An Advisory Board can be critical for the continuing success, growth and sustainability of a family business.
Here are seven reasons why you might want an Advisory Board for your family business:
- Your industry is evolving and you are not sure the direction your business should be taking. An advisory board can provide you with expert advice and direction that could help your business keep pace with changes.
- You want to be more strategic in the approach for your business but don’t have a forum to deliberate and thoroughly think through new ideas. The right Advisory Board can help you identify the opportunities and assess risks.
- Everyone who is directly involved in senior management has similar views and is prone to following the founder’s lead. The business could benefit from an objective and independent sounding board that could help vet ideas and steer away from unwarranted risks.
- Some of the senior management (or family members involved in the business) struggle to communicate effectively with each other. The Advisory Board platform could help to greatly improve communication and the sharing of ideas.
- There are family members who are not directly involved in the business, but who have experience and/or expertise that would be valuable to the business. The Advisory Board would be a way to take advantage of their expertise in a structured way, without them having to be directly involved in the day to day operation of the business.
- You are not very far along on a plan for the succession of management and if you became disabled or died suddenly, the business would suffer. An Advisory Board can help to provide some continuity until replacement management is put in place and/or the business is sold.
- You want to slow down and be less involved in the business. An Advisory Board could help you to reduce your involvement and it could provide valuable support and guidance for your successors as you do so.
Note that an Advisory Board is different than the formal Board of Directors. Every corporation must have a formal Board of Directors and there are certain legalities, responsibilities and liabilities that apply to a Board of Directors. An Advisory Board does not have such legal requirements and its role and structure is customized for the particular business it supports. As such, it has the potential to have a much greater impact.
Any one of the above seven reasons would be a good reason to have an Advisory Board. In my experience, most family businesses will have many.