privacy policy  to learn more.

Why your business needs an advisory board and how to start one

• Strategy and innovation
• Governance and risk

If you were to ask me to list the best practice management tools that are most useful to both startup companies and decades-old businesses, it would be a pretty short list. After all, their money needs are far different, and their tools and capabilities for serving customers and managing their businesses are very different as well. Even a coronavirus outbreak affects them very differently. But if we talked about the most valuable tools that are typically ignored by both entrepreneurial and enduring businesses, my list would drop to a single entry — the advisory board.

An advisory board is a group of experienced and influential business leaders who are willing to help the CEO become more successful by providing access to experience and resources that the CEO typically would never have the time, money, or network to develop alone. Yet they come at a fraction of the cost of accessing those resources in the open market.

A good advisory board can combine the benefits of a team of consultants, a focus group of your customers, and the leading knowledge experts in your industry, all in one room at the same time. All you need to do is assemble them, get them familiar with your business, ask the right questions, and be prepared to implement the best of their ideas.

Reasons for an advisory board

If your company has a formal board of directors chosen from outside the company and/or family, you may already have much of the benefit of an advisory board. And yours would also be a rarity among privately owned companies. Nonpublic companies, especially family-owned companies, often rely on the family or the management team to sort of “guide themselves”. The result is often a “can’t see the forest for the trees” management style that can have serious flaws.

An advisory board can give a company and its management team a priceless opportunity to gain valuable insight, knowledge, and advice without having to learn the hard way, set aside time for outside training, or risk making costly mistakes that could have been avoided if the team had more relevant experience. Introducing the CFO to the best source for debt refinancing is just one example that can bring dollars to a company’s bottom line.

Advisory boards help management scout the marketplace, gauge future trends, and seek new strategic positions, as well as provide a catalyst in the company’s efforts to build repeat, quality customers. American Express, Molson Coors Brewing, and Toyota are among those large companies that have assembled committees of key customers and valued experts to introduce profitable connections and possible partnerships and, in some cases, to help benchmark. And they have very active boards of directors as you can imagine.

Unlike a board of directors, your advisory board has no authority over the CEO or the management of your company. Your organisational filings have no requirements to have or listen to advisory boards. Thus, there is no risk in ignoring their advice, except losing the benefit that might come from taking it. Similarly, your advisory board members have no legal exposure or fiduciary responsibility to your company, which can make it easier to attract the people you want to hear from.

Drawbacks: Reasons not to have one

There are also reasons why you might not want an advisory board.

For one, it takes time and effort to launch one, to select the right people to invite, and to manage the entire relationship. While not so demanding once the board is in place, it still takes time away from the thousand other things your business demands of you. And time is precious.

To have an effective board, you may need to share privileged information about your company, expose its strengths and weaknesses, and answer questions that may delve far more deeply into issues you’ve only shared previously with trusted employees and family members.

There is a cost in dollars. It’s not a large one, but there will be some cost in maintaining an advisory board, eg, travel costs for out-of-town members, meeting attendance compensation, meals during meetings, etc. Of course, if you hold these meetings online only, many of those costs disappear. However, some payment is important both as recognition of their time spent preparing for and attending meetings and as a demonstration that the company places value on their participation.

Case study: A tool for succession planning

Here’s an actual example of an advisory board at work, and the benefits one company gained from this practice. The scenario: A 35-year-old company run by its founder, who grew it into a profitable, multi-location, $100 million business, and who was approaching his desired retirement age. He wanted to turn the company over to his son, who had been involved in the company in roles that did not adequately prepare him for the CEO role. The company grew thanks to the daily attention of a magnanimous founder who earned strong loyalty from nearly everyone in the company who knew him. The challenge for his son was to learn how to run a successful company and keep it growing, all the while preserving as much as possible the loyalty his father’s personal charisma had created.

Having been a management coach to the company’s CFO for several years, I saw first-hand the need for the company to get ideas from outside the small management team, many of whom had grown with the company for years, with little outside experience to rely on. Along with other advisers to the company, we convinced the CEO to form an advisory board to guide the company in creating management practices that could help smooth the management transition. The board consisted of the top management team — including the heir apparent — and three outside advisers, including me. Changes made during the first year included:

• Appointment of an interim CEO, at the time the second-ranking executive in the company, to assist the founder in stepping back from daily responsibilities, while still enabling him to be as involved as he wanted to be;
• A strategic plan and financial forecast for the next five years, outlining the goals the company wanted to achieve over that time period, estimated to equal or exceed the timeframe needed for the management transition;
• Performance metrics that combined the intimate knowledge of company operations that the management team possessed with the best practice methods of monitoring progress that the outside advisers brought to the board;
• The first-ever performance evaluation system for all levels of the management team, helping the company to grow new leaders and strengthen those already in place; and
• Revived growth that could see net income nearly triple within the timeframe of the strategic plan.

How to get started

If you can see the value for your company, here are some thoughts to consider in getting one formed and up and running:

1.   How large should your board be? Many experts recommend boards as small as three members and as large as ten to 12 members. Advisory boards in large companies often function effectively with as many as 15 members. However, I believe a beginning effort should limit the total board size to four or five members. The company can always add more seats later, if desired, once the concept has been proven in use.

2. How do you choose members to invite? Look at what your company needs most that outside expertise could provide. Then look at your industry and your marketplace. That will help you define the kinds of leaders you want on your board. Notice the word expertise and not just experience. You have experience. You want to invite people who can add new knowledge, new connections, and new insights that your experience alone doesn’t provide. What are some areas of expertise from which you might choose potential members? Here are a few ideas:

• Your most important customers, to find out first-hand how they feel and what they want, and will want, and to let them know — and mean it — that you value their opinions;
• Management icons in your industry to help you open doors you can’t open alone;
• A senior finance executive to advise on financial issues and open their contact list of financial resources that might benefit the company;
• Leading researchers in your industry to assist your product development efforts;
• An intellectual property attorney to guide you through protecting your technology advances;
• A senior business consultant to help your decision-making and your internal processes to evolve as your business grows; or
• A key executive in your industry’s professional or trade association, who may know people and have access to resources just because that’s their day job in supporting your industry.

3. How do you approach them?

• Call each candidate personally. If they don’t know you by name, tell them what your company does and how you think it’s having an impact on the industry. Tell them your idea — gathering a small group of very successful executives (it’s OK to use a bit of puffery here) to help your company get better. (Key: This is not the time to tout your company’s image but rather your belief about how they could help you.)
• Explain the kind of value you think they could bring, such as the opportunity to interact with other key industry leaders in a mutually cooperative environment and the chance to make a real difference and be able to tell others their expertise was valued enough that they serve on an advisory board. That kind of appreciation is often highly valued by business leaders who have always focused exclusively on their company and now have time to be appreciated by others in their industry but have never been asked.
• The objective is to reduce the list to four or five individuals who are available and whose backgrounds satisfy the organisation’s most critical needs, and who want to help. Offer them a one-year term, so there is no long-term commitment unless it works for both.

4. How often to meet and how to prepare them for each meeting? Membership would include the advisory board members and the key officers in the company. Meetings would normally be scheduled three or four times a year. Additional meetings and/or time with individual board members could be scheduled as needs and availability dictate. Individual contact by online meetings, phone, or email can be used as needed.

In preparation for each meeting, brief materials describing the status of the organisation should be distributed in advance, preferably accompanied by a proposed agenda. At the meeting, which could be a half-day in the afternoon or an evening, the CEO would make a presentation regarding the status, progress, and needs of the organisation with discussion following. Ideally, some good suggestions or ideas will be raised, or perhaps even an offer to make a key phone call or set up a meeting afterwards. Then it’s time to sort out the discussion takeaways and choose a course of action.

Is it time for your company to think about the value of an advisory board?

— Gene Siciliano is a former CFO, COO, controller, and treasurer with over 30 years of experience in private practice, consulting, and corporate management. He is based in the US. To comment on this article or to suggest an idea for another article, contact Alexis See Tho, an FM magazine associate editor, at  [email protected] .

Related Articles

Related resources.

// Insights

The complete guide to forming and managing an advisory board.

Building a successful business is really hard. So you should do everything you can to improve your likelihood of success. Startup advisors often play an important role in improving the speed and outcomes for the startups they advise. This article explores what advisors are, what they do, and how to get the most out of them.

What is an advisor?

Do advisors invest in the company.

• Why you need advisors
• Real life examples

Helpful mentors dramatically increase fundraising success

• Why you need REAL advisors

What to look for in advisors

Forming your advisory team, advisor compensation, advisor contracts, maximizing advisor contributions.

Startup advisors help management teams make better decisions, move faster, and improve outcomes. Examples of the sorts of things advisors often help with include:

• Advice on business model strategy and positioning
• Advice on key areas of the business (e.g., user acquisition, product architecture)
• Honing your pitch decks and presentations
• Introductions to potential investors
• Introductions to key customers
• Help identify and recruiting talent
• Acting as a sounding board for organizational and people issues

Advisors are almost always experienced business people or domain experts who know things or have relationships the startup management team doesn’t.

What advisors are not

Advisors are not mentors , at least in our lexicon. Mentors offer personal support and advice to entrepreneurs, not to the broader company. Advisors work on behalf of the company and all of its shareholders.

By definition, advisors are not employees . To the extent they formally engage (the relationship is often informal), they are independent contractors.

Legally and practically, advisors are not board directors . Directors also advise and support the company, but the context is quite different. Board directors have a legal status that comes with certain rights and duties that don’t accrue to advisors. Directors have the right to contribute to decisions about the strategy and operations of the company, and a right to be informed about the company. They also have a fiduciary duty to act on behalf of the interests of all the company’s shareholders, ensure they remain suitably informed about the company, and a duty of care in performing their duties. Advisors have no such duties or rights outside those expressed in a written advisory agreement.

Because advisors are not employees or directors, they often act more like mentors—meaning they emphasize the interests of the management team over the other shareholders. For that reason, in many cases entrepreneurs find they can be more open with advisors and more easily avoid conflict with them when dealing with high stress situations.

Advisors may invest in your company as well. Many of them are wealthy, and if they’re interested enough in what you’re doing and believe enough in you to actively help, it shouldn’t come as a surprise when they ask to invest.

But there are many reasons why advisors might not be able or willing to invest. Some simply don’t have the cash. Others might have external constraints that make it too difficult, for example corporate employer policies on equity holdings, or venture capitalists who have to avoid even the appearance of conflict for LPs and partners. Frankly when you’re early on, many advisors are waiting to see where you get before they decide to push any cash your way.

It’s trite to say (as some do) that entrepreneurs shouldn’t engage advisors who aren’t willing to put some money into the company. There’s almost always a point on a company’s path when it’s interesting enough for some advisor attention, but still too uncertain for them to risk cash on it. Cash is emotionally and practically different from time, particularly for non-entrepreneur advisors who may not have as much experience with risk capitalization.

Advisors who do invest are very often more engaged and attentive, so it’s almost always a good thing when they do. One potential downside is that advisors who invest sometimes begin to feel that you have an obligation to listen to their advice, or even an obligation to heed it.

My advice generally is to first focus on the value contributions and working relationship you have with advisors. Any conversations about investment should flow naturally, and should be viewed in the context of their advice more than their money—unless of course they are sophisticated investors with enough capital to really move the needle for you. And don’t exclude promising advisors just because they won’t invest. In the end, there are no hard and fast rules here, and you should constantly seek to optimize for a faster, better outcome.

Are advisors important?

In a word: yes. The right advisors engaged in the appropriate way can dramatically speed progress, reduce risks, and increase your likelihood of success. Changing the way things work (e.g., creating a new business model), inherently involves a level of complexity that requires diverse expertise and difficult problem-solving. Advisors can offer operating experience and insights into areas of expertise that you’re very unlikely to have available on your early stage team. Those insights can have a fundamental impact on your company.

One of the most important things a good advisor will do is force you to reconsider your assumptions. It seems intuitive that diversity improves decision-making by bringing to bear differing perspectives. That’s true, but it doesn’t tell the entire story. Research out of Kellogg School of Management demonstrated that :

“Diverse groups outperformed more homogeneous groups not because of an influx of new ideas, but because diversity triggered more careful information processing that is absent in homogeneous groups.”

Real world examples

The product did too good of a job.

In 2008, I was doing a startup turnaround as CEO of a recruiting technology venture portfolio company. I had no experience in recruiting at the time, hadn’t been part of making the original investment, and stepped in as a venture capitalist on behalf of my firm to try to fix a company that was quickly headed in a bad direction.

We made a seemingly impossible turnaround on the product in six weeks (the product team I brought in was amazing). But we were surprised that the recruiters targeted by our product were ambivalent about it. It was one of our advisors who pointed out a perspective that seemed alien to us: our product was doing too good of a job. Recruiters report their value to their bosses in part by filtering thousands of resumes into a much smaller set of good candidates. Our product automated a lot of that work for them, giving them more time to be good at the parts of their job only a human could perform. But because it made them feel left out of the loop, they felt threatened and diminished by it.

