Why create an Advisory Board for your agency?
Running an agency is not easy. The market is complex, there is a lot of competition, and you can quickly find yourself with your head in the sand. An Advisory Board can change that and help you grow faster.
To talk about it, we organized an online conference with Richard Fraine, to understand how an agency can create an advisory board in order to surround itself and benefit from valuable advice.
What’s an advisory board?
To put it simply: it’s an advisory council of elders. It’s there to give you advice.
Unlike a board of directors, the Advisory Board does not have an executive role. It is advisory and a decision support board.
The Advisory Board will break the loneliness of the manager in front of the major decisions he has to take and the major challenges he has to face.
Of course, it is the executive who makes the decision, but the Advisory Board is there to advise him and help him make this decision.
Moreover, we talk about a long-term support, on different subjects:
- Strategic issues,
- Operational issues.
In the end, it is the manager who sets the agenda when he decides to convene his Advisory Board, and he can call on it on all the sensitive issues he faces.
What are the benefits of an advisory board?
Having a Board for your agency will give you access to several benefits.
According to Richard, an Advisory Board is a real growth gas pedal for the development of the company.
It will help you avoid the mistakes that a manager can make, mainly because the Board members have already made them in the past. They share their experience to accelerate the development of your agency.
Secondly, a Board will give you access to expertise. The people on the board are experts in specific fields. What the manager will do is to seek out profiles with expertise that he or she does not necessarily have.
Your Advisory Board must fill the gaps in your racket.
Thirdly, a Board can also give you access to a better network. An advisor can open the door to his or her network when needed.
And finally, a Board will accelerate you in terms of expertise, experience, network and legitimacy.
If you are accompanied by an Advisory Board in your decisions and strategic choices, you will gain a lot of credibility in the eyes of your stakeholders.
This is why an Advisory Board is a real gas pedal.
You gain access to :
- More expertise,
- More experience,
- More network,
- More legitimacy.
Can a board advise multiple companies?
A board no, but an advisor yes. Every board is specific and brings expertise that the company does not have internally. Each company will have a board that fits its needs.
What this means is that each board is different, but an advisor can be on several boards at the same time and therefore advise several companies.
The advantage is that this advisor can make the companies benefit from each situation he will see. For example, Richard advises two digital agencies. The issues and problems of agency A can help agency B to develop. The reverse is also true.
Why do agencies need an advisory board?
One figure hurts: 7% of digital agencies have an Advisory Board.
This can be seen as a bad thing, but in reality it represents a great opportunity for your agency.
First of all, if you decide to form an Advisory Board, you will benefit from all the advantages we mentioned earlier in these notes.
But in addition, these advantages will be even more pronounced because your competitors do not benefit from them.
You are in a market where the other players do not have an Advisory Board. Hence the double interest of creating one.
How to create an advisory board?
Now that we know all the advantages of creating a Board, where do we start?
First, we define the holes in the racket. What are the critical skills you are missing today? The answer to this question will tell you what types of profiles you need to look for to build your Board.
These profiles can come from your network, as well as from LinkedIn or myadvisoryboard.rocks if you want to outsource the search.
In summary, here’s how to build your Advisory Board:
- What skills are you missing?
- What types of profiles have those skills?
- Look for them in your network, on LinkedIn, or myadvisoryboard.rocks
What’s the ideal board size?
The answer will depend on the size of your agency.
If you have a small team, an ideal Advisory Board has 3 to 5 members. There are several reasons for this number, but the main one is that an Advisory Board must be motivated. Board members need to have enough space to express themselves and speak up.
Otherwise, frustration may arise and you may lose the commitment of one or another of your advisors.
Keep in mind that 3 members is ideal and 5 members is a maximum.
How often do you need to meet your board?
There are two criteria to consider:
- The size of the company and the speed of its growth,
- The reactivity of its market.
For example, in a fast-growing market, the ideal is to meet with your Board every 2 to 3 months. In general, in this type of market, it is every 2 to 3 months that you will have to make decisions that will structure your company.
For a large group, in a slow market, meeting the Board every 6 months is more than enough. Some even meet only once a year.
After that, an Advisory Board has the advantage of being flexible. That is to say, you can convene it on a shorter or longer term, depending on your needs.
Over time, an Advisory Board will generally meet for 2 to 3 hours of discussions.
This is the ideal time to deliver value without dragging on.
How much does an advisory board cost?
There are no rules regarding compensation. Some Advisory Boards are free of charge and can give their advice free of charge.
That said, only 15% of Advisory Boards are free. Remember that everything that is free is worthless.
Without compensation, your advisors will lose motivation and you will end up not being a priority for them.
When you pay your advisors, they will not stop proving that they bring value to you and that they have a place on your Board. And you, you will not stop getting value from your Advisory Board.
Then, how much does it cost?
First of all, you have to know that you have two ways to pay your Advisory Board:
If you decide to pay in equity, the amount will depend on your dilution, your means, and your number of advisors. As a general rule, 1% to 7% is dedicated to the board, with an average of 3%.
The virtuous side is that you don’t take out cash and you create a financial link between your agency and your advisors. The negative side is that your advisors will no longer be neutral and this could influence the advice they give you. On top of that, you will dilute your capital without being sure that you will be satisfied with your Advisory Board. This means that you could end up with shareholders who do not really bring you value.
The second option you have is cash. On the amount, there are no rules. Remember that a high level consultant will charge 1,000 to 1,500€ per day. This gives you an idea if you gather a board of 5 people for 2 hours.
After, other models exist, like the one of myadvisoryboard.rocks
Here, you pay a yearly subscription, and you can ask for your board on demand.