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Advisory boards have a significant impact on a business’s financial performance, yet only 6% of Canadian small and medium-sized enterprises use one, finds a study from the Business Development Bank of Canada.

In fact, almost 86% of entrepreneurs who do have an advisory board say it has had an important impact on their business success.

“The benefits of having good-quality, independent advice from well-respected, experienced individuals is clear, and we now have research to support it,” says Jean-René Halde, BDC’s president and CEO.

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The study found:

  • 6% Canadian small and medium-sized businesses use an advisory board.
  • 57% of respondents without an advisory board felt implementing one required too much work, time and effort.
  • Companies that created an advisory board saw their sales grow almost three times faster in the following three years than in the previous three years.

“An advisory board can be a sounding board to help busy entrepreneurs strategize about their business, broaden their vision and enhance their bottom line,” Halde adds.

When forming an advisory board, entrepreneurs typically seek expertise in accounting and finance, sales and marketing, and human resources, the study found.

The most commonly cited impacts from advisory boards were on company vision, innovation, risk management and profitability.

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The study also found:

  • Sales grew 67% on average in the three years after companies created an advisory board—almost triple the 23% rate of the previous three years.
  • Productivity rose 6% in the three years after—double the 3% rate in the previous three years.
  • From 2001-2011, average annual sales of businesses with an advisory board were 24% higher than those of a control group of other businesses, while productivity was 18% higher.

Most advisory board members give their advice free of charge and meet once a month or quarter with a company’s leadership.

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Originally published on Advisor.ca

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