The solution was fairly quick and easy; we built in more participation and choices on their part, and ensured all the reporting showed the scale and complexity of the applicant funnels they were managing. Their satisfaction immediately improved.

As performance-driven entrepreneurs without an insider perspective we would likely have remained blind to the recruiter concerns until it was too late. Score one for advisors.

Near premature scaling

A number of years ago I was on the advisory board of a startup operating a two-sided marketplace connecting small businesses and consumers. Registered user growth was strong, and CPAs (Cost Per Acquisition) were in line with industry averages. Unit margins were good, and NPS (Net Promoter Score) was great. It was early and low scale, but the founder was convinced things were working well enough to ramp up growth by increasing spending on acquisition.

However, I was concerned the acquisition model wouldn’t scale—it relied too heavily on street marketing by the team, which I believed was artificially skewing the CPAs down. I also was concerned that the CAC (Customer Acquisition Cost) was higher than it should be because consumer geographic demand had to match the small business supply geography, which often didn’t occur. In other words, newly registered users often couldn’t convert into a paying customer due to lack of local coverage. And finally, I thought they should factor in the cost of acquiring the other side of the market (their small businesses) into the equation because it was very costly, and the volume per business location was too small to justify the volume they generated on the consumer side.

I recommended a strategy of focusing intensely on each geographic area to create a sustainable cycle instead of trying to scale more broadly. At first, the team pushed back. But as they looked further into it, they saw the risk of premature scaling. They paused a planned funding round, and refocused on achieving sustainable metrics. Within a year the business was humming, and they later sold to an acquirer. But things could have gone a very different direction had they attempted to scale before resolving the core unit economic elements of the business.

Scale can sneak up on you, too

This next example shows the other side of the scaling dilemma. This founding team was purchasing goods at Costco for resale to their corporate customers. It was intended to be temporary: an expedient way to learn what worked without too much up front cost and complexity. Their instincts were right, but they hadn’t done the math or thought through the implications of switching their process too late. We pointed out to them that:

• Their volume was low, but growth seemed to be reaching an inflection point
• The time and energy to set up wholesale sources would be very painful if the transition occurred when they were already at scale
• The payment timing for Costco (immediate, or at least 30 days on a credit card) was generally worse than they could get working with a wholesale provider
• Costco shopping wouldn’t scale (nor would their credit card)
• Costco prices at scale would significantly impair their working capital cycle
• The limited choices at Costco constrained their ability to effectively test demand

Thankfully, the team listened to us and acted quickly. Within a few weeks we had them set up with wholesale vendors who extended them credit based on our relationships with them. It was disruptive, but manageable at their then current scale. The result was a significant improvement in margins and cash flow cycles, as well as further increases in growth because the founders could spend more time selling—and less shopping. If they hadn’t made this change, they would have quickly run into a wall where their working capital was insufficient to support continued growth, but it would have happened without enough warning for them to raise the capital needed to support continued operations. Thankfully they avoided that existential threat, and continued on to grow 11x in top line revenue over the next 12 months. Cash flow was really tight, but they made it happen.

Examples like the above are probably why startups with helpful advisors raise so much more money than ones that don’t. The Startup Genome Report shows that average funding raised by stage was dramatically higher for startups with helpful advisors.

Funding raised is a reasonable proxy for startup success and progress. The findings from the Startup Genome Report imply that beyond validation stage in particular, startup advisors add tremendous value. In fact, it appears that startups that “don’t have helpful mentors” don’t raise any money at scaling stage—another way of saying that most never get there.

It’s all about REAL advisors

Unfortunately, many founders seem to think of advisors as more of a checklist or branding exercise than a real resource. We regularly see advisors listed in pitch decks only to find later that the advisors have virtually no interaction with the team.

Starting up is hard, lonely, and often frustrating. It often feels like the world just doesn’t understand the potential for what you’re working on. That’s probably why so many founders treat advisors as a sort of endorsement or validation, particularly early on. “Take me seriously, look at my advisors!” or “You know I’ll be successful with advisors like this!”

The problem is that advisors do no good unless they’re actively engaged. What sort of endorsement is it to have a headshot in a pitch deck, but the advisor isn’t willing to take the time to actually help? And what good will an amazing advisor do by merely appearing in a pitch deck and taking a call or two?

That’s why having inactive advisors in a pitch deck is a form of vanity that at best offers no real benefit, and at worst reflects very poorly on founders. Venture capitalists are very likely to check in with your advisors—we certainly do—and it’s quite awkward for entrepreneurs when we find that the advisor almost never speaks to the team. We occasionally find that the advisors don’t even recall the company or the team and is confused as to why we’re asking about them. That’s a sure-fire way to eliminate your fundraising prospects with that VC.

The lesson here is simple: have (and list) only real, engaged advisors.

Founders too often look for obvious or flashy advisors rather than focusing on finding the ones who will add the most value to the business. Another common mistake is settling for the most readily accessible people instead of taking the time to identify and cultivate relationships with the most valuable advisors.

As we said previously, flashy but uninvolved advisors aren’t helpful. Poorly suited advisors can be even worse. That’s why I recommend a thoughtful and planned approach to identifying and recruiting advisors. I recommend looking for advisors who:

• At least understand the realities of running a startup (some should be seasoned startup executives)
• Have a deep understanding of the domains that touch upon your business (e.g., technology, industry)
• See the world differently from you and from each other
• Know people, particularly people you don’t know who might be useful
• Aren’t afraid to challenge you and ask tough questions
• Have the time to focus and actually help
• Share your passion and are inspired by your vision

And don’t forget about actively incorporating diverse perspectives. It can be incredibly eye-opening (and value creating) to witness a very different perspective being laid out before you.

Some checkboxes you should probably be able to check in terms of advisors:

• Someone who has successfully built a company with a similar business model and customer (e.g., enterprise SaaS)
• A veteran of your target industry who knows the prevailing attitudes and many key players personally
• A customer meta-expert: someone who really understands how your target customer thinks, feels, and behaves, and preferably is also one of them
• A serial entrepreneur who knows the ins and outs of building startup teams, operations, and cultures
• A technology or product expert, preferably with experience building teams

Attracting advisors is similar to seeking funding; you have to inspire them with excitement about the vision for what you’re doing. Transactional advisor relationships are unlikely to work well. After all, startups are highly risky and unpredictable. Convincing an uninspired advisor to help—and potentially expose her brand and network to risk—via transaction is unlikely to happen. Vision is a critical component of a successful entrepreneurial venture. You’ll definitely have to bring it out to attract quality advisors.

It also often takes personal interactions over an extended period of time to instill a sense of excitement in potential advisors and to identify the ones who can actually help you. That’s why I recommend building your advisory team gradually over time. Building gradually helps avoid bringing on poorly fitting advisors and enables you to avoid the clutter imposed by unnecessary advisor interactions. Time is precious, and you certainly want to avoid too much management overhead in the formation and maintenance of your advisory team.

Evolution of your advisory team

I tend to think of advisors existing at three distinct levels:

• Advisory network
• Advisory board

I also tend to think about forming your advisory team in the context of slowly building from level 1 to level 3 above.

Advisory Network

Your advisory network comes first. It’s a relatively broad set of people who have an expressed or at least implied willingness to offer advice and assistance to you. How do you find these people? I recommend constantly asking people for advice. Invite the smart ones to your advisory group.

Probably the best way to interact with this network is via regular (quarterly) emails supplemented with targeted asks depending on needs and advisor capabilities. The regular emails should keep the advisors abreast of what’s going on to keep them engaged and reduce friction when you do get around to making asks of them. These regular communications can also incorporate your most important general asks. On top of the regular emails you can reach out directly to appropriate members of the advisory network as needed.

As I mention later in this article, your advisor network members shouldn’t be compensated, and shouldn’t be asked to sign advisory agreements or NDAs. It’s just not worth the cost and complexity for you or for them. If there’s something you’re worried about sharing with them (you probably shouldn’t be), then be careful sharing it or tone down the details.

Your advisory network is most likely to offer fairly passive and infrequent contributions such as pointing out interesting companies, a few introductions, and general ideas and feedback. When members of the network come to you with more specific contributions, consider moving them to an advisor role.

One minor risk that’s worth pointing out is that if you have an advisor who engages too deeply, and starts to feel that she has made meaningful intellectual property contributions to the company, you could find yourself in a legal dispute about IP absent an advisory agreement. That’s one more reason to consider pushing someone to advisor status if they’re becoming more active in helping you.

Your advisors should form naturally from your advisory network. These will be the people who provide the most value to you, both because their capabilities match your needs and because they reliably offer assistance—and come through with it.

Advisors may or may not be compensated, as mentioned later in this article. In many—in my experience most—cases advisors are doing it because they like to help, not in the hopes of compensation. But in the end, I recommend compensating your advisors for reasons discussed in later.

As you get to know your advisors you will start to identify a few who can stand out for their advice and assistance. It tends to happen naturally due to the nature and direction of your business. That’s when you might consider adding an advisor to your advisory board.

Advisory Board

Your advisory board should be formed of key advisors who agree to engage on a regular cadence for a specified tenure. This board should have a regular call and meeting schedule—perhaps monthly calls with once quarterly in-person meetings. The board should be small enough to be nimble, but large enough to offer the key expertise and experience that you need during any given time period. That usually means between 2-4 people.

The tenure of members of your advisory board should map to likely evolutions in the needs of your business. I strongly advise an explicit tenure (e.g., not open-ended) for several reasons:

• Your needs for advice and assistance are likely to evolve over time
• It sets expectations in advance, and makes it much easier to transition people off as needed without offending them
• It constrains their commitment, making it more likely for busy people to accept the role

Terms should probably be for one to two years. If you have a near-term need that’s unlikely to persist, one year might work. Otherwise, two years probably makes more sense because things always seem to take longer than you think, but two years probably offers enough time to get a lot of value out of an advisor.

As I mentioned previously, you should generally expect to compensate your advisors with some equity. I do not advise offering equity to your advisory network; presumably they will accept this light level of engagement without an expectation of compensation. It would also be hard to justify the cost in both equity and time (and legal costs) of offering equity to a fairly broad set of people in an advisory network.

Your advisors, and certainly your advisory board, however, will probably expect some equity. And even if they don’t, there are good reasons you may want to give it to them. Offering equity allows you to require an advisory agreement, which can clarify expectations and offer important intellectual property protections for the company. If you have an advisor who’s clearly adding value and appears to be a level-headed, reasonable person, you probably don’t have to worry about getting her under contract. But less sophisticated or rational people should probably be under contract—or maybe shouldn’t be advising you at all.

How much equity do advisors get?

Advisor equity commonly ranges between 0.10% and 0.25% for a (typical) two-year engagement. In unusual circumstances it can be much higher: 1% or more. Generally I think it’s a bad sign if an advisor expects too much equity. It implies she doesn’t assign too much value to the company, and likely means she isn’t particularly passionate about your vision.

The amount of equity that’s appropriate depends on several factors:

• Stage / value of the company
• Level of effort
• Expected contribution of the advisor

On the other side of the coin, this isn’t a time to be an equity skinflint. I’ve already pointed out how much value an advisor can generate. So instead of thinking about how much equity you’re giving away, I’d recommend thinking about how much net value their participation will add to your company. If you give away $25,000 worth of equity, but see a $100k increase in enterprise value, you’ve made a good deal for everyone involved.

Another way to think about it is that startups are extraordinarily unlikely to achieve a meaningful liquidity event. But when they do have meaningful exits, they’re often really (really) meaningful. As such, I advise optimizing more for the likelihood of a positive outcome rather than the amount of it you own at the time. One-hundred percent of nothing is—wait for it… nothing.

To put things in context, for a startup with a post-money valuation of $10 million, a 0.10% award is nominally worth $10,000. If an advisor allocates three hours a month on average over the course of two years, that’s $138.89 per hour—theoretically. For one thing, value is in the eye of the beholder and many startups are overvalued and advisors know it. For another thing, advisors are typically awarded common equity, which is worth less than preferred equity, so it’s not as simple as multiplying equity percentage by post-money valuation to get the equivalent value.

Advisor equity structure and vesting

In my opinion, advisor equity should be in the form of common stock options. There’s no reason to add complexity to your cap table and voting structure by offering preferred equity to advisors. And as long as the option strike prices are properly set (e.g., at a reasonable fair market value at the time of award), advisors can expect to defer any tax payments until the time of liquidity. As always, consult your tax and accounting professionals and pay attention to regulatory elements such as 83b elections.

