Why SMEs choose to have an Advisory Board

An Advisory Board, Raad van Advies in Dutch, is a group of people from outside the organisation. They give advice on important choices. The members have no official power and are not legally responsible. They share their knowledge, experience, and network.

What is an Advisory Board?

An Advisory Board:

• has no legal role or responsibility. The members of the board have no official duties and are not liable.
• gives advice when requested by the board of directors or the entrepreneur.
• often consists of people with knowledge or experience in key areas, such as education, health, or sustainability. Or they have entrepreneurial experience.

Role of an Advisory Board

An entrepreneur has the freedom to decide what the design and function of the Advisory Board is. Setting a clear goal, such as helping with growth or taking over a family business, gives direction to both the entrepreneur and the board members. Its role is advisory only. This means that the company does not have to take the advice.

Meines Holla & Partners has had an Advisory Board with 2 members since 2016. Owner Martijn van Helvert thinks even a small board is valuable. "Even the advice of a small Advisory Board, with only one or a few members, can provide new insights or additional opportunities. Start with 1 adviser and expand the board later with other members or an extra purpose." The members of Van Helvert’s board come from their own network and are chosen based on knowledge and experience. The first member was Niek Jan van Kesteren, former general director of employers' organisation VNO-NCW. He brings knowledge of politics, business, and civil society organisations. Later, Rob Meines, founder and former owner of Meines Holla & Partners, was added to the board.

Difference from a Supervisory Board

The main difference between a Supervisory Board and an Advisory Board is that a Supervisory Board is mandatory for some companies, such as large private companies or public limited companies. An Advisory Board is never mandatory.

A Supervisory Board is a formal group that oversees an organisation. It can intervene when the members disagree with a situation or choice. An Advisory Board is more flexible, and its members only have an advisory role.

TommyTomato has an ambitious mission: to make all Dutch children life-long vegetable-eaters. The company seeks advice on specific topics but wants to remain independent. Founder Bas Turk explains, "We don't want advisers to sit in the entrepreneur's chair. I want to be able to make decisions myself. That is why an Advisory Board fits us at this stage, where we do not have to have a Supervisory Board."

Advantages of an Advisory Board

Well-known board members provide recognition of your mission and give extra visibility. This can open doors. For Turk, someone's knowledge or network determines the choice. TommyTomato compiled an ideal list of members with people they knew would be almost impossible to recruit, but which provided direction. "That list made concrete which themes we think are important and why we want precisely those people,” says Turk. “Ideally, I would like the Netherlands Queen Máxima on the board, because she is committed to equal opportunities. And Feike Sijbesma, who is committed to food aid. I'm looking for members with a mutual interest who are really motivated to contribute to our mission. So together we can make more impact with TommyTomato."

For Meines Holla & Partners, the Advisory Board is valuable because its members reflect on social changes and see opportunities. Owner Van Helvert says: "Members bring their own experience and knowledge and ask critical questions about our working methods and customer base. In addition, the board shares its knowledge with all our employees, for example through training or consulting. This way, our staff gain additional knowledge. And the board members are ambassadors for our firm and, with their large network, they also help us get new clients in that way."

Advisory Board regulations

Regulations provide clarity for both the entrepreneur and the board members. This includes information about the firm, the composition and purpose of the board, responsibilities and obligations, meeting arrangements, and fees.

Two main reasons for making regulations are:

• Without clear agreements, an Advisory Board can quickly lose momentum.
• The regulations prevent members from performing tasks that belong to a Supervisory Board.

Meines Holla & Partners has not drawn up regulations. "We have no official agreements. We do see each other every 2 months and know where to find each other when necessary. The members come from our own network and so we can assume mutual trust and commitment."

TommyTomato's founder believes an Advisory Board is a good investment for both sides. Turk says, "That’s why we do want to establish agreements on involvement, expectations, and communication. What topic do we want advice on, what information do or don’t we need, and how often does the board meet? I think the more open you are to your advisers, the faster they will feel involved and committed to your company."