What Is a Board of Advisors?
The Board of Advisors exists primarily to provide strategic direction to a business entity. It consists of people of differing background, professional experience, and education. The Advisory Board is non-binding and informal. Its members have no fiduciary or legal liability, nor are they employees of the company. Success depends on who the members are.
The advisory board usually has 5-6 members, generally consisted of accountants, marketing experts, HR experts, and successful entrepreneurs. More is too many, as meetings can take too long and usually no consensus can be reached. This can leave the entrepreneur without the direction and guidance he or she needs. Less than 5-6 usually does not offer enough diversity for the entrepreneur. Thus, the entrepreneur should get people of various backgrounds, experience and age.
What Can Be Discussed With Advisors
Advice and guidance can be for operations, legal matters, finance, manufacturing, organization and  competition.  They also can provide a fresh perspective and the development of a business strategy.
When setting up an advisory board be clear about what you want. Be specific about your business goals and direction. You expect her/him to be knowledgeable about business and view your operation with fresh eyes. 
How the Meeting is Held
Meetings are held at the discretion of the entrepreneur. Usually every six months. They are held in a room in a restaurant, or reserved in a hotel or motel. Lunch is provided, and cell phones are turned off.
The agenda is created by the entrepreneur and sometimes sent to members in advance or distributed at the start of the meeting. Meetings usually last between two and three hours.
Minutes may not be created, but the entrepreneur should take copious notes and question members for more clarification if needed.
When is the Best Time to Form the Advisory Board?
Advisory board can be a great fit for a small to medium sized companies that are looking to grow. Startup companies can also benefit from it if they are well-financed. Well financed because what the Board recommends can sometimes take some money to implement.
How To Form an Advisory Board
The Board members are hand picked by an entrepreneur. There is no set path to form an advisory board. But you can consider following ways to recruit them:
  • Ask the most successful people you personally know.
  • Ask your network (friends, families, acquaintances, etc.) for references of people you would like to have on the board.
  • Join a club that has people you would like to have on the board.
  • Ask professors at business schools and universities
  • Ask professional consultants that you use in your business - like the tax preparers or legal advisors - or ask them for introduction to their colleagues for likely candidates.
Advisors receive no monetary compensation. Instead, the reward comes from seeing a business flourish and succeed and the entrepreneur becoming more confident in carrying out his responsibilities. 
Board of Advisors vs. Board of Directors

About the Author(s)

Dr. Dudley has over 40 years of teaching in the Executive and Presidential Key/Executive MBA Programs at the Graziadio School of Business & Management Pepperdine University. Also, President of Consulting firm Thomas J. Dudley & Associates, still active. Most consulting engagements were with small businesses and/or start-ups.      This experience...

SCORE Mentor
All You Need To Know About Board Of Advisors