What are the benefits of using advisors or external board members?
Sometimes people ask what is the concrete benefit of having advisors or external board members. Here is one example with some figures:
This company was struggling to grow their business. They wanted to find someone to work with the management on strategy as well as with sales and other processes. We found them an experienced person with relevant industry experience. Since this person started to work as a board member, company revenue has grown over 50% (vs zero growth year before) but more importantly profit grew almost 2000%. Not saying this all is because of a new board member but clearly this company needed some fresh views and expertise on how to take the business to a whole new level.
Overall there are several benefits to using advisors or external board members, including:
- Expertise and experience: Advisors and external board members can bring a wealth of expertise and experience in a particular industry or functional area. This domain expertise is perhaps the most common single reason to seek for external views.
- Fresh perspective: Advisors and external board members can provide a fresh perspective on a company's operations and strategies, which can be especially useful when a company is facing a new challenge or seeking to expand into new markets. External people still see the forest from the trees, something that can be hard for CEO and other employees.
- Network and connections: External people may have a wide network of contacts and connections that can be beneficial to a company seeking to access new customers, partners, or resources. This is especially usefull when company enters new countries or new industries.
- Increased credibility: Having advisors or external board members can increase a company's credibility and perceived legitimacy, which can be helpful when seeking funding, partnerships, or other opportunities. It is however not recommended to take advisors purely based on their reputation but try to make sure they also have time to spend.
- Improved governance: Advisors and external board members can provide oversight and guidance on matters related to corporate governance, such as risk management, compliance, and strategy. The bigger the company the more important that governance is properly managed.
- Enhanced decision-making: Advisors and external board members can provide valuable input and guidance on key decisions facing a company, helping to ensure that those decisions are informed and well-reasoned. Also making sure decisions are made and implemented. Also, advisor can help CEO and other management to stay accountable and stay on track to achieve goals.
- How to use advisors for growing the company?
- When is the right time to start using advisors or external board members?
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- The impact of advisors on startup success is clear