Choosing the right advisors can be the difference between an advisory board that genuinely strengthens a business and one that becomes an expensive talking shop.
It’s tempting to start with the people you already know.
A successful business owner.
A respected accountant.
A senior executive from your industry.
Someone with an impressive LinkedIn profile.
Someone who “knows everyone”.
But an advisory board shouldn’t be built around impressive résumés.
It should be built around what your business actually needs.
And those needs change as the business grows.
The advisor who is perfect for a $2 million business may not be the right person when that business reaches $10 million. The challenges of a founder-led business are different from those of a business preparing for an exit, investment or significant expansion.
So how do you choose the right advisors?
Start by understanding the stage you’re at, the challenges ahead and the expertise you’re missing.
The short answer: How do you choose the right advisors?
Choose advisors based on the specific challenges, objectives and capability gaps of your business, rather than their reputation or status.
The best advisory board combines complementary expertise, relevant experience, independent thinking and a willingness to challenge the business owner.
Your advisors should be able to help you solve the problems you have now while bringing perspective that supports where the business is heading next.
Don’t start with people. Start with the business.
This is the most important principle in selecting advisors.
Don’t begin with:
“Who should I invite?”
Begin with:
“What does this business need?”
Start by identifying your biggest strategic challenges.
For example:
- Growth is happening faster than the business can manage
- The owner is becoming a bottleneck
- Profit margins are under pressure
- The leadership team needs strengthening
- The business is entering a new market
- Systems and operations aren’t scaling
- The business is considering acquisition
- Succession planning has become important
- The owner is preparing for an eventual sale
- The business needs to become less dependent on its founder
Once those challenges are clear, you can identify the expertise required to address them.
Only then should you start looking for people.
The right advisor depends on your stage of growth
There is no universal advisory board model.
The composition should evolve with the business.
Early-stage and emerging SMEs
At this stage, the owner is often deeply involved in almost everything.
The business may need advisors who can provide practical experience around:
- Business strategy
- Financial management
- Sales
- Marketing
- Operations
- Customer acquisition
- Building scalable systems
The priority is often moving from an owner doing everything to a business with repeatable processes and clearer priorities.
An advisor who has successfully navigated this transition can be particularly valuable.
Growth-stage businesses
As the business grows, complexity increases.
The questions become less about survival and more about scalability.
You may need expertise in:
- Leadership
- Organisational structure
- Strategic growth
- Commercial finance
- Technology
- People and culture
- Operational scalability
- Market expansion
- Risk management
At this stage, advisors need to be able to think beyond the immediate problem.
They should understand the implications of today’s decisions on tomorrow’s business.
Established SMEs
An established business may have a different set of priorities.
Perhaps revenue is strong but growth has plateaued.
Perhaps the owner is thinking about succession.
Perhaps the business needs to expand without increasing risk.
Potential areas of advisory expertise could include:
- Strategic transformation
- Business valuation
- Succession
- Mergers and acquisitions
- Investment
- Governance
- Leadership development
- Market diversification
- Exit planning
The advisor mix should reflect the decisions the business expects to face over the next several years.
Look for complementary expertise
One of the biggest mistakes is appointing advisors who all bring the same perspective.
Imagine an advisory board consisting of:
- A CFO
- An accountant
- A financial consultant
- A banker
That’s a lot of financial expertise.
It might also be a lot of overlap.
The goal is not to have the most expertise.
It’s to have the right combination of expertise.
A useful skills matrix might include:
| Capability | Current Strength | Gap | Advisor Needed |
|---|---|---|---|
| Strategy | Strong | Low | No |
| Finance | Strong | Low | No |
| Leadership | Moderate | High | Yes |
| Sales | Moderate | Medium | Yes |
| Technology | Low | High | Yes |
| Industry expertise | Strong | Low | No |
| Exit planning | Low | High | Yes |
This simple exercise can completely change who you think belongs on the advisory board.
Experience matters, but relevance matters more
Someone doesn’t have to have run a business exactly like yours to be a valuable advisor.