All advisor equity should vest. The timeframe should map to the expected time horizon for value creation, which is typically one to two years. I recommend a three-month cliff because there’s always a risk that an advisor won’t work out. And if that happens it’s likely to be obvious fairly quickly. A cliff enables you to end the relationship with the advisor with the three month window without losing any equity, and without having to deal with a hard to explain entry on the cap table.

Advisor equity should feature 100% acceleration on single trigger. In other words, if you sell the company before they’re fully vested, they should get everything they would have gotten over the entire vesting period upon sale. After all, they probably did their job, and there shouldn’t be an expectation for them to hang around to advise the new owners.

You need an advisory agreement for any advisor who will receive equity. There are many reasons to put it in a legal document:

• Putting expectations in writing ensures clarity and a “meeting of the minds” about the nature and level of contributions that can be expected
• A contract makes it harder for them to skimp on their duties
• It shows that both parties are serious and actually committed
• Establish clearly that the advisor is not conflicted, and that she will inform you if she becomes conflicted
• A properly constructed agreement protects intellectual property that you may expose from them, or even receive from them (e.g., patentable ideas that by law can lose protection in the absence of NDAs)
• It provides an opportunity to vest advisor equity over time, which is an important tool for recapturing equity that wasn’t really earned

Some advisors will agree to an NDA, IP assignment, and even non-competition without complaint. Sophisticated ones will almost always balk at some or all of those provisions. Venture capitalists, for example, generally won’t sign any of these sorts of provisions. We see so many deals and so many ideas that it’s far too risky to expose ourselves to claims of infringement. Corporate executives are likely to balk as well, for similar reasons. If you do end up at an impasse about any provisions like these, I would recommend dramatically narrowing the scope of your requested protections. The risk that any of your advisors will take advantage of you is small. And it’s nothing compared to the value they might create for you. If you construct appropriately narrow provisions, then you can probably protect yourself against the actual bad actors without capturing the 99.99% of good actors in your net.

It’s generally a good idea to seek legal counsel when constructing important agreements. A good lawyer, for example, can play a critical role in negotiating an appropriately narrow agreement for an advisor who is concerned about your standard provisions.

Alternately, there are standard forms that might work if you’re really tight on capital. Here are two good ones worth considering:

• Founder Institute’s standard advisor form
• Upcounsel’s standard advisor form

It’s not enough to just find and recruit advisors. You have to take the initiative necessary to maximize the value of their contributions. For the most part your advisors will be very busy, and it will be up to you to ensure that you pull the most value from them.

Just as importantly, you ought to minimize the management overhead associated with your advisory team. Startups feature a crushing enough workload as it is.

I’ve seen advice to focus on transactional engagements with advisors to minimize overhead. I think that’s a poor idea. Instead, a regular and thoughtfully managed advisor system can ensure that your advisors remain informed about what’s going on with your business and the industry, so you don’t have waste cycles on reeducating them every time you interact with them.

And a properly managed advisory board can offer a very strong incentive for busy advisors to brush up on things and bring their A-game to advisory board meetings; the last thing they want to do is look like an idiot in front of their advisor peers. And it forces you to think through your needs and goals in advance, which is likely to lead to a more efficient and productive meeting.

Advisors also tend to have strong opinions and inherent curiosity. And for many (most?) advisors, their role helping you is a rare chance to indulge in things that interest them rather than having to be disciplined about their own affairs. As a result, it’s not unusual for them to barge into areas of the business where they’re uninvited and maybe even unhelpful. At least there is a risk they won’t focus on the areas where you need them most.

That’s why I recommend some best practices for working with advisors:

Structured interactions

It’s best to set a regular cadence for core interactions with advisors. For example, I recommend monthly calls and quarterly in-person meetings with your advisory board. This ensures that they can plan ahead to be available, and makes it easier for them to maintain an awareness about what’s going on. If you let things stretch too long between engagements, they’re likely to forget context, requiring inefficient catch-up cycles and increased confusion. That’s not to say that you shouldn’t reach out to advisors on an as-needed basis as well. It’s just that your ad hoc requests should be on top of regularly established interactions.

Share information in advance

You should prepare advisor briefs in advance of advisory board meetings—something like a board deck. You should also try to do brief write-ups before every meeting or call with an advisor to give them context. This ensures that you can spend your time creating value rather than catching up. Experienced business people are accustomed to walking into meetings well-informed.

Focus on specific issues / asks

Most advisors help companies at least in part because they enjoy it. And because they’re not involved in the daily activities of the business, they are often curious about how things work, and may have ideas about directions the business could go. I would recommend listening to whatever it is they want to talk about, but balance that with the need to keep them focused on the task at hand. That’s why your write-ups and initial framing of conversations should be very specific. I recommend listing the specific area(s) where you’d like their help, and where possible describe the options you’re considering. Once you’ve framed the issue(s), you’re much more likely to cover the things that matter most to you.

Advisors can be a critical resource for startup teams. Yet many founders make strategic errors in assembling and managing their advisor group. Don’t assemble a fake or perfunctory advisor team. My advice is to treat it as an important initiative that will require time and energy to achieve full potential.

Join the thousands of people who get our Growth Digest each month, filled with actionable ideas and insights for growing your business.

• Starting a Business
• Growing a Business
• Small Business Guide
• Business News
• Science & Technology
• Money & Finance
• Subscribers For Subscribers
• ELN Write for Entrepreneur
• Store Entrepreneur Store
• Spotlight Spotlight
• United States
• Asia Pacific
• Middle East
• South Africa

Copyright © 2024 Entrepreneur Media, LLC All rights reserved. Entrepreneur® and its related marks are registered trademarks of Entrepreneur Media LLC

How to Build an Advisory Board That Drives Startup Success Here's what startup founders must consider when crafting an advisory board.

By Will Fan • Dec 5, 2023

Key Takeaways

• How to build a diverse and effective advisory board
• How to navigate the ongoing management and shaping of your advisory board

Opinions expressed by Entrepreneur contributors are their own.

As a startup founder, the composition of your advisory board can significantly impact the trajectory of your company. The recent news of Sam Altman being pushed out by his board serves as a pivotal reminder of this reality. This incident underscores the crucial need to carefully consider the structure of your advisory board from the early stages of your startup. It's a scenario that extends beyond mere corporate governance; it embodies the very essence of how a startup's future can be influenced, and potentially redirected, by its board.

Altman's situation is more than a cautionary tale; it's a lesson in aligning your board with your startup's long-term vision and goals. The composition of your board can profoundly impact not only the decision-making processes but also the overall direction of your company. It highlights the importance of creating a board that understands and champions your vision, rather than one that could steer your startup away from its intended path.

For startup founders, this means placing a premium on not just the professional qualifications of board members, but also their personal alignment with the startup's ethos and aspirations. The lesson here is clear: Carefully select board members who resonate with your company's vision and are committed to driving it forward.

Related: Why Your Startup Needs an Advisory Board (and How to Choose the Right People)

Building a diverse and effective advisory board

When it comes to crafting your startup's advisory board, diversity in expertise and background is key. This isn't just about filling seats; it's about creating a team that brings a wealth of knowledge, experience and perspectives to your startup.

Your board should ideally include industry experts who understand the nuances of your market, financial advisors to navigate fiscal complexities, legal experts for compliance and governance, and, if applicable, tech experts to steer product development. Marketing and sales specialists can offer insights on scaling your customer base, and HR professionals can guide you on organizational development as your startup grows.

This diverse mix of expertise ensures that your startup benefits from a wide range of perspectives, fostering innovative problem-solving and strategic planning . Each member should complement the others, creating a board that's not just a governing body, but a powerhouse of advice, guidance and industry knowledge.

Shaping and managing your advisory board

Identifying and inviting the right individuals to join your board is just the beginning. The ongoing management and shaping of the board is where the real work lies.

It's essential to ensure that every member of your board, from industry veterans to financial gurus, is aligned with your startup's goals and vision. This alignment ensures that decisions made at the board level support the overall direction and ethos of the company.

Having clear advisory agreements in place is crucial. These agreements should detail the roles, expectations, and, if applicable, compensation for each board member. Beyond the formalities, fostering a collaborative environment where board members can openly share ideas and feedback is vital for a dynamic and effective board. How do you identify the right individuals for your board and shape it to best serve your startup's needs? Here are some tips:

Align with your vision: Ensure that every board member, regardless of their role, shares your vision for the company. They should understand where you want to take the company and be committed to helping you get there.

Diversity of thought : Look for advisors who bring different perspectives and experiences. This diversity can lead to more innovative solutions and strategies.

Track record of success : Advisors with a proven track record in their respective fields can bring credibility and valuable insights.

Networking value: Consider the network and connections potential advisors can bring to your startup. These networks can be instrumental in opening doors for partnerships , funding and growth opportunities.

Compatibility: It's essential that you can work well with your board members. Look for individuals who not only have the expertise but also the interpersonal skills to collaborate effectively .

The formation and management of your startup's advisory board are not tasks to be taken lightly. Inspired by lessons from scenarios like Sam Altman's, founders should strategically select and manage their boards. By doing so, they can ensure that their advisory board is not just a formal requirement but a strategic asset that actively contributes to the success and growth of their startup.

Related: How To Create An Effective Advisory Board

Entrepreneur Leadership Network® Contributor

Head of School at NewCampus

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick Red Arrow

• 'The IRS is Coming in Hot': Jason Tartick Says All Business Owners Should Do This 1 Thing Before Filing Taxes — Or Risk a Potentially Pricey Audit
• Lock What Is a 'Dry Promotion' — and Has It Happened to You? Employees in This Specific Group May Be the Most Likely Victims .
• I Was a 25-Year-Old Nurse When I Started a Side Hustle to Combat Anxiety. It Made $1 Million in 7 Months — Then Sold for a Life-Changing Amount.
• Lock 2 Phrases I Learned From a Senior CIA Officer That Changed My Leadership Style
• The U.S. Justice Department Is Suing Apple in a Groundbreaking iPhone Monopoly Lawsuit — Here's Why
• Lock I Built My Company to 23 Profitable Stores. Here's My Advice to Small Business Owners Who Want to Grow Their Retail Presence.

Most Popular Red Arrow

From tom brady to kevin o'leary – see who lost big in the wake of the ftx crypto collapse.

The crash exposed an $8 billion hole in FTX's accounts, leaving investors and customers scrambling to recoup their funds.

Popular Appetite Suppressant Ozempic Can Be Made For Less Than $5 a Month, New Research Suggests

The $5 includes a profit margin.

Karlie Kloss, Josh Kushner Announce Plans to Relaunch Life Magazine, 16 Years After Its Last Print Issue

Kloss is the CEO of Bedford Media.

This Highly-Debated Piece of Cinematic History Just Sold For Over $700,000 at Auction

The wood panel from "Titanic" is often mistaken as a door. Either way, he couldn't have fit. (Sorry.)

Mark Zuckerberg Says This CEO Is the 'Taylor Swift' of Tech

Meta's CEO posed with Nvidia CEO Jensen Huang on Instagram Wednesday.

Avoid These 9 Pitch Deck Mistakes When Asking Others For Money

Crafting an efficient pitch deck requires serious effort, but at least it's not wandering in the dark since certain rules are shaped by decades of relationships between startups and investors.

Successfully copied link

How to Build and Utilize a High-Impact Advisory Board

Advisory boards are undoubtedly controversial. While many articles sing their praises, others condemn them as mere headshots in pitch decks. The truth is that advisory boards are usually not silver bullets. Still, they can be powerful tools and yield strong ROI—if executed properly.

This article includes an overview of advisory boards, their economics, when they can and should be used, and a step-by-step guide to building one.

By Patrick E. Donohue

Patrick is a 5x serial entrepreneur accross finance, healthcare and energy. He specialises in capital raising, client networks/partnerships.

