You’ve learnt what an advisory board is, now you’re ready to create one. Often in business we want to create things or act on something as soon as possible – the fear of missing an opportunity. However, similar to the way you chose the directors on your board, you want to make sure you are careful and meticulous about the people you invite to become formal advisors. As with any business relationship, you need to be certain that your advisors have your business’ best interest in mind.

1.     Choose Members:

Identify skill sets that are missing from your senior management.  Seek professionals out with these skills. You can find members at a chamber of commerce, through advertising or by using your existing corporate networks.  Try not to use family or friends as they are often yes people. The ‘right’ number of advisors for your business will depend on many factors, including the size, workforce and stage that your business is at. For a small to medium sized business, 3 people is an ideal amount. What you want to avoid is having too many cooks in the kitchen. When it comes to what will influence your business decisions, go for quality over quantity. Once you have found the right members create an Advisory Board Member’s Agreement to clearly set out the length, remuneration and scope of the advisor’s term.

2.     Set Expectations:

Provide your advisors with goals and expectations of their role.  It is often a good idea to create an advisory board handbook.  This will entail how often meetings are to occur and precise objectives. It’s also important to set out any limitations that you might have. The key here is to start the advisor relationship on clear terms. This will help to prevent future disagreements or any confusion about the scope of an advisor’s role. It will also allow the advisor to give you focused advice.

3.     Compensate Your Advisory Board:

Compensation can vary depending on the level of expertise and experience that the advisor is bringing to the table.  Compensation can be in the form of payment, stock options (equity), or simply covering the advisor’s expenses. The experience of being on an advisory board can also benefit the members, which is sometimes a motivator for advisors to offer their expertise free of charge. The advisor relationship is not one of an employee which is why an Advisory Board Member’s Agreement is vital to set out in plain terms the nature and scope of the advisors’ role as well as the agreed remuneration.

4.     Gain the most out of your Advisory Board:

The time that you have with your advisory board is precious and should be utilised to the fullest. This is particularly true if your advisors are volunteering their time and skills. Plan and prepare for meetings, run meetings professionally and provide the advisory board with an agenda before the meeting. This will save time and mean you can get stuck into the substance of your current challenges.  It is also important to respect the board’s contributions. You can do this by following up the meeting with an action plan or a summary of actions that you have taken.

If you’re ready to establish an advisory board for your business or startup, you can use LawPath’s Advisory Board Member’s Agreement.

Unsure where to start? Contact a LawPath consultant on 1800LAWPATH to learn more about customising legal documents, obtaining a fixed-fee quote from our network of 600+ expert lawyers or to get answers to your legal questions.

Dominic Woolrych

Dominic is the CEO of LawPath, dedicating his days to making legal easier, faster and more accessible to businesses. Dominic is a recognised thought-leader in Australian legal disruption, and was recognised as a winner of the 2015 Australian Legal Innovation Index.