By Mark Rogers, Managing Director and Head of the Board Practice, Robert Half
Several years ago, I was introduced through a mutual friend to an extraordinarily successful business owner who had made a name for himself in logistics and supply chain consulting. His firm had experienced tremendous growth during the previous few years, and I was curious as to what or whom he attributed this success. As he was aware of my own background in board recruitment, he was more than happy to humbly offer that his advisory board was in large part responsible for the firm’s recent achievements. He stated these individuals provided him with something unique in private industry–an unbiased sounding board.
This brief interaction more than decade ago fueled my own interest (read: passion) in advocating for the utilization of advisory boards at private companies. Whether family-owned, founder-led, or middle-market—private companies are navigating increasingly complex markets. Decisions that once relied on instinct now require structured strategic thinking, specialized expertise, and external perspective. Yet many private companies hesitate to build a formal board of directors, fearing loss of control, cost, or bureaucracy. This is where an advisory board becomes a powerful solution: it brings the benefits of knowledgeable outside advisors without the obligations associated with a fiduciary board.
The Strategic Value of Advisory Boards for Private Companies
What is an Advisory Board?
An advisory board is a non-fiduciary body of external experts who provide strategic guidance, challenge assumptions, and help owners make better decisions. Unlike a fiduciary board, an advisory board does not govern the company or vote on corporate matters. Its purpose is purely supportive and strategic.
How does an Advisory Board operate?
Simple—however, the business owner wants them to operate. There is no mandate, regulatory requirements or otherwise, as to how an advisory board should function. Every business and business owner is unique, and their advisory board should complement that uniqueness. Nevertheless, in my own experience, the more structured an advisory board is, the more value it provides the business owner. Regularly scheduled meetings (ex. quarterly), along with the distribution, in advance, of a formal meeting agenda and associated materials, help to establish expectations and maximize the effectiveness of an advisory board.
The financial benefits of an Advisory Board
One of the reasons I am such a strong proponent of advisory boards is that I have witnessed first-hand the substantial benefits received by the business owner. Perhaps the strongest reason to form an advisory board is the potential bottom-line impact. Private companies that adopt advisory boards frequently experience measurable financial gains, including:
Increased revenue growth—Research from the National Association of Corporate Directors (NACD) and multiple middle-market studies show that companies with advisory boards experience significantly higher revenue growth. Reasons include: (i) better strategic planning; (ii) improved pricing disciplines; (iii) faster go-to-market execution; and (iv) access to new markets and partnerships.
Improved EBITDA through operational efficiency—Advisory boards often identify inefficiencies that internal teams overlook. Common outcomes include: reduced SG&A expenses, streamlined operations, vendor optimization, and improved budgeting and financial discipline.
Higher business valuation—Companies with advisory boards often command higher valuations during exit events, ESOP transactions, capital raises, and strategic acquisitions. The reason for this is that buyers and investors view advisory boards as indicators of strong governance and a more predictable performance.
Better access to capital—Lenders and investors—even at the private-company level—favor companies with clear governance mechanisms and professional strategic guidance. Advisory boards can help companies build investor-ready financials, strengthen creditworthiness, attract better financing terms, and increase interest from strategic investors.
Lower risk—Advisory boards help companies anticipate major financial and operational risks—and avoid potential major missteps. The reduction in downside risk produces quantifiable gains.
The additional benefits of an Advisory Board
The benefits of an advisory board are not limited to financial gains. There are numerous other advantages to convening an advisory board, including:
A continual, unbiased outside perspective—Owners often operate within a bubble—surrounded by employees who are reluctant to challenge their thinking. Advisory boards provide neutral, data-driven insight. They elevate decisions beyond instinct and internal politics.
Non-intrusive structure that preserves owner control—Because recommendations are advisory and non-binding, owners maintain full autonomy. This allows the company to benefit from high-level expertise without the oversight, dilution, or legal obligations of a fiduciary board.
Strategic guidance from subject-matter experts—An advisory board gives private companies access to professionals who have scaled businesses, navigated M&A, built go to market strategies, managed business risks, and led organizations through major transitions. Owners can select experts with the credentials they believe are necessary to drive growth.
Structured accountability—Advisory boards may create a strategic rhythm—regular meetings, agenda-driven discussions, and measurable follow-up. This structure keeps the owner focused, disciplined, and aligned with long-term goals rather than day-to-day distractions.
A cost-effective alternative to a fiduciary board—Fiduciary directors usually require higher compensation, along with indemnification, insurance, and formal governance structures. Advisory boards, however, are flexible, cost-effective, and scalable—they deliver expert guidance without substantial overhead.
For private companies, an advisory board provides the expertise, structure, and strategic discipline needed to grow—without sacrificing owner control or incurring the costs of a formal fiduciary board. The potential financial benefits—higher revenue, improved profitability, and better valuation —make advisory boards one of the most cost-effective and high-value tools available to private company leaders today.
All sunshine and rainbows?
So where is the catch? Why don’t all private companies have an advisory board? The reality is that starting an advisory board isn’t easy. Beyond understanding the skill sets and credentials you need around the table, as well as identifying and evaluating potential candidates, you also need to determine the appropriate compensation and establish expectations. Although this may seem daunting, the Board Practice at Robert Half helps private companies through the entire process in a cost-effective approach designed to absorb the executional burden and allow the business owner to focus on strategy and growth.
Contact Mark Rogers at [email protected] to discuss establishing your own advisory board and get ready to take your business to the next level.
