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Advisory Board Basics © 2009  Avalon Consulting Group
What is an Advisory Board <ul><li>Special group of advisors lending insight and counsel </li></ul><ul><li>Independent and ...
What is an Advisory Board (cont.) <ul><li>Typically three to four members (smaller the better) </li></ul><ul><li>No legal ...
Why Create an Advisory Board <ul><li>Supplement management’s knowledge and experience </li></ul><ul><li>Lend insight and p...
When is the right time to form an Advisory Board <ul><li>If you company has gone as far as management’s expertise/skills c...
When Not to Consider an Advisory Board <ul><li>Not ready, willing or able to: </li></ul><ul><li>Confide in others about yo...
Whom Should you Select  as an Advisor <ul><li>Someone who: </li></ul><ul><li>Has knowledge and experience not currently po...
How Do You Begin Process of Selecting Advisor <ul><li>Identify knowledge and experience needed to achieve goals over the n...
How Should Owners Interview  an Advisor <ul><li>Follow a similar process that you would for any high level employee, inclu...
How Should Owners Interview  an Advisor (cont.) <ul><li>Give tour of your facility or site, describe your business and com...
How to Invite Someone to Become an Advisor <ul><li>Letter of invitation setting forth proposed expectations and compensati...
Compensation <ul><li>Why pay members of the Advisory Board? </li></ul>
Compensation (cont.) <ul><li>Suggested compensation: </li></ul><ul><li>Retainer – One year (based on size of the company b...
How to Structure Advisory  Board Meetings <ul><li>Establish specific regular schedule well in advance (quarterly recommend...
Best Practices: How to Get the Most Out of Your Advisory Board <ul><li>Do not confuse it with your statutory board of dire...
Best Practices: How to Get the Most Out of Your Advisory Board (cont.) <ul><li>2. Select Advisors on the basis of compleme...
Best Practices: How to Get the Most Out of Your Advisory Board (cont.) <ul><li>3.  Do not clutter your agenda </li></ul><u...
Best Practices: How to Get the Most Out of Your Advisory Board (cont.) <ul><li>5.  Expose your skeletons </li></ul><ul><li...
How Can An Advisory Board  Help You?
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Advisory Board Basics

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How to establish an advisory board for your organization.

