What Is a Board of Advisers? With Importance and Duties

A board of advisers is an important element of scaling a business. Being a board member can be very rewarding, as they're fundamental in helping organisations develop. Understanding the roles and benefits of having a group of advisers can help you ascertain if you have the right skills and industry knowledge to join one. In this article, we discuss the definition of an advisory board, review its importance and the members' duties and explain the difference between an advisory board and a board of directors.

What is a board of advisers?

A board of advisers consists of several professionals who give advice to business owners, directors and executives to help them improve their management strategies. Advisory boards are typically less formal than a board of directors and have less influence over business operations. Their purpose is to guide rather than instruct, and they may focus on helping managers improve operations in specific business areas.

To ensure managers consider all areas of business development, advisory boards usually contain legal, human resources, marketing and accounting professionals. An advisory board stays updated on industry developments so members can provide advice that helps businesses develop in current economic climates.

Related: What Is the Role of a Board of Directors? (Plus FAQs)

Advisory board duties

Here's a guide to the typical duties of an advisory board and its members:

Listening to managing directors' ideas and concerns

Executives may share their thoughts with an advisory board before making important business decisions. If you're a board member, managers might present an idea or new process to you and measure your reaction. You may then share your opinions and suggest alternative ideas to help managers meet their key development targets. This duty also involves advisory members ensuring that all decisions align with the business's best practices and code of conduct. You may identify anything that you believe isn't in keeping with the company's values or that may influence the public's perception of an organisation.

Related: How to Become a Career Adviser (A Step-By-Step Guide)

Helping businesses scale

One of an advisory board's key duties is to help organisations scale. Scaling refers to a business increasing its revenue and operations without using more resources than it already uses. You may recommend ways that managers can re-divert their resources to help facilitate scaling.

For example, a business may wish to increase its customer base. A marketing expert advisory board member may propose that the managers redirect some of their resources towards making marketing and advertisement campaigns that attract more customers. By offering this advice, the expert member helps the company increase its profits without spending too much money on extra resources or personnel.

Related: What Is a Business Adviser? (And How to Become One)

Encouraging strategic thinking

Advisory boards aim to provide managers with advice that facilitates better strategic thinking. You can use your industry experience to show leaders the best ways to create new processes that promote business development. You can do this by helping managers secure the correct resources, providing case studies and analysing current business operations to identify areas where the organisation can improve. This helps executives understand how to formulate strategies, ensuring they streamline their decision-making process.

Related: Master Your Strategic Thinking Skills in 8 Simple Steps

Establishing organisational best practices

To help managers make smarter business decisions in the future, advisory boards, alongside a board of directors, may help managers establish best practices. These help to guide all subsequent decisions, ensuring leaders consider all the necessary aspects of the business before making a decision, such as budget, resources, available personnel and development objectives. Establishing these best practices can assist businesses in scaling and becoming more competitive. This is because they can help you and the managers reduce spending, increase productivity and improve efficiency.

Related: Performance Management Best Practices (With Benefits)

Evaluating existing performance

One of the most important things that an advisory board handles is evaluating existing performance. This means that you review sales projections against targets and assess current performance against competitors and forecast for the future. Assessing business performance helps managers make more productive plans that can help the business develop. With your evaluations, you can identify areas that require more strategic support and make targeted improvement plans to facilitate business growth.

Mentoring managing directors and executives

Sometimes, you may also mentor managers or senior executives. As advisers typically come from experienced backgrounds, they can provide valuable mentoring that helps managers improve their key leadership skills and other areas that require development. Mentoring can also consist of introducing managers to key industry contacts, which helps them network more effectively. The overall aim of mentoring is to help leaders and executives reach their personal career objectives and enable them to pursue more development opportunities and further scale their businesses.

Importance of board advisers

The value and benefits of an advisory board can vary depending on the type of business and the industry where they operate. Here's a guide to the key reasons these board members are so integral to organisations:

Assist with business development

In many industries, there's a lot of pressure to expand and keep up with competitors. This means it's necessary for company owners and managers to constantly seek more business development opportunities. Having an advisory board helps to facilitate business development, and on the board, you can provide leaders with constructive advice and product feedback from an end-user perspective. This allows business owners to continually improve their operations and remain competitive in their market.

• What Are Business Partnerships? (With Types and Definitions)

Improve business profile and reputation

A business's profile is central to attracting investors and business partners, so it's important that owners take constructive steps to maintain a positive company image. Owners may do this by asking an advisory board to help advocate for a business and promote its goods and services. As an advisory board member, you're also central to reputation management, as you can provide consultation services regarding public relations, which can help businesses improve their reputation with customers.

As advisory members are typically known in their fields, they're likely to have key industry contacts that they can introduce to business owners. This helps to boost the company profile and allows business owners to keep up with their competitors.

Provide access to unbiased opinions

Receiving impartial feedback is invaluable for business development, as this ensures managers approach their development areas fairly and without the influence of their own opinions of their business or success. Being unbiased, you can evaluate performance and identify areas for improvement that the business owner isn't aware of, helping them reallocate their resources and identify more effective ways of operating. Providing business owners with impartial opinions is beneficial because your experience means that your advice on leadership style and business strategies is effective.

You can also help professionals to gather various opinions on how to best meet their consumers' needs. This makes it easier for business owners to retain customers and create products and services that cater to a wider demographic.

Fill skill and expertise gaps

If owners handle a very small business, it can be advantageous to have advisory board members that can help fill skill and expertise gaps. As a skilled advisory board member, you can help business owners make more informed and strategic decisions, enabling them to reap more tangible results in the future. If you're an expert board member, you can teach business owners key leadership skills that allow them to effectively manage their teams and streamline operations in the future.

If business owners notice that they have a skills gap, they may discover that members of their advisory board possess the necessary specialist skills to complete certain tasks. That means that business owners can maintain a high standard of output while they're recruiting more skilled professionals.