Even successful family businesses can become insular, impaired by conflict or in need of fresh perspectives. That’s where advisory boards made up of business professionals from outside the company can help.
The advisory board of a private business isn’t bound — as public company boards are — by a fiduciary responsibility to shareholders. So its members are free to offer creative solutions and help resolve differences among family members on such issues as compensation, succession and retirement planning, and company direction and growth strategies. An advisory board can also provide expertise, such as marketing or employee benefits knowledge, that your business lacks. Your board should be made up of professionals from varying fields and backgrounds, including business, government, academia and philanthropy. Professional advisors — such as accountants and lawyers — who are already familiar with your company’s issues can be particularly helpful.
Businesses should reimburse travel costs associated with attending board meetings and consider paying members for their time. Cash compensation may make sense if your business intends to remain closely held.