The Difference Between an Advisory Board and Board of Directors —And Which One Will Help You Grow Your Business

The Difference Between an Advisory Board and Board of Directors —And Which One Will Help You Grow Your Business

Ever wondered why Business Advisory Boards are all the rage? Are you thinking of whether you should join a Board of Directors or a Business Advisory board? 

To answer this question, let's look at the two formats closely, how they are formed, the role they play, and how they will impact your business? There are significant differences between a Business Advisory Board and a Board of Directors. 

An advisory board is a select and diverse group of independent people who provide guidance, support, and advice to each other in the group. They are selected to cover individuals from different fields and industries with expertise to help business owners fill any gaps of knowledge in their management team. 

Unlike a Board of Directors, they provide unbinding advice and are not bound by legal governance codes, making them more informal. Therefore, they are also much more flexible in the way they are formed and structured. 

Why should you join an Advisory Board?

A Business Advisory Board or Peer Advisory Board brings an outside perspective to the problems faced by entrepreneurs and business leaders. These Boards provide them with a safe place to discuss challenges and opportunities to get direction and guidance from other expert members. 

An advisory board, in simple terms, is a shared brain trust that is invaluable in growing a business. In today's dynamic business world, where technology changes at warp speed, companies need a peer advisory group more than ever. It is the shared wisdom that can help avoid tunnel vision and propel a business to new heights. 

Unlike a formal Board of Directors, a business advisory board is not a decision-making entity. Instead, it is more like an educational forum or resource that guides its members by tapping into the shared expertise and experience in various facets of a business. 

A well-formed Business Advisory Group, though informal, will have suggested roles and responsibilities for its members, with regards to providing support and guidance and following a code of conduct. Here are some of the roles and responsibilities the members of an effective advisory board should possess:

1.          Develop a good industry knowledge of all businesses in the group.

2.          Provide unbiased counsel.

3.          Provide insights and new ways of solving problems.

4.          Explore new ideas.

5.          Become a resource for the members.

6.           Hold the members accountable for their goals.

During which stage of business do you need a Business Advisory Board?

No matter what stage of business you are in, you will gain immensely from joining a Business Advisory Board, and here's why:

Some significant benefits you will get from joining a Business Advisory Board:

1.          Have access to a knowledge bank of experts in various fields, and you will draw from a broad range of skills and experience. 

2.          Many of the members in the group would have gone through the challenges or opportunities you are facing, so you can rely on practical business advice and many cases, learn from other peoples' wins and mistakes. 

3.          Attract not only better employees but also investors to your business

4.          Get an outside perspective and often, new ways of doing business you may not have thought of yourself. 

5.          Build strategic partnerships to grow your business. 

6.          Grow your network by tapping into the members' connections

7.          While helping others solve their problems, you may stumble upon a solution or opportunity for your business. 

8.          You can devote this time to working "on" your business rather than "in" your business. 

And, of course, you will never feel alone in your entrepreneurial journey with an expert group of individuals pushing you to achieve your goals. 

Deyan Dimitrov

🧩 Connecting Businesses with the Right Clients & Investors on LinkedIn.

1y

Thanks for sharing, Doug -)

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Mick O'Sullivan P.Eng, MBA, ICD.D

Director, Consultant: Management, Organizational , Corporate Governance

3y

Words of wisdom…..again, Doug!

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