Executive Summary

• At its simplest, advisory boards are groups of subject matter experts providing a company's leadership team with guidance on company vision, innovation, risk management, and profitability.
• Though they provide management with advice, they do not possess the authority to vote on corporate matters.
• A 2014 Canadian study by the Business Development Bank of Canada polled over 1,000 small and medium-sized enterprises (SMEs) to reveal that only 6% of SMEs have access to an advisory board, yet 80% indicated that they'd set up an advisory board again.
• In a ten-year study , annual sales of businesses with advisory boards were 24% higher than those of the control group. Productivity was also 18% higher for those with advisory boards.
• According to a Wall Street Journal article , 50 of the Fortune 500, including General Electric, American Express, and Target, have set up digital advisory boards, typically comprised of six experts under the age of 50.
• Compensation. Per advisory board best practices, the company should always provide something —whether it be paying for meals, travels, an honorarium, or even offering equity at some juncture. Startups should pay $100 to $500 per meeting, host a meal, and cover any incidental costs.
• In large corporations, the annual compensation paid to advisory board members is normally between a third and half of what's paid to regular board directors.
• A global survey conducted by the Advisory Board Architects found that 15% of private company boards paid no compensation, 25% paid only cash, 43% only equity, and 17% paid cash and equity.
• There is anecdotal evidence of ROI for advisory boards (returns of over $100 million for large companies to higher evaluations for startups), but it's difficult to pin down representative statistics.
• There's a specific objective and internal resources are not equipped to execute. A company with specific needs such as making an acquisition, selling the company, entering a new market, or raising capital can benefit from an advisory board.
• The company would benefit from positive association. Advisors typically have impressive track records that corporations want to affiliate with. When a company showcases its advisors, it demonstrates that it's surrounding itself with key opinion leaders and that these leaders are invested in their success.
• The leadership team has skill gaps. If the company cannot justify hiring full-time employees, advisory boards can provide perspective it's not getting internally. The most common needs are in accounting or finance .
• The company plateaued or is in a rut. If a company feels too entrenched in a given set of processes and product offerings, it could benefit from an advisory board's fresh insights. This is especially impactful for companies that have hyper-political and entrenched cultures.
• Identify your needs. Identify what the company needs to achieve with an advisory board. The more specific, the better—a measurable strategic outcome is ideal. Figure out how these goals are tied to mission, vision, strategy, and milestones.
• Draft job descriptions. The company needs to draft written profiles of ideal candidates. Once the profiles are written, then an advisory board job description can be drafted for recruiting and informing candidates on roles and expectations. Prospective board members should not have a pre-existing relationship with the company or its management team.
• Source and recruit. Don't hesitate to do cold outreach with candidates unfamiliar with the company. And, don't be overly concerned about waiting for the right moment. Only after engaging with multiple candidates should a decision be made. Make sure to thank the candidates who were not selected and let them know that you would like to stay in touch.
• Finalize contractually. When candidates agree to join as advisors, it is important to have them sign a job description or a memorandum of understanding . While advisory boards can be fairly informal, utilize formal documents to set the tone and demonstrate the seriousness of the board.
• Set key performance indicators. It is important to work towards milestones, measure outcomes against KPIs, and swap out members when they are no longer a fit. Don't be shy in executing evaluations—good advisors will want goals and to be held accountable.

Introduction

Advisory boards are undoubtedly controversial. While many articles sing their praises (see here and here ), others condemn them as mere headshots in pitch decks. The truth is that advisory boards are usually not silver bullets. Still, they can be powerful tools and yield strong returns on investment (ROI). However, they must be properly utilized with an analysis of the cost against the rewards of achieving strategic objectives. Otherwise, they can be a substantial waste of time and resources.

As a former medtech analyst and investment banker, I’ve seen many healthcare companies utilize scientific advisory boards to understand their clients, often medical doctors. Since then, I’ve witnessed the broadening of advisor usage, especially by early-stage businesses with acute needs they can’t otherwise afford. Having personally served on three advisory boards, organized advisory boards for two of my businesses, and assisted more than one corporation in building an advisory board, I’ve seen firsthand both how advisory boards can achieve substantial ROI and where miserable mistakes have occurred. This article includes an overview of advisory boards, their economics, when they can and should be used, and a step-by-step guide to best pracices for building one.

Advisory Board Overview

What is an advisory board.

At its simplest, advisory boards are groups of subject matter experts. The role of an advisory board is to provide a company’s leadership team with guidance on company vision, innovation, risk management, and profitability. Though they provide management with advice, they do not possess the authority to vote on corporate matters.

A 2014 Canadian study by the Business Development Bank of Canada (BDC) polled over 1,000 small and medium-sized enterprises (SMEs) to reveal that only 6% of SMEs have access to an advisory board, yet 80% indicated that they’d set up an advisory board again. The BDC also conducted a ten-year study from 2001 to 2011, finding that annual sales of businesses with advisory boards (307 observations) were 24% higher than those of the control group (300 observations). Productivity was also 18% higher for those with advisory boards. BDC now encourages its 49,000 clients to utilize advisory boards, with about 10% of their clients utilizing them.

According to a Wall Street Journal article , 50 of the Fortune 500, including General Electric, American Express, and Target, have set up digital advisory boards, typically comprised of six experts under the age of 50. These groups coach management on everything from new marketing tools to emerging digital trends. Since 2011 , GE’s digital advisory group has met quarterly, rotating members annually, pulling experts from areas such as gaming and data visualization. Borne out of these meetings was the GE Sound Pack , a popular app that helps electronic musicians produce tracks, when a then-26-year-old advisory board member suggested it. GE’s digital advisory board also proved valuable on the 45th anniversary of the moon landing, when it helped GE promote its role in the event, which had been to produce the silicon rubber in the astronauts’ moon boots. With guidance from the board, GE produced “moon boot” sneakers , which cost $200 a pop and sold out within minutes.

Advisory Board vs. Board of Directors

Advisory boards and boards of directors (BOD) are often confused with one another. The crucial distinction lies in fiduciary duty , the legal responsibility to act in the stakeholders’ best interest via a construct of specific duties . While the BOD has the responsibility to influence corporate governance , advisory boards do not . Fiduciary duties are light on requirements to provide strategic insights around business growth. Without this burden of legal liability , high-profile individuals are typically more willing to accept the role of an advisory board member over a directorship.

Another key difference is lifecycle: while a BOD exists in perpetuity , an advisory board is episodic. Advisory boards can be ongoing, but they typically have a defined lifespan. According to Owen Jonathan , an executive board director at PwC UK, which has an advisory board, “The phrase ‘board’ is somewhat misleading. They don’t assume a level of formality that a board of directors would… The board of directors and the advisory board sit as separate but parallel bodies.”

Economics of an Advisory Board

Compensation for advisory board members.

One of the fiercest debates around advisory boards is around compensation. While professional advisors suggest stipends in thousands per meeting and/or decent equity upside, entrepreneurs and retirees looking to “pay it forward” often insist a cup of coffee is adequate. Like most things in life, the truth lies somewhere in the middle.

I believe the company should always provide something —whether it be paying for meals, travels, an honorarium, or even offering equity at some juncture. I encourage startups to pay $100 to $500 per meeting, host a meal, and cover any incidental costs. In large corporations, the annual compensation paid to advisory board members is normally between a third and half of what’s paid to regular board directors.

A global survey conducted by the Advisory Board Architects (ABA) found that 15% of private company boards paid no compensation, 25% paid only cash, 43% only equity, and 17% paid cash and equity. Though the survey includes data from both fiduciary and non-fiduciary boards, the CEO of ABA indicated that most respondents were from advisory boards and that the compensation breakdown is in line with what they have seen for advisory boards. Interestingly, their surveys have found that boards paying only equity have the lowest impact. This is counterintuitive to the widely-held belief that equity participation provides the strongest alignment with achieving key corporate objectives. The survey also found that the boards with the most impact were paid cash and equity.

Interestingly, in the BDC survey of only advisory boards, a whopping 57% of advisory board members were uncompensated. When I interviewed Pierre Cléroux, VP of Research and Chief Economist at BDC, he noted that most advisors in Canada simply want to help small business owners succeed and don’t view it as an avenue for personal enrichment. We also discussed the striking difference between US and Canadian startups in their willingness to provide equity to advisors. Cléroux stated, “We have found that it is very unpopular with Canadian entrepreneurs to share equity. They save it for financings and want to control the business.” Canadian founders typically reserve equity for the BOD.

Another cost consideration is the size of the board. While there aren’t definite size requirements, a University of Pennsylvania study concluded that collaboration falls off after six people. In line with this research, the BDC Study found that advisory boards were an average size of five.

A Quick Word on Equity

Matters become more complicated when it comes to offering equity, something that’s debated extensively . For an established company, equity makes little sense since they can pay in cash. However, a startup may be tempted to offer a few percentage points in exchange for access to big-name advisors. Founders should tread lightly here. It could be a red flag if an advisor insists upon a large stipend or a decent chunk of equity immediately. Equity incentives can be very expensive and could reflect poorly on the founder’s judgment should the advisor eventually yield little to no value . In situations involving equity, I recommend that advisor relationships start out in a honeymoon phase, with equity available only after the advisor has provided tangible value and vested upon specific milestones.

Once, a tech founder hastily drafted an email to a potential advisor, offering what seemed like 20% equity. Given these supposedly generous terms, the advisor quickly agreed. However, issues arose when it was time to formalize the deal. The founder was actually offering 20% of the option pool (20% of a 10% option pool would equal 2% of total shares). Meanwhile, the advisor was expecting 20% of the entire company! Fortunately, I facilitated a solution by demonstrating that 20% of the company was far above benchmark terms and that offering this amount would adversely affect the company’s ability to raise capital.

Framework for Return on Investment (“ROI”)

It’s worth noting that an advisory board is not necessarily the most effective (cost and otherwise) method of attaining advice. Alternatively, current employees, new hires, or third-party services could potentially get the job done better and faster. Therefore, advisory board members should possess an x-factor, such as an exceptionally valuable network or experience.

While there is anecdotal evidence of ROI for advisory boards (indicating returns of over $100 million for large companies to higher evaluations for startups), it’s difficult to pin down representative statistics. However, we can borrow from ROI frameworks used by companies considering customer advisory boards to engage with current and prospective customers. As such, analyzing ROI for advisory boards should be treated as analyzing any other project in corporate finance. You must consider the cost, potential return scenarios, and the weighting of the risk/return vs. other investment opportunities.

Here’s a simple example of a sample company and its advisory board ROI:

Let’s assume a young technology company is assembling a five-person board to aid their new product launch, scheduled in 18 months. The new product has taken $5 million to develop and the annual revenue opportunity is in the nine figures. From the advisory board, the company hopes to receive: 1) three new distribution leads from the advisory board, 2) connections into influencers in the space, including social media influencers or simply those known in the industry, and 3) positive PR around the advisory board to drive website visits and social media engagement. The board is set to meet five times in the next 18 months.

In this advisory board example, the company would yield a significant ROI if the board lives up to its expectations. The product launch has already been a $5 million investment, and the advisory board could be considered an insurance policy. Costs are fixed and in the control of the company, whereas the upside can be exponential. Still, the only thing guaranteed is costs, so it’s important to weigh the likelihood of the outputs. If the company is hiring people for the new product line and is unsure about how to engage distribution channels, then an advisory board could prove valuable in ways not understood at the outset. These can include introductions to highly qualified potential employees, insights on go-to-market strategy, and pricing and scalability recommendations.

Signs You Need an Advisory Board

The timing around assembling an advisory board is dependent on the company’s needs and capacity. The following include situations where a company might benefit from an advisory board:

• There’s a specific objective and internal resources are not equipped to execute it. A company with specific needs such as making an acquisition, selling the company, entering a new market, or raising capital can benefit from an advisory board. According to Bob Arciniaga, Founder of Advisory Board Architects , advisory boards working on a strategic outcome are the most successful. Transformational events are challenging for leadership teams because they add stress and risk distracting management from core responsibilities. An advisory board can help. For example, if a company seeking capital assembles a board to complete the round of financing, the advisors would be tasked with identifying sources of capital and guiding management through the fundraising process. The project would be measurable and specific.
• The company would benefit from positive association. Advisors typically have impressive track records that corporations want to affiliate with. The opportunity for a company to showcase its advisors can demonstrate that it’s surrounding itself with key opinion leaders and that these leaders are invested in their success.
• The leadership team has skill gaps. If the company cannot justify hiring full-time employees, advisory boards can provide perspective it’s not getting internally. This could be a member who provides feedback on inclusion and community relations. Or, it could be an advisor with knowledge about emerging trends tangential to the corporation’s core business. For example, a corporation with entrenched products may benefit from learning about millennial consumer trends. Advisory boards are an elegant way for executive teams to learn from individuals different from them. The most common needs are in accounting or finance (see below).

• The company plateaued or is in a rut. If a company feels too entrenched in a given set of processes and product offerings, it could benefit from an advisory board’s fresh insights. This is especially impactful for companies that have hyper-political and entrenched cultures since an advisory board can provide a safe environment for new ideas to percolate.

How to Build and Utilize an Effective Advisory Board

After performing the ROI analysis and deciding to move forward, this is how to set up an advisory board.

Step 1: Identify Your Needs

The first step in the plan needs to identify what the company needs to achieve with an advisory board. The more specific, the better—a measurable strategic outcome is ideal when you’re setting up an advisory board. Figure out how these goals are tied to mission, vision, strategy, and milestones. You will also need to determine if the time and expense of organizing an advisory board can provide a substantial positive ROI.

Step 2: Draft Job Descriptions

Next, the company needs to draft written profiles of ideal candidates. It’s important that each of the profiles are unique, with a high bar of qualifications. A highly functioning advisory board will have a diverse set of views where the advisors can learn from one another. Once the profiles are written, then an advisory board job description can be drafted for recruiting and informing candidates on roles and expectations. This step is important since it lays the groundwork for finding who is needed versus already knowing a qualified candidate and reverse-engineering a profile to fit their background.

