Today’s post is by Randy Russon, founder of TOPCFOS
This is Randy Russon and welcome to our blog today. TOP CFOS offers the finest CFO consulting services anywhere in the world to companies who want to take their organization to the top. We absolutely love being a part of your success. We also love to be the catalyst behind your firm’s soaring profits! Today’s blog comes from the Boards category on our website and is entitled Advisory Boards.
I first learned about what Advisory Boards were when I was invited to serve on an Advisory Board of a company owned by a friend of mine. I had never heard of the term before, and I was very intrigued by this idea. Being the avid reader that I am, I went to my Kindle to find a book on what Advisory Boards were. And, I found a most excellent book entitled, Built to Scale: How Top Companies Create Breakthrough Growth through Exceptional Advisory Boards, authored by Marissa Levin. So, what is an Advisory Board?
From Wikipedia we learn, “an advisory board is a body that provides non-binding strategic advice to the management of a corporation, organization, or foundation. The informal nature of an advisory board gives greater flexibility in structure and management compared to the Board of Directors. Unlike the Board of Directors, the advisory board does not have authority to vote on corporate matters or bear legal fiduciary responsibilities. Many new or small businesses choose to have advisory boards in order to benefit from the knowledge of others, without the expense or formality of the Board of Directors.”
In forming your Board of Advisors, Marissa quotes from Amy Vanderbilt, Ph.D. who recommends, “… Make sure whomever you put on your board is brutally honest, won’t hold anything back, and will bring you ideas that push the boundary.” I totally agree with this, especially the part about finding a board member who is “brutally honest”. Honest feedback is immeasurable. Further, Marissa suggests looking for board members who have already taken a company to the level you are seeking to take yours. In other words, they have been there and done that. Once board members are found, Marissa gives guidance on monetary and non-monetary compensation models.
She says, “Fees can range from $100 to $5,000 per meeting for each board member.” I like the idea of taking this one step further. A performance based compensation model is ideal. In other words, Advisory Board member’s fees could be tied to the performance of the firm. How often should board meetings be held? Marissa suggests meetings be held on a quarterly basis for three hours. She feels that any less time than this doesn’t allow board members to really dig into the issues. However, I tend to disagree with this approach.
I feel that board meetings ought to be held monthly for 1.5 hours. I feel that you need to meet this often to keep the momentum going. And, having to wait three months for more sound advice from your board members is just too long. So, I suggest holding them monthly. In writing this post on Advisory Boards, I simply wanted to pique your interest by opening the window of the possibilities of what Advisory Boards can do for your organization. If you want your business to really go places, I would highly suggest that you consider forming your own Board of Advisors. This is an investment that will pay you dividends for years to come.
We hope you’ve enjoyed our blog today. Please remember, TOP CFOS offers the finest CFO consulting services to companies anywhere in the world and would love to be a part of your team. Feel free to reach out to us anytime. Your feedback is most welcome, and we invite you to share this post with friends. Our contact information can easily be found on our website at topcfos.com. Our next blog will come from the Finance category on our website and is entitled Funding Sources. And, thank you for joining us!