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Advisory Board Basics

  1. 1. Advisory Board Basics © 2009 Avalon Consulting Group
  2. 2. What is an Advisory Board <ul><li>Special group of advisors lending insight and counsel </li></ul><ul><li>Independent and objective </li></ul><ul><li>Offer advice and mentorship </li></ul><ul><li>Provide knowledge or experience not present among management </li></ul>
  3. 3. What is an Advisory Board (cont.) <ul><li>Typically three to four members (smaller the better) </li></ul><ul><li>No legal obligations or responsibilities of a statutory board </li></ul><ul><li>Does not replace the company’s statutory board </li></ul>
  4. 4. Why Create an Advisory Board <ul><li>Supplement management’s knowledge and experience </li></ul><ul><li>Lend insight and perspective to business strategies, leaving implementation to paid management or consultants </li></ul><ul><li>Help determine benefits and risks </li></ul><ul><li>Generate contacts and potential resources </li></ul><ul><li>Assist with succession </li></ul><ul><li>Help hold management accountable </li></ul>
  5. 5. When is the right time to form an Advisory Board <ul><li>If you company has gone as far as management’s expertise/skills can take it </li></ul><ul><li>If your company’s revenue growth has reached a plateau </li></ul><ul><li>If your company anticipates having to deal with a significant issue within the next year </li></ul><ul><li>NOW! </li></ul>
  6. 6. When Not to Consider an Advisory Board <ul><li>Not ready, willing or able to: </li></ul><ul><li>Confide in others about yourself and your business </li></ul><ul><li>Present key strategic issues for consideration of others </li></ul><ul><li>Accept criticism </li></ul><ul><li>Take time to prepare for meetings and communicate </li></ul>
  7. 7. Whom Should you Select as an Advisor <ul><li>Someone who: </li></ul><ul><li>Has knowledge and experience not currently possessed by management (“complementary competencies”) </li></ul><ul><li>Has familiarity with or willing to learn about your company’s industry </li></ul><ul><li>Is compatible with existing management </li></ul><ul><li>Is willing to “roll up sleeves” and work </li></ul><ul><li>Can be trusted to maintain confidentiality </li></ul>
  8. 8. How Do You Begin Process of Selecting Advisor <ul><li>Identify knowledge and experience needed to achieve goals over the next three years, but not present, among current management </li></ul><ul><li>Interview several candidates for each role that is represented on the advisory board </li></ul><ul><li>Involve several members of ownership and management in the process </li></ul>
  9. 9. How Should Owners Interview an Advisor <ul><li>Follow a similar process that you would for any high level employee, including: </li></ul><ul><li>Obtain a resume in advance </li></ul><ul><li>Determine whether resume reflects needed knowledge and experience </li></ul><ul><li>Interview to confirm knowledge and experience and judge other factors </li></ul>
  10. 10. How Should Owners Interview an Advisor (cont.) <ul><li>Give tour of your facility or site, describe your business and communicate honestly your company </li></ul><ul><li>Communicate your expectations </li></ul><ul><li>Assess your comfort with taking counsel from this person as an advisor </li></ul>
  11. 11. How to Invite Someone to Become an Advisor <ul><li>Letter of invitation setting forth proposed expectations and compensation </li></ul><ul><li>Confidentiality agreement </li></ul><ul><li>Indemnification agreement </li></ul>
  12. 12. Compensation <ul><li>Why pay members of the Advisory Board? </li></ul>
  13. 13. Compensation (cont.) <ul><li>Suggested compensation: </li></ul><ul><li>Retainer – One year (based on size of the company by annual revenue): </li></ul><ul><li>$0-$3 million……………………………$1,000 </li></ul><ul><li>$3-$5 million…………………………….$2,000 </li></ul><ul><li>$5-$10 million…………………………...$3,000 </li></ul><ul><li>Greater than $10 million…………..$4,000 </li></ul><ul><li>Meetings – Pay Advisor for each suggested quarterly meeting </li></ul>
  14. 14. How to Structure Advisory Board Meetings <ul><li>Establish specific regular schedule well in advance (quarterly recommended) </li></ul><ul><li>Prepare detailed agenda for key issues </li></ul><ul><li>Educate advisors on prior year performance and current operating plans </li></ul><ul><li>Forward relevant materials well in advance of meeting </li></ul>
  15. 15. Best Practices: How to Get the Most Out of Your Advisory Board <ul><li>Do not confuse it with your statutory board of directors or a board of managers </li></ul><ul><li>Statutory board authorizes or gives authority </li></ul><ul><li>Advisory board advises or gives advice </li></ul>
  16. 16. Best Practices: How to Get the Most Out of Your Advisory Board (cont.) <ul><li>2. Select Advisors on the basis of complementary competencies. Do not select on the basis of friendships </li></ul><ul><li>Determine where you want to be in 3 years </li></ul><ul><li>Select advisors based on knowledge and skills needed to meet your goals </li></ul>
  17. 17. Best Practices: How to Get the Most Out of Your Advisory Board (cont.) <ul><li>3. Do not clutter your agenda </li></ul><ul><li>Focus on key topics that you need/want input </li></ul><ul><li>Focus on strategic issues </li></ul><ul><li>4. Show Advisors your business </li></ul><ul><li>Walk them through </li></ul><ul><li>Let them touch, feel, see and smell </li></ul>
  18. 18. Best Practices: How to Get the Most Out of Your Advisory Board (cont.) <ul><li>5. Expose your skeletons </li></ul><ul><li>Share the company story – who are you, where you have been, where you want to go </li></ul><ul><li>Seek advice of what they WOULD do if they were YOU </li></ul><ul><li>6. Communicate, Communicate, Communicate </li></ul>
  19. 19. How Can An Advisory Board Help You?

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