In fact, sometimes a completely different perspective can be extremely useful.
The key question is whether their experience is relevant to the problem you’re trying to solve.
Consider two potential advisors.
Advisor A has 30 years of experience in your industry but has never scaled a business beyond your current size.
Advisor B has 15 years of experience scaling businesses through the exact stage you’re entering, but comes from an adjacent industry.
Advisor B may be the more valuable choice.
Experience should be assessed against the challenge, not simply the industry.
Avoid the “famous advisor” trap
A well-known name can be tempting.
It can add credibility.
It can impress investors.
It can look fantastic on your website.
But ask yourself:
Will this person actually have enough time and interest to understand our business?
A highly successful executive with 15 other commitments may look impressive but provide very little practical value.
An experienced operator who genuinely engages with your business may be far more valuable.
You aren’t hiring a résumé.
You’re building a relationship.
Avoid choosing advisors because they’re friends
This one can be uncomfortable.
A trusted friend may know you extremely well.
That doesn’t necessarily make them a good advisor.
The same applies to former colleagues, business contacts and family members.
The question isn’t:
“Do I trust this person?”
It’s:
“Will this person provide the perspective this business needs?”
Sometimes the answer is yes.
Often it isn’t.
An advisory board needs enough independence that members can challenge assumptions without worrying about damaging a personal relationship.
Avoid the “yes person”
If you want everyone to agree with you, you don’t need an advisory board.
You need a fan club.
A good advisor should be comfortable saying:
“I don’t think that’s the right decision.”
They should be able to explain why.
And they should be willing to ask questions that expose assumptions.
The value isn’t in being difficult for the sake of it.
The value is in creating constructive challenge.
The business owner remains responsible for the final decision, but the quality of that decision can improve dramatically when assumptions are properly tested.
Look for independent thinking
Independence doesn’t mean advisors have no commercial interests.
It means they can provide objective advice without allowing personal agendas to dominate.
When assessing a potential advisor, consider:
- Do they have relationships that could create conflicts?
- Are they likely to recommend their own services?
- Do they have a financial interest in particular outcomes?
- Can they disagree with the owner constructively?
- Are they comfortable saying “I don’t know”?
- Do they ask questions before offering solutions?
The best advisors don’t need to prove how clever they are.
They’re interested in understanding the problem.
Don’t appoint someone who wants to run the business
This is particularly important for strong personalities.
An advisor isn’t the CEO.
They aren’t management.
They aren’t there to make operational decisions.
Their role is to provide perspective, expertise and challenge.
If someone continually wants to take over decisions, bypass management or dictate implementation, you’ve probably appointed the wrong person.
The business owner and leadership team need to retain clarity around who is responsible for what.
Ask potential advisors better questions
A conversation with a potential advisor should go well beyond:
“Would you like to join my advisory board?”
Ask questions such as:
“What businesses have you helped through this stage of growth?”
Look for relevant experience rather than generic success.
“What would you want to understand about our business before advising us?”
This reveals how they think.
“Tell me about a time you disagreed with a business owner.”
You want to understand whether they can challenge constructively.
“What would you expect from us?”
Good advisors should have clear expectations about preparation, access, meetings and accountability.
“What would you do if you didn’t agree with a decision we made?”
Their answer can tell you a great deal about whether they understand the advisory role.
“What would make you resign from the advisory board?”
This can reveal their standards and boundaries.
Don’t underestimate cultural fit
Skills matter.
Experience matters.
Independence matters.
But so does fit.
Your advisory board members don’t need to think alike.
They do need to be able to work together.
Look for people who:
- Listen
- Ask useful questions
- Respect different perspectives
- Can disagree without becoming personal
- Prepare for meetings
- Keep confidences
- Follow through
- Understand their role
A brilliant advisor who consistently disrupts the group may create less value than a very capable advisor who collaborates effectively.
Watch for conflicts of interest
Before appointing an advisor, identify any actual or potential conflicts.
