Advisory boards are terrific on many levels. They're useful in providing an objective, third-party viewpoint and reality check on leadership matters, and in filling in knowledge gaps in your organization. Well-placed advisors also bring their credibility and substantial network to new businesses and play an important role in helping them gain momentum.
A functional advisory board should operate as a seamless part of your culture rather than a group of outsiders you happen to assemble periodically. Here are 6 things to keep in mind as you create and solidify your board.
Ideally, your culture will be one in which you pay people fairly for their work. Advisors are no exception. The most common way to compensate advisors is to share a percentage of equity, which can range from 1 to 2 percent depending on the level of involvement. Put all agreements in writing, and while you’re at it, have your advisors sign a nondisclosure and an indemnification clause so they aren’t liable in any business-related lawsuits.
You will get the most value from your advisors if you're honest with them upfront. That means opening your vest about your business’s challenges—cultural and otherwise. Lay out your business plan or short- and long-term goals. Share how you think each particular advisor might be able to help and solicit their feedback. Hopefully, you and your advisors overlap on the most critical values and philosophies.
For more where this came from, head over to the full post at the AMEX Open Forum.