How can you use a corporate advisory board to scale a company?
Mature companies have formal boards of directors.
A board of directors manages “the business of a corporation.” BCL § 701. The board establishes binding resolutions for the corporation and appoints and controls corporate officers.
With a formal board of directors there is a built-in discipline and objectivity that provides the foundation to maintain and grow the business.
Although every business needs that discipline and objectivity, many smaller, emerging, and family businesses do not have a board of directors. Often those businesses do not yet have the understanding or formality in place to set up a board.
But it is those businesses – smaller, emerging, or family business – that need a board the most. They crave the foundation to maintain and grow the business.
An advisory board can be a perfect interim step toward setting that foundation.
Advisory boards provide non-binding strategic advice, outside perspective, and fill knowledge gaps. The board members serve voluntarily (although they could be paid) and have no fiduciary responsibility.
This board is a good intermediate step before putting a true board of directors in place who would have the power and responsibility for managing the company. '
In essence, an advisory board is a good test drive for the more formal board of directors required later, when selling, going public (IPO) or upon the interest of venture capital investors or lenders.
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