What is an Advisory Board?

An advisory board is a group of people who give advice and help to a company, organization, or project. The people on an advisory board are called advisors. They are not part of the company or group’s day-to-day work. Instead, they meet occasionally to talk about important things and offer their ideas.

Advisory boards are different from boards of directors. A board of directors can make choices and tell the company what to do, but an advisory board does not have this power. Advisory boards are there to give advice, but the company does not have to do what the advisors say.

Why do companies have advisory boards?

Companies have advisory boards for a few reasons:

To get advice from smart people who know a lot about something
To help the company think about the future and make good plans
To make the company look better by having well-known or respected people as advisors

Having an advisory board can be helpful for a company, especially if it is new or trying to do something new. The advisors can help the company avoid mistakes and give ideas for improvement.

Who is on an advisory board?

The people on an advisory board are usually chosen because they know much about something important to the company. This could be things like:

The kind of work the company does (like science, computers, or making things)
The people the company sells to (like kids, older adults, or people in certain places)
How to run a company well (like how to make money, get people to work for you, or follow the rules)

Advisors are often people like:

Teachers at colleges or universities
People who used to be in charge of big companies
People who work for the government
Very smart people in their field

The company picks advisors who it thinks can help it the most. It wants people who will tell it the truth and give good ideas, even if they disagree.

What does an advisory board do?

An advisory board does a few main things:

Meets every so often to talk about the company and give advice
Look at the company’s plans and tell them if they think it is a good idea or not
It helps the company meet new people who could help them like other companies to work with
Answers questions and helps solve problems when the company is not sure what to do

Advisors are not there every day to tell the company what to do. The meetings often happen every few months or a few times a year. When advisors are not at meetings, they can also talk to the company in other ways, like email or phone calls.

How does an advisory board work?

Companies usually have rules for how their advisory board works. These rules are sometimes called a “charter.” The charter says things like:

How many advisors there will be
How long advisors stay on the board
How often the board meets
What advisors get paid (sometimes just a little, sometimes a lot)
What advisors are supposed to do

Usually, one person from the company is in charge of the advisory board. This person plans the meetings, tells the advisors what the company needs help with, and ensures everything runs smoothly.

At the meetings, the company tells the advisors what has happened and what they plan to do. The advisors ask questions, give their thoughts, and offer ideas. The meeting is a chance for everyone to talk openly and honestly.

After the meeting, the advisors might have more ideas or advice to share. They can write these to the company or talk more on the phone.

The company takes all the advice and decides what to do with it. The advisors cannot force the company to do anything, but smart companies listen carefully to what their advisors say.

Why be an advisor?

People agree to be on advisory boards for a few reasons:

They want to help the company do well
They think it will be interesting and they will learn new things
It is a good thing to have on their resume
They might get paid or get stock in the company

Being an advisor can be a fun way to use your skills and knowledge to help others. It is not as much work as a real job, but it can still be rewarding.

Are there any downsides?

While advisory boards can be very helpful, there are some possible downsides:

If the company does not listen to the advisors, it can be frustrating
If something bad happens to the company, people might blame the advisors even though they are not in charge
It takes time to be an advisor, and people are often busy with their real jobs, too

So, while being an advisor or having an advisory board can be great, everyone needs to understand what the role is and is not.

The future of advisory boards

Advisory boards are very common now and will likely continue to be important. As the world changes, companies will always need smart people to help them decide what to do.

Some things that might change about advisory boards in the future are:

More meetings might happen online instead of in person
There might be advisory boards for new kinds of companies or organizations, not just businesses
Advisors might be paid in new ways, like with cryptocurrency

But no matter what changes, the basic idea will stay the same: advisory boards are a way for companies to get help and advice from smart people who want them to do well.