Step 3: Source and Recruit

With these documents prepared, it is time to identify candidates to fill the roles. As mentioned previously, prospective board members should not have a pre-existing relationship with the company or its management team—these people are essentially already informal advisors! Thus, don’t hesitate to do cold outreach with candidates unfamiliar with the company. In my experience, there’s usually a high response rate. And, don’t be overly concerned about seeking introductions or waiting for the right moment. Like all good sales processes, the time is now. Utilize your candidate profile and job description to reach out to candidates and strike up a dialogue.

Only after engaging with multiple candidates should a decision be made. For one, it allows the company to absorb some knowledge during the recruitment process. Second, it ensures the right fit personality-wise. Make sure to thank the other candidates who were not selected and let them know that you would like to stay in touch. These budding relationships may prove valuable someday.

Step 4: Finalize Contractually

When candidates agree to join as advisors, it is important to have them sign a job description or a memorandum of understanding . While advisory boards can be informal, it is important to utilize formal documents to set the tone and demonstrate the seriousness of the board. The agreement can be a simple one-page document outlining compensation and a set of expectations around time commitment and participation. It is crucial to have people sign this document prior to the first meeting. I’ve included an example that you can use to re-purpose for your own company here .

Step 5: Set Key Performance Indicators

Finally, it is critical to set objectives and key performance indicators (KPIs). It is important to work towards milestones, measure outcomes against KPIs, and swap out members when they are no longer a fit. In my interview with Bob Arciniaga, he noted his distaste for the term “ sounding board ,” stating, “There are much cheaper and easier ways to get feedback than trying to get a group of advisors together. The primary purpose of an advisory board should be to drive outcomes.” Finalize your KPIs and communicate them clearly. Don’t be shy in executing evaluations—good advisors will want goals and be held accountable.

Mistakes to Avoid

A haphazardly-assembled advisory board can become a liability. A prime example is one I’ve seen play out many times. A few years ago, I met with tech company co-founders who were seeking advice on their fundraising process, showcasing an executive summary page with their “advisors.” As it turns out, they had met with an investor who knew one of their “advisors” personally. When the investor reached out to the “advisor,” he was surprised since he’d only met the company once and had never committed to the position. He wasn’t thrilled that his name was already on pitch materials. Needless to say, the investor lost interest and the company had some reputation clean-up. Perhaps worst of all, the tech company never secured funding and eventually shut down. With this cautionary tale, let’s dive into some mistakes to avoid:

• Don’t list the member on materials without approvals. Under no circumstances should an advisory board member be listed on promotional materials without the advisor formally accepting the position. This can be particularly true with overzealous startup founders eager to showcase the networks they’ve built. If the company overstates the relationship or makes comments on behalf of the advisor (i.e., “They think we’re going to be the next billion-dollar company!”), it can prove detrimental.
• Don’t under-communicate. I have witnessed companies fall out of sync with advisors, leading to advisors publicly speaking out of line about the company’s progress. I’ve seen this happen with a tech company who pivoted their target market but failed to share the updates with its advisors. Thus, when people in the industry asked an advisor about the technology’s total addressable market, he answered with a dated viewpoint, which negatively affected the company’s standing with prospective investors. It doesn’t take much for an advisor’s uninformed or outdated comments to reflect poorly on the company. Always err on the side of overcommunication early in the relationship and when there are shifts in strategy.
• Don’t ruin the relationship by letting tasks fall to the wayside. If you tell an advisory board member that you’re going to do something, make a priority to get it done. Advisory board members are likely to be very influential in their spheres of influence. Therefore, it is critical that the advisory board members have nothing but positive experiences with the company. As Henry Ford put it, “You can’t build a reputation on what you’re going to do.”
• Don’t let the relationship fester. Advisory boards should have a stated lifecycle tied to a key outcome. Otherwise, advisory boards can become directionless and a time sink. If an advisory board is set up to achieve a milestone, it should naturally end upon the realization of that milestone. In the rare case that an advisory board is set up with ongoing objectives, be sure to rotate advisors periodically. And, if an advisory board is not working for the parties, proactively shut it down immediately and move on. I’ve personally stumbled before by allowing a board I created for a company I have ownership in to never formally conclude. It was embarrassing when I later saw an advisor at an event and was asked, “So, whatever happened to meeting on a regular basis?” In retrospect, we should have had a nice dinner to signify the formal conclusion of the advisory board, and that we’d keep them updated on our progress.

Parting Thoughts

The most valuable asset of every founder is their time. While the cost of an advisory board can be a significant budget item, it often also requires a substantial time commitment. If you are going to take one thing away from this article, it is simply this: If you are going to put together an advisory board, it has to be done right. Perhaps the best reminder of why advisory boards can be very impactful is, as Cléroux puts it, “We see the greatest impact advisory boards have is on the impact on the vision of the company. Business owners are working in the business and advisory boards forces owners to work on the business—the big picture vision—which can lead to new revenue opportunities.”

Understanding the basics

Are members of an advisory board paid.

While professional advisors suggest stipends in thousands per meeting and equity upside, others looking to “pay it forward” often insist a cup of coffee is adequate. The truth lies somewhere in the middle. The company should pay $100 to $500 per meeting, pay for meals, travels, an honorarium, or even offer equity.

What is the role of the advisory committee?

At its simplest, advisory boards are groups of subject matter experts that provide a company’s leadership team with guidance on company vision, innovation, risk management, and profitability. Though they provide management with advice, they do not possess the authority to vote on corporate matters.

• BestPractices

Patrick E. Donohue

Eden Prairie, MN, United States

Member since July 11, 2017

About the author

World-class articles, delivered weekly.

Subscription implies consent to our privacy policy

Toptal Finance Experts

• Blockchain Consultants
• Business Management Consultants
• Business Plan Consultants
• Business Process Optimization Consultants
• Certified Public Accountants (CPA)
• Economic Development Consultants
• Equity Research Analysts
• Excel Experts
• Financial Benchmarking Consultants
• Financial Forecasting Experts
• Financial Modeling Consultants
• Financial Writers
• Fintech Consultants
• FP&A Managers
• Fractional CFOs
• Fundraising Consultants
• FX Consultants
• Growth Strategy Consultants
• Integrated Business Planning Consultants
• Interim CFOs
• Investment Managers
• Investment Thesis Consultants
• Investor Relations Consultants
• M&A Consultants
• Market Sizing Experts
• Pitch Deck Consultants
• Private Equity Consultants
• Procurement Consultants
• Profitability Analysis Experts
• Real Estate Experts
• Restructuring Consultants
• Risk Management Consultants
• Small Business Consultants
• Supply Chain Management Consultants
• Valuation Specialists
• Venture Capital Consultants
• Virtual CFOs
• Xero Experts
• View More Freelance Finance Experts

Join the Toptal ® community.

Business Plan Writing

9 Steps to Start-up

9 Steps to Start a Small Business Step 1 Entrepreneur /Team Resources Step 2 Product or Services Step 3 Description of the Market Step 4 Sales and Marketing Step 5 Organising your Company Step 6 Business Development Step 7 Budgets Step 8 Financing Step 9 Business Concept Business Plan Apps Business Plan Examples - lots of inspiration Business Plan for Women Entrepreneurs Business Plan in Arabic Download Business Plan templates Graphic design business plan Example IT Business Plan - sample Short Business Plan - Mini Business Plan Simple business plan template Social Enterprise Business Plan Template business plan

Business Plan Issues

Entrepreneurship Education

Entrepreneurship concept Entrepreneurship context Entrepreneurship Education Entrepreneurship Power Point Free Entrepreneurship Text Book Mocuba Entrepreneurial Experience Problem Based Learning Teachers Download Center Training Module Specifications What is an entrepreneur and entrepreneurship?

Financing Start-up

Be sure to have Sufficient Cash Business Plan Budgets Calculate turnover and sales Cash Flow Budget - inspiring template to download Contribution Margin - Example Establishing Budget Example of an Operating Budget Financing Business Start Funding Capital Investors and Others Operating Budget Personal Source of Financing Sourcing from Banks

Organising the Company

Accountant Administrative Routines Bank Account for your Biz Business Insurance How do build an advisory board Legal Business Structure Privacy Policy Staff Policy

Sales and Marketing

Advertisement Online and Offline Business Card and Logo Business-to-Business Market Competitive Parameters Consumers Distributors and Sales Channels FAB Model: Features - Advantages - Benefits How to Network How to Open a Webshop How to promote a store Make a Sales Strategy Make a Website Market Description Market Research Marketing Plan Presentation Folders Reception at Business Start Sales Letter - AIDA Model Sales Management Who are your Competitors

The Person Behind

4 Types of Entrepreneurs - which are you? Coaching to start a small business Corporate Social Responsibility - CSR Global Compact How to create a company Start Business From Nothing Women Entrepreneurs

Your Product / Service

Be Specific About Your Product Business Canvas Business Policy Different from your competitors? Estimating Cost How Much Stock Do You Need How to Make an Elevator Pitch Pricing - Focus on Expenses Pricing - Market in Focus Product Lifespan Realistic Number of Customers Value for Your Customer What is a business model

Manage Your Business

Close your Business

Bank Indebtedness Closing a Business Financial Assessment Financial Control - Danger Signals

Help to Take Action

Contribution Margen or Gross Profit Contribution Ratio vs Markup Credit Sale Fixed Costs / Overhead Expenses Gross Profit - how to act on it Influence on Profits Keep Control Reduce Stock SWOT Analysis + PO Terms of Sales and Delivery The Art of Consultancy

Principles in Accounting

Account Plan - Chart of Accounts Adding Vouchers Depreciation Double-entry Bookkeeping Example of an Account Plan Invoice - How to Issue one Mis-entry in the books Re-posting a Voucher Vouchers Who is Able to Do The Accounts?

Safeguarding Your Assets

Cash Control Delegated Authority Four Ways of Safeguarding Cash Physical Control Reconciliation Stock Registration

Understand Financial Info

Accountability and Management Financial System - Illustrated Profit and Loss Statement The Assets The Balance Statement The Liabilities Understanding the Assets Understanding the Liabilities What is a Financial Statement

What is Accountancy?

Accountability Accountancy Step by Step Accounting on a computer Administration Made Easy Computer Bookkeeping? IT Systems Why Accounting

How to build an advisory board

An advisory board is the informal board of a company. advisors can guide you and your new business..

It is voluntary for the entrepreneur to build an advisory board and it should only be build if you will use the advises the board can give you.

Which skills

First you have to analyze which skills you want in the company´s advisory board. Do you need competence in sales, finance, product knowledge, HR or other key issues? When you have identified your needed competences you can start looking for members.

Generalists and specialists

It is normally an advantage with a mix of generalists and specialists in a board. Generalists may be persons with experience and overview of business operations or exports and a specialist could be a lawyer specializing in IPR. Some members of the board should also have knowledge and experience in the work of a board.

Leaders or former leaders

Obvious topics to the board can be leaders or former leaders of successful small businesses. These candidates are practitioners who know and understand the small business problems and challenges.

Directors or functional managers

Another obvious group is directors or functional managers from major companies. These individuals often have a large network and have a specialized knowledge that the small company can not or find it very difficult to obtain by other means.

Call for candidates

Once you have identified the names you want on the board please call them. The person you call will most likely be honoured by the call - if he does not sit in 50 advisory boards in allready.

Prepare candidate speech

Prepare the "sale" of board space: What do you want to tell possible board member when you meet him or make a telephone call? Maybe you have sent the possible board member an e-mail in advance to prepare for the talk.

External assistance

You can also choose to have an external partner to call, e.g.:

• Interest Organizations
• Personal networks
• Board Organizations

Public support organisations for small businesses

Advisory board size

Board of directors vs. advisory board.

Advisory Board: Roles, Responsibilities and Best Practices

The rising relevance of responsible governance among investors became increasingly important. According to McKinsey, governance-related requests from investors throughout the world have increased by 5,000% over the last decade — 49% year on year — from 27 in 2009 to roughly 1,400 in 2019.  

A successful advisory board, when properly created and managed, may give non-binding but educated advice and is a valuable ally in the pursuit of greater corporate governance. As much as they are not part of the company’s management structure, they contribute their expertise by addressing key issues and providing insights into projects. 

This article explains the advisory board roles and responsibilities and board of directors structure , while giving best practices for effective membership.  

Discover effective management tool for your board

Rely on our choice – iDeals Board

What is an advisory board ?

The advisory board is a group of individuals in a company who offer strategic opinions on specific aspects of a company’s processes. They have no fiduciary duties or legal responsibility for the organization’s operations, but their advisory services are important to help an organization handle its legal, financial, or managerial responsibilities.

Do all businesses need an advisory board?

Companies wondering about forming an advisory board must address a critical question: “ Why are we establishing an advisory board, and what do we want out of it? ” The company may require support with everything from marketing to managing human resources to influence regulators’ decisions.

