Why Your Organization Needs an Advisory Board

John Francis Post

A word from the wise…

J.FrancisJohn Francis

Note: Although an advisory board can be very beneficial to your business, it’s important to understand that the board isn’t there for the business’ benefit – it’s there to help you, the business owner, achieve greater levels of success.

If after reading this piece you want to proceed to the next step, I welcome you to contact me by clicking on the “Contact John Francis” link in the upper left corner of the page.  During this free call, we’ll have a judgement-free discussion about the benefits that are most critical to you.


If you want to play the bigger game, and are serious about building your business, you need an advisory board.

From giving objective advice to scouting the marketplace, an advisory board can give your organization the edge it needs to compete at a higher level.  This is particularly true if you have a business with over $1 million in revenue and either a business partner or ambitions of passing the business to your children someday.

Not to be confused with a Board of Directors, an advisory board is an informal gathering of well-respected individuals from the community whose primary purpose is to help your business succeed – not for their financial benefit, but for the mentoring, networking and social opportunities the experience provides.

It’s always a good idea to provide some compensation for your advisory board members; at a minimum this means paying for their meals during meetings, though many business owners provide a financial stipend, as well.  Typically, this small financial investment is well worth the benefits the advisory board provides.

The 8 Benefits of Having an Advisory Board

  1. The discipline of preparation – Prior to each board meeting, you’ll need to create an agenda with all the appropriate attachments such as financial statements, operations updates, marketing updates and current business issues. The process of preparing for each meeting in advance is incredibly valuable, as it allows for critical information about the organization to be evaluated on a regular basis.
  2. Increased credibility – Although an advisory board is strictly there to help you, the business owner, its presence can go a long way towards giving your organization increased legitimacy in the marketplace. In the long term, this legitimacy can actually improve your business’ chance of survival.

  3. Disaster planning/relief – If you’re suddenly unavailable to run your business, do you have someone who is knowledgeable enough to take over? An established advisory board understands your business and will be able to help keep the wheels moving in your absence. This can be a huge relief to your family members and employees if they’re forced to continue the operation without you.

  4. A bigger network – Your network increases dramatically through your advisory board – after all, your board isn’t JUST the board, it’s everyone the board knows. This makes your board a valuable resource when you need a new employee, for example. Through their own professional networks, they may know of the perfect vendor or management professional to join your team.

  5. A focus on the future – While you’re busy managing the day-to-day operations of your business, your advisory board can remain focused on the future. This allows you to rest more easily, knowing that you have a team of professionals out there who are looking out for your best interests while not in the day-to-day grind.

  6. Someone to blame – If you have a big decision to make, using the excuse that you need to “run the idea by your board” is a great way to buy yourself some more time (and make yourself sound more impressive). The “blaming the board” strategy can also work when you have a difficult decision to make. Need to replace a beloved employee (or family member)? Just saying, “the board made me do it…”(whether it’s true or not), can help remove some pressure or hard feelings and deflect blame to a third party they’ll never meet.

  7. More efficient – Instead of scheduling five different phone calls at five different times, your advisory board allows you to gather all of your most trusted resources in one room for a focused and collaborative discussion about your organization. This gives you the most leverage and value for your time – while still leaving plenty of time for the actual running of your business.

  8. Develop your staff – Asking key employees to make presentations to the board can be a great way to develop your staff and see who is ready for leadership. These presentations can be about anything they want – budgets, projects, results – the key is how well the information is delivered. Make sure your board is ready to ask questions and scrutinize the information being presented to them – it will show you how well your staff performs under pressure and help set expectations with accountability.

Additional Considerations for the Franchise Industry

If you are a franchisor or franchisee, an advisory board can add some additional benefits to your organization:

As a franchisor, an advisory board can add credibility to your organization and create confidence in the eyes of your franchisees.  It can also prepare you for growth, whether you’re seeking private equity funding, a merger and acquisition or brand development. Also keep in mind that if this board of advisors transitions into a more formal Board of Directors with fiduciary responsibility, you can add it (and the experience of its members) to the Franchise Disclosure Document for a further confidence boost.

As a franchisee, an advisory board can help you better see what your brand is providing – as well as where it’s falling short. Board members can also provide a great deal of experience to your organization when buying another location, selling a store or preparing for a merger and acquisition.

With so many benefits, it’s important to highlight that there truly should be no downsides to establishing an advisory board.  If you’re not seeing the benefits of your board members, or a member isn’t working out, simply make some changes or shut it down.  As the business owner, it’s up to you to set the expectations and manage the board in a way that serves your needs. When used effectively, an advisory board can become a great asset, adding an important contribution to the success of your business.

via Why Your Organization Needs an Advisory Board | John Francis.


John Francis is a consultant, strategic advisor and keynote speaker who helps franchise organizations  “see what they don’t see” and achieve their highest levels of success.  In his 25+ year career, John has worked as a franchisee, franchisor, investor and Board Member for brands and organizations such as Cost Cutters, PostNet, Sports Clips, Office Pride and the International Franchise Association (IFA). To learn more about John, visit http://www.johnwfrancis.com.

Copyright © 2015 by John Francis. All rights reserved.

Family Business Owners; How Do You Manage Your Transitions?

keysDid you know that 70% of all family businesses fail to successfully transition from the first generation to the second, and that 80% fail to successfully transition from the second generation to the third? This statistic is alarming.

I work with family businesses in transition. Transition is the active process of passing stock and leadership to the next generation.

I am often asked, “When should a family business get serious about transitioning?” I think there are three situations that call for beginning the transition work.

  1. When the entrepreneur wants to change his/her role. When this happens, the entrepreneur is in transition. And when the entrepreneur is in transition, the whole company and family are in transition. Planning is critical here.
  2. When the senior generation plans to pass stock to the next generation within 1-2 years. When stock transfers to the next generation, the next generation becomes owners. What does this actually mean? It means that they will have new ownership roles and responsibilities that need to be discussed and agreed on. Clarity is critical here.
  3. When owners and managers become different people. When some of the owners are not employees of the company or when the owners bring in professional non-family management, the roles of ownership and management separate. When this happens, owners and managers need to clarify their roles and agree how they will work together. Integration is critical here.

I am also asked, “What do owners do?” Besides electing directors, the main responsibility of owners is to agree on how they are going to own and run their business. They do this by developing an owners’ plan. Just like management should have a strategic plan which spells out their long-term strategy, owners should have an owners’ plan which spells out their vision.

An owners’ plan consists of three parts:

  1. The values, needs and goals of the owners. This includes things like revenue and profit expectations, distributions, debt and risk tolerance, compensation for owners who work in the business, the culture they want inside the company, etc.
  2. How the owners will work together. This includes things like what owners do, how they make decisions, perks, how family members who are not owners are involved, updating buy-sells, etc.
  3. What board arrangement, if any, they want. This includes things like what the board does and how it works with ownership and management.

When the owners speak with one voice, it gives clarity to management on where the owners want to go and what is important to them reduces ownership conflict and allows for a more effective transition.

For more detail on the roles and responsibilities of owners, managers and boards, check out my book The Balance Point by Cary Tutelman and Larry Hause, which is available at Amazon.com.

The Balance Point

The Balance Point

by Cary Tutelman and Larry Hause