It can be lonely at the top, especially for entrepreneurs that feel they have to go at it alone. In some cases, you may have a leadership team and as your business grows, you may reach a point where hiring additional staff is essential. Regardless of the number of employees, size, structure or complexity of the organization, your business’s success ultimately rests on your shoulders. That’s a tough pill to swallow and may lead to some crises, but, it doesn’t have to be that way!

This can be where an advisory board full of subject matter experts fills gaps of knowledge. Advisory board members are not directors in the traditional sense: They do not serve a governance function or represent shareholders or other stakeholders. They simply provide advice to the entrepreneur & leadership team about achieving current business goals. Why have an advisory board versus a board of directors? Simply put: directors direct and advisors advise.

At its most basic level, the advisory board is your sounding board. At its best, the board can provide expertise, guidance and business-development insight, and so much more. In all cases, the advisory board furnishes you with a group of experts who can discuss opportunities, challenges and next steps.

Now, how does one go about creating an advisory board? The following are eight tips for creating an effective advisory board:

1. Determine Your Purpose:

You can use an advisory board to weather current challenges and opportunities. For example, your business has been growing but feels like it is growing a little bit out of your control. It is moving in multiple directions and there is an unlimited number of opportunities presented to you. But, your focus seems to be lacking and the leadership team is busy reacting, and is not able to truly run the business.

An effective board of advisors can help the leadership team focus, and guide them to look at only the promising opportunities that directly align with the business’s vision. They can continually force a tie of activities back to the business’s strategy and growth plans to ensure the business is staying on track.

As an independent group, a board can provide high level guidance and fill any critical knowledge gaps to keep your business on the right path.

2. Recruit Different Opinions:

You don’t need “yes men” disguised as advisory board members. The ideal board has your best interests at heart, because of this, they are not afraid to give advice (even if it contradicts your thoughts). Because the feedback can be brutally honest (trust us, you will appreciate the “tough love” in the long run), you should avoid picking board members who are close friends or family members.

3. Leverage Your Network(s):

Initially, identifying potential board members can seem like a daunting task. Your best approach is to identify people within your personal or professional network with the requisite skills and experience. To the extent a particular need cannot be met by someone in your network, referrals can be sought. The final option is making old-fashioned cold calls.

After identifying potential advisory board candidates, be sure to carefully vet them to ensure that they would be a good fit. They should not only have the technical knowledge but also a desire to help you! Also, don’t discredit good chemistry between yourself and a potential board member.

4. Document, Document, Document:

Board members will be privy to highly confidential information about business plans, intellectual property and trade secrets. Each one should initially complete nondisclosure and conflict of interest agreements. Also, it would be wise to spell out in writing the board’s role, responsibilities and other expectations – have everything documented.

5. Time is Money:

Advisory board members are not contributing their valuable time for money. They become involved as a result of their desire to help, and perhaps feel good about mentoring someone in need of their expertise. It is good practice to provide some form of compensation. Depending on your financial ability, compensation could include meals, travel expenses and a small stipend. Individuals who feel appreciated will put forth their best effort. Often the advisors are paid a fee similar to an hourly rate for a senior executive.

6. Keep the Circle Intimate: 

The value of an advisory board is determined by its members, not its size. Be sure to seek out a maximum of three to five individuals with the necessary skills to meet the current challenges. Over time, critical business issues may change and you may need to seek new members with the needed skills.

Anyone who is no longer relevant or contributing as needed should be retired. Asking anyone to step down is not easy. So setting term limits is a good approach. This will result in less drama and stress and allow you to easily rotate board members as business needs change. After a few years board members have typically provided the depth of their wisdom and changing the composition of the board can breathe new life into the organization.

7. Maximize Value, For Everyone: 

You should treat your advisory board as a vital company asset. Members can provide valuable feedback and recommendations so long as they are prepared before meetings. All relevant information such as business plans, financial statements and other reports should be provided well in advance of board meetings. Details should be planned out ahead of time, including the agenda, meeting location and time, the meal and any audiovisual needs.

8. Maintain Open & Constant Communication:

Advisory boards tend to meet infrequently, perhaps once per quarter. Periodic or infrequent meetings can result in business matters slipping from the top of mind. If you are able to provide your board with interim information such as monthly financial and other reports, board members can remain informed and important details will not likely be missed.