More often than not, an organization, either a nonprofit or for-profit with a nonprofit side, needs the community it’s reaching out to, to perceive it in a positive light. The advisory board definition often mirrors the image of the organization.

There is a short overview of the cases when companies might need an advisory board:

• Fast growth and expansion
• M&A 
• Assistance with staff development
• Difficulties in board communication
• Strategic partnerships
• Conflicts resolution
• Important decisions due to a shift in course

Benefits of an advisory board

An advisory board member brings to the company a lot of information, skills, and experience. In its report, BDC states that 86% of businesses with advisory boards experienced up to a 24% rise in revenue, while company productivity climbed by 18%. 

These people are frequently experts in their professions, capable of giving insights, and advice. Here are some specific ways an advisory board member might contribute value:

• Leveraging expertise . Employ the useful and practical advice provided by experienced advisors who specialize in boosting company success.
• Improving reputation . A positive reputation fosters increased trust among consumers, partners, and stakeholders, potentially leading to new possibilities and partnerships.
• Building trust . A trustworthy company is more likely to attract and keep customers and partners and acquire the trust of investors.
• Attracting top-tier talents . The presence of a reputable advisory board makes the firm more desirable to top-tier experts looking to join a vibrant and forward-thinking organization.
• Cultivating culture . Advisory board members understand the company’s culture. This helps to maintain continuity and consistency with the organization’s values and goals

Purpose of advisory boards

Advisory board members provide strategic counsel and expert guidance to organizations, whether they are corporate entities or nonprofit organizations. The advisory board’s purpose is to fulfill corporate advisory board responsibilities or nonprofit advisory board responsibilities, depending on the context. 

These responsibilities encompass a range of advisory board duties, such as: 

• Offering industry-specific insights 
• Sharing knowledge
• Advising on nonprofit governance best practices .

Advisory board meetings, when these board members or specialists convene to deliberate on critical issues, are often led by the advisory board leader or chairperson.

Importantly, compensation advisory board members and membership advisory board members often serve on a volunteer basis. In fact, they are motivated by a desire to see the organization succeed and adherence to board governance models that encourage effective and ethical governance practices.

The difference between an advisory board and a board of directors

Both boards are key aspects of a nonprofit; however, their roles diverge. The role of advisory board often extends to providing industry trends, facilitating contact network expansion, generating new business ideas, and offering invaluable expertise.  The infographic depicts the main differences between board of advisors responsibilities and the board of directors:

• In essence, the advisory board advises the organization on its operations, while the board of directors acts in charge of the organization’s day-to-day operations. The board of directors bears all financial and legal responsibilities, while the advisory board’s mandate is exempt from these obligations, except working to raise funds for the organization.
• Nonprofit leadership distinguishes between the board of directors and advisory boards . The directors’ board defines the organization’s objectives and monitors success through key metrics, while advisory board members offer expert guidance to achieve these goals effectively. This division of responsibilities optimizes strategic planning and goal execution. 
• Both boards may act as the face of the organization on separate grounds. While the board of directors acts as the professional public relations officers of the organization, the advisory board members may act as ambassadorial public relations officers — passively or actively.
• Finally, the board of directors is vested with the power to appoint the organization’s key officers, such as the CEO and the chief financial officer (CFO). Also, they can dismiss these persons from their duties if their performance is not up to par. However, advisory board members cannot function in these capacities, they have no power to elect or terminate.

The chart below summarizes the key distinctions between advisory boards, governing boards, advisory councils, steering committees, and change control boards. 

Types of advisory boards

Advisory board types vary widely, each with its distinct qualities. These boards, acting as a sounding board for senior executives, fulfill specific roles within an organization. Depending on the context, they may include multiple boards, from those focused on a local company to those specializing in a particular foreign jurisdiction. 

• Programmatic . This type of advisory board is formed from low-income social workers’ clients, who have vast experience on the issues that a nonprofit is poised to solve. They help to provide valuable feedback to the nonprofit on the impacts of its programs. 
• Young professionals . An advisory board of these ambassadors consists of young people who represent the younger population that an organization is looking to serve. They provide insights into activities and advise the management on creative ways to serve the population they represent.
• Letterhead . These advisory board members play no physical roles in the nonprofit other than providing the goodwill of their names to a nonprofit’s operation. You find these names on the nonprofit’s correspondence, but beyond that, these advisors have no other input to the nonprofit.
• Fundraising . A fundraising advisory board could be created to advise the organization on prospective fundraising activities and how to reach new donors. 
• Governance . This board lends its expertise to advise on how the leadership is chosen, and their decision may largely influence the outcome, even though they have no direct role to dictate who is or is not appointed.
• CAB . A CAB consists of selected customers or clients who provide valuable feedback, insights, and suggestions based on their experiences with the organization’s products or services

The advisory board member roles and responsibilities

So what does an advisory board do? There are no specific rules to how members of an advisory board should act and the responsibilities expected of them. However, there are expectations and unwritten advisory board responsibilities such as

• Strategic guidance . Advisory board members don’t just provide suggestions; they actively shape the organization’s strategy and decision-making.
• Networking and partnerships . Advisory board members leverage their extensive networks to open doors to potential collaborators, investors, and partners. They cultivate relationships that prove pivotal for the organization’s advancement.
• Industry expertise . These members bring critical domain knowledge and industry-specific insights to the table. Their understanding of industry trends and best practices ensures the organization remains agile and competitive.
• Accountability and risk management . Advisory board members share in the responsibility for the organization’s success. They collaboratively work to identify and mitigate potential risks. 

What an advisory board structure looks like

The structure of the board is up to you, as are their roles. Although, there are simple tips to keep in mind.

It’s best to have an odd number of board members to avoid a tie when voting. The number of members need not be too large — nine or eleven is sufficient. Thus, a smaller advisory board helps to make the decision-making simpler . However, some companies have from three to five board members . 

Your advisors should be experienced and experts in the industry, especially if you’re searching for investors for your company or donors for your nonprofit. When organizing board meetings, you should have a number that represents the equity of your company, or the audience you’re reaching out to. 

Don’t forget to determine how you’re going to compensate board members for their expertise and commitment to your organization. However, you choose, remember that it could help to motivate them all the more.

Best practices for effective advisory board membership

Advisory board members are critical to an organization’s success. Consider the following practical advice to make the most of this position:

1. Clear and open communication

Encourage open and honest contact with the organization’s leadership. Engage in discussions to ensure that your ideas and suggestions are properly appreciated and in line with the strategic direction.

2. Regular participation

Your active participation is the foundation of your effectiveness. Thus, attend meetings and discussions regularly. Your presence demonstrates your commitment to the organization’s mission and ensures informed decision-making. Thus, each contribution you make adds value to the discussions and the overall direction.

3. Staying informed

To be a forward-thinking and valuable advisory board member, you must stay informed about industry trends and developments. Continuous learning and staying updated with the latest advancements in your field will empower you to bring fresh and relevant insights to the table. 

4. Confidentiality and discretion

The trust you foster within the organization is one of the cornerstones of what you do. When dealing with sensitive information, maintain the utmost level of secrecy. Respecting the confidentiality of internal matters protects the organization’s integrity and strengthens your reputation as a valued counsel.

Consider using board portals to increase your effectiveness as an advisory board member. These secure digital systems simplify communication, allow simple access to meeting materials, and protect sensitive data. In turn, iDeals Board provides a set of features that bring transparency and security to your business. 

How to create and manage a successful advisory board

To achieve success in your organization, it is crucial to gather a strong advisory board that is capable of providing valuable insights. This requires taking assertive and pivotal steps:

• Identifying the right members . The foundation of a successful advisory board lies in its members . Seek individuals with diverse expertise, a proven track record, and a passion for your organization’s mission. They should be well-connected, with the ability to open doors and offer valuable guidance.
• Setting clear objectives . Define your advisory board’s purpose and expectations. What specific challenges or opportunities will they address? Having a clear mission ensures everyone is aligned and working towards common goals.
• Structured meetings and agendas . Develop a structured agenda that focuses on key issues and ensures each member’s time is well-spent. Encourage open discussions and brainstorming while maintaining a disciplined approach.
• Evaluation and feedback . Regularly assess your advisory board’s performance. Are they meeting the set objectives? Collect feedback from both board members and your organization’s leadership. Make necessary adjustments to improve the advisory board’s effectiveness.

4 challenges encountered by advisory boards

Creating advisory boards can be a cost-effective endeavor that demands little in the way of management. But, as with any facet of business, challenges invariably arise. These hurdles must be addressed to unlock the full potential of advisory boards.

• Balancing diversity . Diverse perspectives and ideas add immense value to the decision-making process. However, there lies a challenge within this opportunity: how to strike the right balance.
• Limited interaction with peers and company leadership . It is sometimes difficult to comprehend why members do not participate in the discussion. It’s much more upsetting when you don’t see them socializing with external stakeholders and fellow members.
• Transforming valuable insights into tangible actions . When there’s no clear plan to capture insights and turn them into action, it’s easy for valuable ideas to slip through the cracks. It usually leaves other board members feeling disillusioned, and their engagement wanes as they wonder if their input truly matters.
• Keeping member engagement . While companies may initially launch a robust program with successful meetings, there is often a significant lull between these meetings. During this downtime, both members and internal stakeholders may lose sight of shared goals and outcomes

Key takeaways

• While lacking binding authority, the advisory board’s role provides priceless insights and expertise for robust corporate governance.
• A positive reputation, nurtured by advisory board contributions, fosters increased trust among consumers, partners, and stakeholders, opening doors to new opportunities and partnerships.
• Clear objectives are the cornerstone, guiding the advisory board roles towards defined purposes, be it strategic guidance, market expansion, or problem-solving.
• Maintaining regular communication and feedback keeps advisory board members engaged and ensures their advisory board roles remain relevant

Time to use the modern board management software!

iDeals Board serves board of directors, committee members with a comprehensive suite for governance tools

Are advisory board members paid?

Advisory board members, whether serving on compensation advisory boards or membership advisory boards, are typically unpaid for their roles in advisory board meetings. Unlike board members on boards of directors, they generally do not receive compensation for their services.

What does an advisory board do? 

Advisory board members offer strategic advice and wise counsel to the senior management team. They provide valuable insights into industry trends, business performance, and corporate matters, aiding in the organization’s strategic decisions. 

What are the roles and responsibilities of advisory board members?

Advisory board members provide valuable advice on industry trends, business performance, and corporate matters. They attend meetings to offer high-quality advice and focused input and make efficient and effective strategic decisions. Their significant representation and industry knowledge contribute to the organization’s reputation and success.

Recommended Posts

8 Required Board of Directors Documents for a Successful Meeting March 29.2023 → Read More

Board Governance Trends in 2023 January 2.2023 → Read More

How to Write Bylaws for a Nonprofit: From Vision to Rulebook November 29.2023 → Read More

A download will begin shortly. If the download does not start, click the button below to download the White Paper.

How to Write the Management Team Section of a Business Plan + Examples

Written by Dave Lavinsky

Over the last 20+ years, we’ve written business plans for over 4,000 companies and hundreds of thousands of others have used our business plan template and other business planning materials.

From this vast experience, we’ve gained valuable insights on how to write a business plan effectively , specifically in the management section.

What is a Management Team Business Plan?

A management team business plan is a section in a comprehensive business plan that introduces and highlights the key members of the company’s management team. This part provides essential details about the individuals responsible for leading and running the business, including their backgrounds, skills, and experience.

It’s crucial for potential investors and stakeholders to evaluate the management team’s competence and qualifications, as a strong team can instill confidence in the company’s ability to succeed.

Why is the Management Team Section of a Business Plan Important?

Your management team plan has 3 goals:

• To prove to you that you have the right team to execute on the opportunity you have defined, and if not, to identify who you must hire to round out your current team
• To convince lenders and investors (e.g., angel investors, venture capitalists) to fund your company (if needed)
• To document how your Board (if applicable) can best help your team succeed

What to Include in Your Management Team Section

There are two key elements to include in your management team business plan as follows:

Management Team Members

For each key member of your team, document their name, title, and background.

Their backgrounds are most important in telling you and investors they are qualified to execute. Describe what positions each member has held in the past and what they accomplished in those positions. For example, if your VP of Sales was formerly the VP of Sales for another company in which they grew sales from zero to $10 million, that would be an important and compelling accomplishment to document.

Importantly, try to relate your team members’ past job experience with what you need them to accomplish at your company. For example, if a former high school principal was on your team, you could state that their vast experience working with both teenagers and their parents will help them succeed in their current position (particularly if the current position required them to work with both customer segments).

This is true for a management team for a small business, a medium-sized or large business.

Management Team Gaps

In this section, detail if your management team currently has any gaps or missing individuals. Not having a complete team at the time you develop your business plan. But, you must show your plan to complete your team.