This could include:
- Advising a direct competitor
- Commercial relationships with suppliers
- Personal relationships with key stakeholders
- Financial interests
- Providing paid services to the business
- Access to commercially sensitive information
Conflicts don’t necessarily mean someone cannot be an advisor.
But they should be identified, discussed and managed appropriately.
Confidentiality should also be addressed clearly from the beginning.
How many advisors should an SME have?
There is no magic number.
The right size depends on the purpose and complexity of the advisory board.
Too few people can create gaps in expertise.
Too many can make the board unwieldy.
For many SMEs, a small group of carefully selected advisors can provide enough diversity of thought without creating unnecessary complexity.
Start with the capabilities you need.
Then determine how many people are required to provide them.
Don’t start with a target number and then try to fill the seats.
Your advisory board doesn’t have to be permanent
Another common misconception is that once someone joins an advisory board, they’re there forever.
That doesn’t have to be the case.
Business needs change.
An advisor who was extremely valuable during a growth phase may not be the right person for an international expansion or exit process.
It can make sense to periodically review:
- Whether the advisor is still adding value
- Whether their expertise remains relevant
- Whether their availability has changed
- Whether new capability gaps have emerged
- Whether the board needs a different perspective
An advisory board should evolve with the business.
The most expensive advisor mistake
The most expensive mistake isn’t necessarily paying too much.
It’s appointing the wrong person and then keeping them for too long.
The cost includes:
- Advisory fees
- Management time
- Lost opportunities
- Poor decisions
- Group dynamics
- Confusion
- Frustration
And perhaps most importantly, the opportunity cost of having the wrong expertise around the table when important decisions are being made.
A mediocre advisor can be more expensive than an expensive advisor who delivers significant value.
Build the board around the next stage, not just the current one
This is where many business owners get it wrong.
They choose advisors who understand where the business is today.
But the advisory board should also help the business prepare for where it is going.
If your goal is to double the business, you need people who understand what happens at the next level.
If you’re preparing for an eventual sale, you need advisors who understand what buyers look for.
If you’re expanding internationally, you need relevant market and operational experience.
If you’re building a leadership team, you need people who understand organisational growth.
Think one stage ahead.
A simple framework for choosing your advisors
Before approaching anyone, work through these six steps.
Step 1: Define your objectives
What are you trying to achieve over the next three to five years?
Step 2: Identify your biggest challenges
What could prevent you from achieving those objectives?
Step 3: Map your capability gaps
Where does the business lack experience or expertise?
Step 4: Define the advisor profile
What experience, perspective and skills would genuinely help?
Step 5: Assess candidates
Look at relevance, independence, availability, approach and cultural fit.
Step 6: Review regularly
Make sure the advisory board continues to match the needs of the business as it evolves.
The right advisors should make you think differently
The best advisory board members don’t simply tell you what to do.
They help you see the business differently.
They ask questions you haven’t considered.
They challenge assumptions.
They bring experience from situations you’ve never encountered.
They help you distinguish between a genuine opportunity and an expensive distraction.
And sometimes, they tell you something you really don’t want to hear.
That’s not a problem.
That’s the point.
The right advisory board is built for the business, not the brochure
An impressive collection of names doesn’t make an effective advisory board.
The right people do.
And “right” means different things for different businesses.
The advisors you need depend on your stage of growth, strategic objectives, capability gaps and the challenges you’re preparing to face.
Start with the business.
Identify what is missing.
Then find people who can fill those gaps with relevant experience, independent thinking and a willingness to challenge.
Because the value of an advisory board isn’t determined by how impressive the people around the table look.
It’s determined by what becomes possible because they’re there.
Ready to build the right advisory board for your next stage of growth?
Touchstone Advisory helps business owners think strategically about the people, expertise and structure they need around them as their businesses evolve.
If you’re considering establishing an advisory board, reviewing your existing advisors or preparing your business for its next stage of growth, the right starting point is understanding what you need the board to achieve.
Build the board around the future you’re creating, not simply the business you have today.