How to set up an advisory board.

Whether you have 10 employees or 1,000, having a reliable group of advisers who can offer objective analysis and a few timely introductions can make all the difference.

Slightly different from a board of directors, which is required of some private companies in many states, an advisory board serves more of a mentorship role. Its members have no fiduciary responsibility to the company or its stakeholders.

Young, growing companies stand to benefit most from advisory boards, says Richard Magid, president of SoundBoard, a consultancy specializing in creating and running advisory boards: “An advisory board is good for that independent eye. It helps ask questions beyond just what is on the first line of the profit and loss statement.”

And with business regulations growing more complex and transactions more international, the number of companies with advisory boards has crept up, says Paul Dorf, managing director of Compensation Resources, a New Jersey-based executive pay consultancy.

Here are six tips for building your own indispensable advisory board.

Where To Look

Start with who you know and trust. Lawyers and bankers are no-brainer additions to any advisory board. Beyond the inner circle, troll your local small business development center, SCORE (Service Corps of Retired Executives) office or industry association. A riskier option: customers and vendors who might have good connections in the industry. Just be careful what you tell them; better yet, have them sign confidentiality agreements.

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