As such, describe what positions are missing and who will fill the positions. For example, if you know you need to hire a VP of Marketing, state this. Further, state the job description of this person. For example, you might say that this hire will have 10 years of experience managing a marketing team, establishing new accounts, working with social media marketing, have startup experience, etc.

To give you a “checklist” of the employees you might want to include in your Management Team Members and/or Gaps sections, below are the most common management titles at a growing startup (note that many are specific to tech startups):

• Founder, CEO, and/or President
• Chief Operating Officer
• Chief Financial Officer
• VP of Sales
• VP of Marketing
• VP of Web Development and/or Engineering
• UX Designer/Manager
• Product Manager
• Digital Marketing Manager
• Business Development Manager
• Account Management/Customer Service Manager
• Sales Managers/Sales Staff
• Board Members

If you have a Board of Directors or Board of Advisors, you would include the bios of the members of your board in this section.

A Board of Directors is a paid group of individuals who help guide your company. Typically startups do not have such a board until they raise VC funding.

If your company is not at this stage, consider forming a Board of Advisors. Such a board is ideal particularly if your team is missing expertise and/or experience in certain areas. An advisory board includes 2 to 8 individuals who act as mentors to your business. Usually, you meet with them monthly or quarterly and they help answer questions and provide strategic guidance. You typically do not pay advisory board members with cash, but offering them options in your company is a best practice as it allows you to attract better board members and better motivate them.

Management Team Business Plan Example

Below are examples of how to include your management section in your business plan.

Key Team Members

Jim Smith, Founder & CEO

Jim has 15 years of experience in online software development, having co-founded two previous successful online businesses. His first company specialized in developing workflow automation software for government agencies and was sold to a public company in 2003. Jim’s second company developed a mobile app for parents to manage their children’s activities, which was sold to a large public company in 2014. Jim has a B.S. in computer science from MIT and an M.B.A from the University of Chicago

Bill Jones, COO

Bill has 20 years of sales and business development experience from working with several startups that he helped grow into large businesses. He has a B.S. in mechanical engineering from M.I.T., where he also played Division I lacrosse for four years.

We currently have no gaps in our management team, but we plan to expand our team by hiring a Vice President of Marketing to be responsible for all digital marketing efforts.

Vance Williamson, Founder & CEO

Prior to founding GoDoIt, Vance was the CIO of a major corporation with more than 100 retail locations. He oversaw all IT initiatives including software development, sales technology, mobile apps for customers and employees, security systems, customer databases/CRM platforms, etc. He has a  B.S in computer science and an MBA in operations management from UCLA.

We currently have two gaps in our Management Team: 

A VP of Sales with 10 years of experience managing sales teams, overseeing sales processes, working with manufacturers, establishing new accounts, working with digital marketing/advertising agencies to build brand awareness, etc. 

In addition, we need to hire a VP of Marketing with experience creating online marketing campaigns that attract new customers to our site.

How to Finish Your Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your business plan?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Click here to finish your business plan today.

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.

Click here to see how Growthink’s professional business plan consulting services can create your business plan for you.  

Other Resources for Writing Your Business Plan

• How to Write an Executive Summary
• How to Expertly Write the Company Description in Your Business Plan
• How to Write the Market Analysis Section of a Business Plan
• The Customer Analysis Section of Your Business Plan
• Completing the Competitive Analysis Section of Your Business Plan
• Financial Assumptions and Your Business Plan
• How to Create Financial Projections for Your Business Plan
• Everything You Need to Know about the Business Plan Appendix
• Business Plan Conclusion: Summary & Recap

Other Helpful Business Plan Articles & Templates

• Pre-Markets
• U.S. Markets
• Cryptocurrency
• Futures & Commodities
• Funds & ETFs
• Health & Science
• Real Estate
• Transportation
• Industrials

Small Business

Personal Finance

• Financial Advisors
• Options Action
• Buffett Archive
• Trader Talk
• Cybersecurity
• Social Media
• CNBC Disruptor 50
• White House
• Equity and Opportunity
• Business Day Shows
• Entertainment Shows
• Full Episodes
• Latest Video
• CEO Interviews
• CNBC Documentaries
• CNBC Podcasts
• Digital Originals
• Live TV Schedule
• Trust Portfolio
• Trade Alerts
• Meeting Videos
• Homestretch
• Jim's Columns
• Stock Screener
• Market Forecast
• Options Investing
• Chart Investing

Credit Cards

Credit Monitoring

Help for Low Credit Scores

All Credit Cards

Find the Credit Card for You

Best Credit Cards

Best Rewards Credit Cards

Best Travel Credit Cards

Best 0% APR Credit Cards

Best Balance Transfer Credit Cards

Best Cash Back Credit Cards

Best Credit Card Welcome Bonuses

Best Credit Cards to Build Credit

Find the Best Personal Loan for You

Best Personal Loans

Best Debt Consolidation Loans

Best Loans to Refinance Credit Card Debt

Best Loans with Fast Funding

Best Small Personal Loans

Best Large Personal Loans

Best Personal Loans to Apply Online

Best Student Loan Refinance

All Banking

Find the Savings Account for You

Best High Yield Savings Accounts

Best Big Bank Savings Accounts

Best Big Bank Checking Accounts

Best No Fee Checking Accounts

No Overdraft Fee Checking Accounts

Best Checking Account Bonuses

Best Money Market Accounts

Best Credit Unions

All Mortgages

Best Mortgages

Best Mortgages for Small Down Payment

Best Mortgages for No Down Payment

Best Mortgages with No Origination Fee

Best Mortgages for Average Credit Score

Adjustable Rate Mortgages

Affording a Mortgage

All Insurance

Best Life Insurance

Best Homeowners Insurance

Best Renters Insurance

Best Car Insurance

Travel Insurance

All Credit Monitoring

Best Credit Monitoring Services

Best Identity Theft Protection

How to Boost Your Credit Score

Credit Repair Services

All Personal Finance

Best Budgeting Apps

Best Expense Tracker Apps

Best Money Transfer Apps

Best Resale Apps and Sites

Buy Now Pay Later (BNPL) Apps

Best Debt Relief

All Small Business

Best Small Business Savings Accounts

Best Small Business Checking Accounts

Best Credit Cards for Small Business

Best Small Business Loans

Best Tax Software for Small Business

Filing For Free

Best Tax Software

Best Tax Software for Small Businesses

Tax Refunds

Tax Brackets

Tax By State

Tax Payment Plans

All Help for Low Credit Scores

Best Credit Cards for Bad Credit

Best Personal Loans for Bad Credit

Best Debt Consolidation Loans for Bad Credit

Personal Loans if You Don't Have Credit

Best Credit Cards for Building Credit

Personal Loans for 580 Credit Score or Lower

Personal Loans for 670 Credit Score or Lower

Best Mortgages for Bad Credit

Best Hardship Loans

All Investing

Best IRA Accounts

Best Roth IRA Accounts

Best Investing Apps

Best Free Stock Trading Platforms

Best Robo-Advisors

Index Funds

Mutual Funds

CNBC WELCOMES NEW MEMBERS TO ITS GLOBAL FINANCIAL WELLNESS ADVISORY BOARD TO HELP THE NETWORK ENGAGE WITH EMERGING AUDIENCES AROUND PERSONAL FINANCE

Arturo Bris, Ph.D. , Director of Worldwide Competitiveness Center & Professor of Finance, IMD;  Hau Yee Ng , Executive Director of Junior Achievement Singapore; and  John Hope Bryant , Founder, Chairman & CEO, Operation HOPE & CNBC Contributor   join esteemed group of personal finance & financial literacy experts                                         

ENGLEWOOD CLIFFS, NJ  – (March 27, 2024) – CNBC, the global leader in business news, today announced it is welcoming  Arturo Bris, Ph.D.,  Director of Worldwide Competitiveness Center & Professor of Finance, IMD;  Hau Yee Ng , Executive Director of Junior Achievement Singapore; and  John Hope Bryant , Founder, Chairman & CEO, Operation HOPE to its " Global Financial Wellness Advisory Board ." The group is comprised of today's most innovative experts, thought leaders and influencers dedicated to financial literacy research, policy, and advancement of personal finance education around the world. CNBC's Global Financial Wellness Advisory Board will share their insights and expertise with the CNBC editorial team to help CNBC empower, uplift, and prepare the next generation of audiences for a global economy.  

"Providing financial information to audiences around the world is core to our business at CNBC as we believe it can put people on a path towards financial security and financial growth," said KC Sullivan, President, CNBC. "We are partnering with this global collective of experts on our Financial Wellness Advisory Board to help more people live out their ambitions."  

Members of CNBC's Global Financial Wellness Advisory Board include:  

• Sheila Bair , Former Chair, Federal Deposit Insurance Corporation (FDIC)
• Arturo Bris, Ph.D.,  Director, World Competitiveness Center & Professor of Finance, IMD
• John Hope Bryant , Founder, Chairman & CEO, Operation HOPE, CNBC Contributor
• Martin Cabrera, Jr. , CEO & Founder, Cabrera Capital Markets/Cabrera Capital Partners
• Deepak Chopra, M.D. , Founder, Chopra Foundation/Chopra Global; Clinical Professor of Family Medicine & Public Health, UCSD
• Brandon Copeland , Former NFL Linebacker; Entrepreneur; Professor; Philanthropist; Investor 
• Yanely Espinal , Director of Educational Outreach, Next Gen Personal Finance
• Billy J. Hensley, Ph.D. , President & CEO, National Endowment for Financial Education
• George James, Psy.D., LMFT , Founder & CEO, George Talks, LLC
• Brad Klontz, Psy.D.,   CFP,  Managing Principal, Your Mental Wealth Advisors; Associate Professor of Practice, Creighton University Heider College of Business
• Laura Levine , President & CEO, Jump$tart Coalition for Personal Financial Literacy
• Joanne Li, Ph.D., CFA , Chancellor, The University of Nebraska at Omaha
• Annamaria Lusardi, Ph.D. , Founder & Academic Director, Global Financial Literacy Excellence Center
• Nan J. Morrison , President & CEO, Council for Economic Education
• Hau Yee Ng , Executive Director, Junior Achievement Singapore
• Tim Ranzetta , Co-Founder, Next Gen Personal Finance
• Walter A. Tobin, Ph.D.,  President & CEO, Orangeburg-Calhoun Technical College 

For more information about CNBC's financial literacy and personal finance information, please visit  CNBC.com/YourMoney.  

CNBC is the recognized world leader in business news, providing real-time financial market coverage and business content consumed by more than half a billion people per month across all platforms. The network's 15 live hours a day of news programming in North America (weekdays from 5:00 a.m. - 8:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC at night features a mix of reality programming, CNBC's highly successful series produced exclusively for CNBC and a number of distinctive in-house documentaries.  

CNBC also offers content through its vast portfolio of digital products such as: CNBC.com, which provides financial market news and information to CNBC's investor audience; CNBC Make It, a digital destination focused on making you smarter about how you earn, save and spend your money; CNBC PRO, a premium service that provides in-depth access to Wall Street; a suite of CNBC mobile apps for iOS and Android devices; Amazon Alexa, Google Assistant and Apple Siri voice interfaces; and streaming services including Apple TV, Roku, Amazon Fire TV, Android TV and Samsung Smart TVs. To learn more, visit  cnbc.com/digital-products .  

Members of the media can receive more information about CNBC and its programming on the NBCUniversal Media Village Web site at  nbcumv.com/programming/cnbc . For more information about NBCUniversal, please visit  NBCUniversal.com . 

MEDIA CONTACTS

Eden Kyle | [email protected]

Steph Hirlemann | [email protected]

Melissa Castro | [email protected]  

2024 Yale SOM Alumni Advisory Board Nominees

The Yale School of Management Alumni Advisory Board represents the over 11,000 Yale SOM alumni within the Yale SOM Alumni Network. The Board’s mission is to advance the values and mission of SOM, to collaborate with and counsel SOM leadership, and to engage with alumni, students, and greater Yale.  The Yale School of Management Alumni Advisory Board is dedicated to ensuring our alumni are heard and engaged with SOM’s mission to educate leaders for business and society. 

The slate of proposed nominees to join the Yale SOM Alumni Advisory Board includes a broad range of highly accomplished individuals with careers exemplifying leadership in business and society, and with demonstrated service and commitment to Yale SOM. The nominees were selected following an open call for nominations from the broader alumni community, followed by a thorough evaluation process by the Alumni Advisory Board.

The proposed nominees to join the Yale School of Management Alumni Advisory Board are:  

Richard Dietrich III ’97 

Jessica Strauss ’09

Pascal Rogers Su ’22

Please vote on the confirmation of the slate of nominees to the Yale SOM Alumni Advisory Board for a three-year term beginning in June 2024.  You may either approve the appointment of the full slate of nominees, withhold your approval from the entire slate of nominees, approve only some of the nominees, or abstain.

