An Advisory Board, unlike a Board of Directors has neither legal obligation nor authority to give direction with respect to the firm. They bear no fiduciary duty. Therefore they are able to focus on giving seasoned business advice in a way that a more formal Board of Directors could not provide.
In terms of numbers I would suggest your initial Board membership be restricted to three to six individuals as sufficient for small business. As you business grows, so can your Advisory Board increase in size?
The composition will be folks who are well respected within the community and within the industry. Recently retired executives from larger firms would make a “good feeding ground” to identify sound potential members for your Board.
They bring with them credibility, connections within the community, ecosystem intelligence, and may even in the fullness of time become potential investors. It is been my experience that a process of “bonding” takes place between the members of the Advisory Board and your firm. They will develop a passion, a love for your firm and will take some form of “unofficial” ownership for your firm’s well being. Similar to the Big Sister Program!
Because of the potential for conflict of interest I do not recommend that you include your lawyers, accountants, bank managers, nor customers on your Board. You have and pay for their advice as required in any event. Focus on other entrepreneurs and vendors [it gives them a vested interest in the well-being of the company], … people who have done it from scratch. They are the “been there, done that” folks.” You want people who can look at your firm’s issues without ego or emotion getting in the way.
