An advisory board is a group of business advisors that provides non-binding advice to the management of a business. Unlike a board of directors, an advisory board does not have authority to vote on corporate matters and generally bears no liability for corporate decisions. Many newer businesses form an advisory board in order to benefit from their collective knowledge, experience, and contacts without having to incur the cost of a formal board of directors. Advisory boards may meet with the owners monthly or quarterly. Advisory board members may be compensated but generally any compensation is far less than what corporate directors receive.

Advisory board members are particularly valuable to a company if they are rainmakers. A rainmaker is a person who consistently generates significant business for a company as a result of their contacts, influence, and skills.

Selecting Corporate Directors