I have written before about advisory boards and the steps you can take toward evolving that board into a more formal, fiduciary board for your business. But there are also steps you can take in the near-term to leverage your board in a different way to help grow your business: You can use them as a business development tool.
To explain what I mean by this, consider an example of a company that operates as a government contractor. Perhaps they sell to the Department of Defense, the intelligence community, or civilian government agencies. When creating their advisory board, this company could seek out former senior level leaders who served in the target organizations. If they want to sell to the Navy, for instance, they could recruit a retired admiral to their board. Or if they want to sell to the Army, they could go after a retired three-star general. Why? Because these kinds of board members can make introductions and open doors that even your best salespeople can't touch. In this way, your advisory board can be incredibly valuable to your business.
But you might be wondering why these retired officers would have any interest in serving on these roles--especially since most of them have decent pensions and health care benefits provided by the government. The truth is that many of these former officers are likely still fairly young, often in their 50s, and interested in something to engage their abilities. Many of them want to earn and rotate their leadership and other skills to the commercial side of things.
It's important to note that these officers won't do this for free. It's typical for organizations to pay board members a modest base compensation, say $10,000 to $20,000 for attending three to four meetings a year.
But, if you want to turn your board into a business development force, you should also plan to pay them a commission of sorts for any large contracts they might help the organization land. Let's say we are going after a big contract with the Army. If your board member helps you win a significant contract with their former agency, you should plan on paying them 0.5 percent to 1 percent of the total value of the deal. Obviously, if the contract is significant, like $100 million to $500 million, that could add up to a lot of money for your board member.
Let's be clear: This is not a cheap salesforce. You will still need seasoned salespeople to engage with the clients, develop the requirements, price the deal, and ultimately close it. You can expect these adviser board members to make the right warm introductions, help you understand how decisions are made, and even give you insight on your product or service and the fit for the client. I've even seen some recommend much higher prices based on the size of the problem they were solving (and the supplier had no idea).
It's also important to recognize that this same dynamic with your board can work in many industries--think of the auto, logistics, or retail industries as examples. The goal again is to recruit senior leaders who can help build relationships and open doors for your company you otherwise wouldn't have access to.
When you can do that, you can begin to look at your advisory board in a whole new light.