Now that you've committed to building an advisory board (see Week 10 of the Growth Planner series), you need to draft the plans from which you’ll assemble the right group of advisors.

PROFIT asked Greig Clark, the founder of College Pro Painters, a venture capitalist and an advisor to numerous entrepreneurial businesses, to share his thoughts and recommendations concerning advisory boards. In Part 2, Greig shares how to set up a board that’s motivated and effective.

Fellow PROFIT columnist and entrepreneurship expert Rick Spence and I contacted numerous CEOs across Canada to find out how they tap advisors' expertise and goodwill. We learned that there are many ways to build a board, and that entrepreneurs tend to structure them based more on their own needs than on any formal process. Still, we've identified a few best practices for those serious about forming a team of seasoned advisors.

Step 1: Get help
We spoke to many CEOs who used outsiders, such as a consultant or trusted advisor, to help them devise their board strategy or scout out potential board candidates. An outsider can bring contacts, experience and focus to your initiative. And they offer busy business owners a “champion” who can make this Priority 1.

Step 2: Decide why you really want your board
Do you want a board purely for advice? Or are you after the discipline and focus that comes from being accountable to a peer group that meets regularly? The good news is a well-structured board can provide both.

Step 3: Draw a blueprint of your board
Set out your roles and expectations. Some examples:
• Purpose of the board: Operating advice? Strategic leadership? Accountability? Know from the start what you're looking for.
• Success measures: Establish specific objectives to measure how well your board is working.
• Size: The successful boards we studied ranged from two directors to eight, but most were four to six.
• Membership: What skills and experiences do you want? Why do you want them? Start compiling a list of people who you think might fit these attributes.
• Compensation: This might take the form of retainers, meeting fees, shares or stock options — or a mix of them. Pay your advisors real money or shares, and they'll feel more motivated to actively look for ways to help the firm.
• Meetings: Regular quarterly meetings are the most common among successful boards. I recommend appointing an outsider as chair. That person can prod you to prepare properly for meetings, which is the only way you'll get full benefit from them. Chairs also take responsibility for preparing and distributing agendas, prepping material and running effective meetings.
• Confidentiality: To ensure a free exchange of ideas, board mandates commonly include confidentiality and non-compete clauses.
• Liability: Advisory boards typically don't have significant liabilities. To preserve this status, your board should make only recommendations — never decisions.

NEXT WEEK: Identify the management candidates among your employees.