Thank you for participating in the confirmation of our new Alumni Advisory Board Members.

The nominees’ statements of interest are included below.

To learn more about the Yale SOM Alumni Advisory Board .

To contact the Yale SOM Alumni Advisory Board, please email: [email protected]

I graduated from Yale SOM in 1997. When I arrived in the Fall of 95, I did not expect just how big an impact the school and community would have on my life. This was the old Yale SOM, when the degree was an MPPM (Masters in Public and Private Management). It was in the old building with the Hall of Mirrors and lower floor computer lab. It was a a place of warmth and togetherness. I met my wife at SOM, both getting to know each other during crew practices on the Housatonic River or at Yale's Payne Whitney Gym.  What had separately attracted both of us to Yale for graduate school was the focus that it had on the public sector and on making business more considerate of a double bottom line, of doing good while doing well. By the time we graduated, Yale offered the choice of an MBA instead of MPPM and from then on it was an MBA. My life after business school has included a lot of work in the public sector, as well as work to bring business solutions to provide for the public good. I could not imagine a better education for this path. At the same time it was the experience at SOM that pushed me along in these directions.  Now in its current incredible space SOM continues with its original DNA, offering an expanded yet still warm community of togetherness. SOM is a world class business school, offering the leaders of tomorrow exactly what they need. I want to give back further to this community by serving on the SOM Alumni Advisory Board.

I am delighted to express my keen interest in serving on the Yale School of Management (SOM) Alumni Advisory Board and I appreciate the opportunity to share my commitment, past volunteer involvement, and the unique skills I will bring to the table. My connection to Yale SOM has been profound, extending far beyond the academic realm. As an engaged and proud alumna, I have actively sought opportunities over the past 15 years to give back to the university that has both been instrumental in shaping my personal and professional trajectory as well as enhancing its ranking across full-time MBA programs. • Regarding career mentorship , I have been actively involved in mentoring both current SOM students and alumni who are navigating career prospects in my field and lending support to those seeking to move to Canada. I believe that anything is possible with the right coach and it has been my pleasure to actively help those that are reaching out. • Regarding global chapters and for the broader Yale community, I have hosted numerous alumni events in Ottawa and have been leading our unofficial Yale Alumni Chapter (I’ll shortly formalize this chapter). This engagement has enabled me to foster collaboration with the Toronto alumni chapter and serve as a liaison for those seeking to be more active within our SOM community. • Regarding promoting Yale SOM , it has been an honour for me to have engaged SOM faculty on contract. In doing so, I foster academic research by expanding SOM’s visibility. I have ensured that any SOM research is fully credited so as to secure the assets of the University and encouraged my colleagues to further engage with SOM faculty and researchers. I continue to learn so much from the brilliant minds even still! These experiences have afforded me the chance to engage with current students, reconnect with fellow alumni, and contribute to the vibrant community spirit that defines SOM. Through my involvement, I have witnessed the impact of our alma mater on individuals' lives and the broader community, reinforcing my belief in the Yale SOM’s mission, vision, and values. If selected to serve on the Alumni Advisory Board, I bring a unique set of skills and perspectives developed through my professional journey and volunteer engagements. My background in public sector management and leadership has provided me with a strategic understanding of key challenges that SOM faces including a competitive recruiting landscape, retention of integral faculty, the role of AI as it regards research and asset securitization, and SOM’s place in the broader international community. I am eager to leverage this expertise in contributing to the board's objectives.  One of my strengths lies in coordinating complex teams. In my current role within the Government of Canada, I lead a large inter-departmental team of 40 people. This team further coordinates stakeholder inputs from the private sector, Indigenous communities, and sub-national governments to deliver a large government policy as part of this government’s election platform and mandate commitments. My leadership style and team building capabilities through this initiative earned me the highest award in my department. These skills have been honed through my professional experiences, and I am confident in their applicability to the committees within the Alumni Advisory Board. Whether it be shaping admissions policies, providing career guidance, enhancing communications strategies, fostering global connections, or participating in the nominating process, I am enthusiastic about contributing meaningfully to the growth and success of Yale SOM. In addition to my skills, my perspective as an alumna who has navigated the challenges and opportunities post-graduation starting with the housing crisis in 2008 to the current complex geopolitical environment will bring a valuable dimension to the Alumni Advisory Board. I understand the evolving needs of alumni in different stages of their lives and careers, and I am committed to ensuring that the Alumni Advisory Board remains responsive to the diverse interests and aspirations of our alumni community. In conclusion, my dedication to Yale SOM, coupled with my experiences and skills, positions me as a passionate and capable candidate for the Alumni Advisory Board. I am excited about the prospect of contributing to the university's legacy and sustaining a strong alumni network.

My journey with Yale SOM has been a profound and transformative one, and I am dedicated to giving back to the institution that has played a pivotal role in shaping my career. Over the years, I have actively engaged in various volunteer roles that have deepened my connection to the Yale SOM community and allowed me to witness the incredible impact of our alumni network. As a Career Advisor with the Career Development Office, I had the privilege of guiding current students through the intricacies of their professional paths. I firmly believe that our alumni network's strength lies in our ability to support one another in achieving our career goals. With my background as a CPA and CFA, I bring a strong financial skillset to the table that can be invaluable in assisting our alumni community. I am committed to continuing this work on the Alumni Advisory Board, where I aim to contribute to innovative initiatives that cater to the diverse needs of our alumni community, particularly in areas where financial expertise is crucial. In my role as an Admissions Interviewer, I have had the honor of playing a part in selecting the next generation of leaders who will carry forward Yale SOM's values and mission. This experience has given me a profound appreciation for maintaining the high standards and values that make Yale SOM a world-class institution. I am eager to bring this perspective to the Alumni Advisory Board, where I can contribute to discussions on strategies for upholding the school's unique identity and reputation. Additionally, my involvement as a member of the Reunion Planning Committee has allowed me to witness the power of bringing alumni together to celebrate shared experiences and accomplishments. Reunions serve as a critical opportunity for alumni to reconnect with each other, renew their ties to the school, and reinforce their commitment to our shared values. My financial expertise has proven invaluable in budgeting and financial planning for these events, ensuring they are financially sound and provide meaningful experiences for all participants. Joining the Yale SOM Alumni Advisory Board would be a natural extension of my commitment to giving back to the school that has profoundly influenced me as a leader. My experiences as a Career Advisor, Admissions Interviewer, and Reunion Planning Committee member have allowed me to witness the direct impact of alumni engagement on the Yale SOM community. I am excited about the opportunity to leverage my financial skillset, dedication, and passion to contribute to the strategic direction and initiatives of the Alumni Advisory Board. Thank you for considering my application. I look forward to the opportunity to collaborate with the Board, leveraging my financial expertise to further strengthen our alumni network and the school's impact on society while continuing to support Yale SOM's mission.

• Share full article

Advertisement

Supported by

New York Takes Crucial Step Toward Making Congestion Pricing a Reality

The board of the Metropolitan Transportation Authority voted to approve a new $15 toll to drive into Manhattan. The plan still faces challenges from six lawsuits before it can begin in June.

By Winnie Hu and Ana Ley

New York City completed a crucial final step on Wednesday in a decades-long effort to become the first American city to roll out a comprehensive congestion pricing program, one that aims to push motorists out of their cars and onto mass transit by charging new tolls to drive into Midtown and Lower Manhattan.

The program could start as early as mid-June after the board of the Metropolitan Transportation Authority, the state agency that will install and manage the program, voted 11-to-1 to approve the final tolling rates, which will charge most passenger cars $15 a day to enter at 60th Street and below in Manhattan. The program is expected to reduce traffic and raise $1 billion annually for public transit improvements.

It was a historic moment for New York’s leaders and transportation advocates after decades of failed attempts to advance congestion pricing even as other gridlocked cities around the world, including London, Stockholm and Singapore, proved that similar programs could reduce traffic and pollution.

While other American cities have introduced related concepts by establishing toll roads or closing streets to traffic, the plan in New York is unmatched in ambition and scale.

Congestion pricing is expected to reduce the number of vehicles that enter Lower Manhattan by about 17 percent, according to a November study by an advisory committee reporting to the M.T.A. The report also said that the total number of miles driven in 28 counties across the region would be reduced.

“This was the right thing to do,” Janno Lieber, the authority’s chairman and chief executive, said after the vote. “New York has more traffic than any place in the United States, and now we’re doing something about it.”

Congestion pricing has long been a hard sell in New York, where many people commute by car from the boroughs outside of Manhattan and the suburbs, in part because some of them do not have access to public transit.

New York State legislators finally approved congestion pricing in 2019 after Gov. Andrew M. Cuomo helped push it through. A series of recent breakdowns in the city’s subway system had underscored the need for billions of dollars to update its aging infrastructure.

It has taken another five years to reach the starting line. Before the tolling program can begin, it must be reviewed by the Federal Highway Administration, which is expected to approve it.

Congestion pricing also faces legal challenges from six lawsuits that have been brought by elected officials and residents from across the New York region. Opponents have increasingly mobilized against the program in recent months, citing the cost of the tolls and the potential environmental effects from shifting traffic and pollution to other areas as drivers avoid the tolls.

A court hearing is scheduled for April 3 and 4 on a lawsuit brought by the State of New Jersey, which is seen as the most serious legal challenge. The mayor of Fort Lee, N.J., Mark J. Sokolich, has filed a related lawsuit.

Four more lawsuits have been brought in New York: by Ed Day, the Rockland County executive; by Vito Fossella, the Staten Island borough president, and the United Federation of Teachers; and by two separate groups of city residents.

Amid the litigation, M.T.A. officials have suspended some capital construction projects that were to be paid for by the program, and they said at a committee meeting on Monday that crucial work to modernize subway signals on the A and C lines had been delayed.

Nearly all the toll readers have been installed, and will automatically charge drivers for entering the designated congestion zone at 60th Street or below. There is no toll for leaving the zone or driving around in it. Through traffic on Franklin D. Roosevelt Drive and the West Side Highway will not be tolled.

Under the final tolling structure, which was based on recommendations by the advisory panel, most passenger vehicles will be charged $15 a day from 5 a.m. to 9 p.m. on weekdays, and from 9 a.m. to 9 p.m. on weekends. The toll will be $24 for small trucks and charter buses, and will rise to $36 for large trucks and tour buses. It will be $7.50 for motorcycles.

Those tolls will be discounted by 75 percent at night, dropping the cost for a passenger vehicle to $3.75.

Fares will go up by $1.25 for taxis and black car services, and by $2.50 for Uber and Lyft. Passengers will be responsible for paying the new fees, and they will be added to every ride that begins, ends or occurs within the congestion zone. There will be no nighttime discounts. (The new fees come on top of an existing congestion surcharge that was imposed on for-hire vehicles in 2019.)

The tolls will mostly be collected using the E-ZPass system. Electronic detection points have been placed at entrances and exits to the tolling zone. Drivers who do not use an E-ZPass will pay significantly higher fees — for instance, $22.50 instead of $15 during peak hours for passenger vehicles.

Emergency vehicles like fire trucks, ambulances and police cars, as well as vehicles carrying people with disabilities, were exempted from the new tolls under the state’s congestion pricing legislation .

As for discounts, low-income drivers who make less than $50,000 annually can apply to receive half off the daytime toll after their first 10 trips in a calendar month. In addition, low-income residents of the congestion zone who make less than $60,000 a year can apply for a state tax credit.

All drivers entering the zone directly from four tolled tunnels — the Lincoln, Holland, Hugh L. Carey and Queens-Midtown — will receive a “crossing credit” that will be applied against the daytime toll. The credit will be $5 round-trip for passenger vehicles, $12 for small trucks and intercity and charter buses, $20 for large trucks and tour buses, and $2.50 for motorcycles. No credits will be offered at night.

Grace Ashford contributed reporting.

Winnie Hu is a Times reporter covering the people and neighborhoods of New York City. More about Winnie Hu

Ana Ley is a Times reporter covering New York City’s mass transit system and the millions of passengers who use it. More about Ana Ley

Egan-Jones backs activist Peltz for Disney's board as proxy battle rages

• Walt Disney Co Follow

The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here.

Reporting by Arsheeya Bajwa in Bengaluru; Editing by Maju Samuel

Our Standards: The Thomson Reuters Trust Principles. , opens new tab

The U.S. government has asked the Mexican government to review allegations that a parts factory in that Nuevo Leon has denied workers their labor rights, the office of the U.S. Trade Representative said on Monday.

T. Rowe Price backs Disney directors in boardroom challenge with hedge funds

Mutual fund firm T. Rowe Price , which owns roughly 11.7 million shares in Walt Disney , said it has voted for the entertainment giant's directors, dealing a blow to activist hedge funds Trian Fund Management and Blackwells Capital as they seek board seats.