Advisory board or board of directors? What’s the difference? There’s a major difference. An advisory board brings informal advice to your company, sometimes pointing out gaps in your business, whereas a board of directors has a fiduciary responsibility to an organization to be legally responsible for given areas of focus.
And according to Entrepreneur magazine, an advisory board is defined as “a group of individuals who’ve been selected to help advise a business owner regarding any number of business issues, including marketing, sales, financing, expansion and so on; a body that advises the board of directors and management of a corporation but does not have authority to vote on corporate matters.”
At Black Women Talk Tech’s (BWTT) third annual “Roadmap to Billions” conference, held earlier this month in New York City, brand maven Darlene Gillard Jones, part of the Founding team and Director, Community for digitalundivided, led an informative and lively discussion on the ins and outs of advisory boards. For Black women founders seeking to form an advisory board, Gillard Jones broke down when, how and with whom to form one.
(Founded by Regina Gwynn, Esosa Ighodaro and Lauren Washington, the BWTT conference is comprised of an innovative lineup of panels, workshops, keynote speakers and pitch competitions – all designed to connect Black women founders and tech entrepreneurs to funding.)
Gillard Jones, who for the past 20 years has worked for some of the most well-known brands and publications in business, media, and technology such as Time Inc, eBay, Disney, and Essence magazine, also talked about incentives founders can offer their advisory board members and measures that can be taken to maintain control of your advisory board.
Here, in her own words, are some snippets of her chat, which was moderated by Tiffany Hardin, director of partnership, digitalundivided.
With whom to form an advisory board:
Ask yourself, “Who in my network has the advice that I don’t have.” Approach people who will tell you the real deal – the truth. You need the devil’s advocate. This person is definitely not your moms!
What you need to know about that person:
Is their mission aligned with yours? What are their concerns about the advisory board? You want people who are committed to you and to your business.
Questions you should expect that person to ask:
How long is the commitment? Sometimes joining an advisory board is a 2-year commitment. How many times a year will the board meet? What committees exist within the advisory board?
Characteristics to look for in a potential advisory board member:
Look for someone who fills a void, and can bring knowledge and resources to the table. Look for someone who is down for whatever. Look for someone you like. And consider having the person sign a Non-Disclosure Agreement to make sure your information is protected and confidential because you will have to share a lot of information with that person.
Whether an advisory board member should get to invest in your company:
Whatever you decide, make sure it’s agreed upon on paper. On some advisory boards, members do invest, but speak to an attorney first to discuss equity.
Keeping your advisory board members updated:
There’s nothing worse than not being in touch. Stay in touch once the board is in place, Your members should get quarterly updates, and be sure they have all the documents they need for the next meeting.
Best number of people:
An advisory board should be intimate. Five is a good number; it’s manageable.
Incentives to entice people to join your advisory board:
If someone knows your business and is ecstatic about working with you, they could be volunteers or mentors. Identify 3 to 5 areas of opportunity and say, “here’s how you can help.” Whether it’s working on your website, or on your company’s documentation, potential board members should have a mental picture of where they can fit into your company. They should be able to help tell the story about your company. When you extend someone a position as an advisory board member, you’re saying, “Walk with me.”
When an advisory board member wants a stake in your company:
You might decide, yes, a particular board member is very valuable. But how much is too much when it comes to a stake in your company? It depends on the valuation of the company. Find the people who are committed to you, and at a certain point in your company’s growth, you might want to give those people equity.
Maintaining control of your board:
How do founders protect themselves? Be nice. Sometimes a board can decide that the CEO is no longer fit to run the company. Think of the story of Steve Jobs. At some point, we wasn’t fit to run his company, although he eventually got it back. The board members are there to make sure the company succeeds. Sometimes, you have to think to yourself…is there someone who can do this job better than me?
Although some of us think we can do it all ourselves and be the quintessential superwomen, the truth is “you’ll need to leverage the skills and experiences of a team of professionals outside of your firm,” says Levar Haffoney, principal with Fayohne Advisors LLC, and member of The Network Journal’s 40 Under Forty Advisory Council, in an article he wrote about advisory boards. “These advisors can provide ideas, access to their network and valuable advice to help you operate and expand.”