The Benefits of a Board of Advisors
in the Post-Pandemic Period and Beyond
Bombarded by confusing governmental bureaucracy, challenged by daily changes in your work teams, and bewildered about the future path forward in this pandemic?
Wouldn’t it be great to have Jack Welch, the legendary (former) CEO of General Electric as advisor and mentor to your business? You may not be able get Jack Welch as a mentor, but you can develop your own team of advisors to add leverage to your leadership and strategic planning skills. The value of a board of advisors to a business owner or manager (and their successors) lies in the wise judgment, counsel, and advice such board can bring to issues faced by a growing company.
An advisory board can be a life preserver for your business, family, and key employee relationships at a time when everything has gone downhill, like with the black swan events of 2020. This is a group appointed to advise, counsel, and assist the owner/chief executive in the individual leadership of the business. For example, the advisory board’s role could be to assist with mission-critical business issues by:
- Helping to develop policies, strategic plans, and corporate tactics: Reopen the business? Bring workers back to the office? Remote working for all of 2021-22? How to improve the company’s cash position or seek financing sources?
- Providing objective, non-shareholder viewpoints concerning financial and other investments.
- Giving advice on major pandemic recession financial decisions.
- Determining how to work with furloughed or laid-off employees.
- Assisting in the transition of the owner or manager from fully active to inactive, guiding the transfer of wisdom and knowledge, and training family or intra-corporate successors.
Advisory boards that are designed to assist the sole shareholder or CEO should be comprised of independent but trusted outsiders, providing a confidential atmosphere in which to discuss sensitive issues.
Depending on the company size, the optimum number of advisory board members is generally between two and five. Growing companies can always expand their advisory boards. The best advisors are typically other C-suite executives, bankers, attorneys, accountants (usually at the partnership level), and retired business owners who have strong professional and practical experience. Ideally, advisory board members would have direct experience in the specific industry sector of your organization’s business.
Advisors should possess marketing skills, strategic planning skills, financial and analytical skills, multi-business experience, and a positive interest in the success and future of the business. It is helpful to have an attorney knowledgeable in business affairs on the advisory board, but others can be invited to periodic meetings if they are found to offer fresh perspective.
Here is how you can get started.
Step 1 - Select potential board members.
Talk to your current advisors and explain that you are building future success by building a board of advisors. To keep discussions focused and productive, ask for recommendations on key specific issues.
Step 2 - Invite your candidate to join your advisory board.
The following is a letter to a potential advisory board member:
“I am reaching out to invite you to serve as a member of an advisory board I’m forming to assist me in operating my company. I believe that an advisory board can provide valuable benefits for both the company and me personally. I would like for you to consider accepting a position in the group.
The advisory board will be separate and distinct from the company’s board of directors. I’m not asking you to serve in a fiduciary role as a director, but rather in a consultative role as an advisor. The advisory board will not take votes, establish policy, or conduct the company’s business. It will serve as a forum through which I can discuss issues that concern me and gather suggestions from you and other members.
I anticipate that this board will meet periodically – four to six times per year. Each meeting will be held at a time and place that is mutually convenient and will run for about 2 ½ hours. An agenda and any related information will be delivered to you at least one week in advance of each meeting.
I am faced with several important opportunities and difficult decisions that must be addressed over the next year. Your participation at this time would be greatly appreciated. As business conditions change, I will make changes in the composition of the board, dropping some advisors and adding others. By the same token, your participation would be “at will,” and you are free to resign at any time if you so desire.
I am ready to go and plan to have a meeting later this month. I will call you to discuss this further.”
Step 3 - Form your advisory board and organize a meeting.
Using advisors efficiently is key. For starters, pick a date each month or every other month to meet or conduct a video conference. The number of meetings will vary with the needs of the CEO and the firm. The CEO has the obligation to prepare the meeting agendas, and any background reference materials such as financial statements should be sent to all advisors at least one week prior to the meeting to allow time for thoughtful review and consideration.
Selecting and cultivating an effective advisory board can be a big boon to your business, especially during uncertain times. Talented advisors are available and looking for opportunities to assist, and savvy chief executives would be wise to seek out such seasoned counselors.
Pacific Northwest Law Group
firstname.lastname@example.org | email@example.com | Tel. 425-867-0512
The information provided in this article does not, and is not intended to, constitute legal advice.
All information, content, and materials mentioned herein are for general informational purposes only.