Every small business runs inside a bubble. The founder, the early team, the same customers, the same problems, the same air. That's not a criticism, just a fact. When everyone in the room has lived the same twelve months, the room agrees with itself, and it can't tell you what it can't see.
I have held the view for a long time that If your business has real growth ambitions, you should set up a formal advisory board the moment you pass five full time staff. Not when you hit serious revenue. Not when you raise capital. Not when things get hard. Five staff.
Almost nobody does this. Which means almost every business past that size is sitting on one of the most powerful growth levers available and has never pulled it. Most don't know the lever exists.
What your bubble actually costs you
The obvious cost is pattern blindness. Every hard problem your business hits, the repricing you're scared to do, the market entry, the first senior hire, the deal that looks too good, is a problem someone else has already faced twenty times. Inside the bubble you solve it for the first time, slowly, with tuition paid in cash, time and battle scars. Experienced outsiders around a table turn most of those first times into significantly better outcomes.
The second cost is opportunity. The right external people carry networks, customers, capital and credibility you can't reach yet, and a standing seat at your table gives them a reason to open those doors. Some of the best deals I've been a part of never went to market. They travelled through somebody's advisory board.
The third cost is the one nobody prices: perspective. Preparing for an advisory meeting forces you to step out of the day to day and explain your business, your numbers and your plan to smart people who aren't in it. That discipline alone is worth a meaningful fraction of the whole exercise before anyone gives you a word of advice.
This is not a board of directors
A common reason founders never think about a board is that they picture a board of directors: governance, liability, lawyers, loss of control. That's a different type of board. An advisory board largely exists to help the founder and ownership team steer the business: think strategically, pressure test the big decisions, and open opportunities. It has no legal authority over the company, no fiduciary duties, no governance machinery. You can stand one up next month with nothing more than three phone calls and a calendar invite.
A board of directors pairs advice with obligation: compliance, risk, statutory duties, and the personal liability that comes with them. It's something you take on when scale, structure or investors require it, and when that day comes it's valuable. But it isn't the entry point, and founders who conflate the two end up using the cost and formality of the second as the reason they never build the first. You can capture most of the growth value with none of the governance overhead. Plenty of businesses eventually run both.
How many people, at what size
The numbers I work to are simple. Between 5 and 25 staff, have 3 external people. From 25-100 staff, 4 or 5. Past 100 staff, 5-7. External means genuinely external: not the accountant who bills you, not a mate, not a supplier, not an investor protecting a position (unless they genuinely fit the mould). People with no stake in your business except a standing invitation to tell you the truth.
The count grows with complexity, not with headcount for its own sake. At 8 staff your problems are focus, early customers and first hires, and three sharp outsiders cover the ground. At 60 you're carrying structure, funding, maybe multiple markets, and you need more breadth at the table without letting it become a conference. Past a hundred the business has too many fronts for 5 people to see around, but 7 is still small enough for every person to be heard and held to their opinions.
That's the external side of the table. Internally, keep it lean, because every internal seat you add changes what people are willing to say. Between 5 and 25 staff, it's just you, or you and your right hand person. From 25 to 100, you, your right hand person and one other leader in the business. Past 100, four internal people including the founder, or the CEO if the founder has stepped out of the lead role. The board exists to challenge the way the business thinks, and a room stacked with the people who built that thinking defeats the purpose.
Beyond those seats, bring key department heads or changemakers into the meeting for specialised sessions rather than standing invitations. If the board is discussing an expansion into a new market, have your CMO in the room for that item. They come in for a designated slot, contribute, and leave, not sit through the whole meeting. It keeps the session sharp, gives your best people exposure to the board without diluting the table, and keeps the standing conversation between the externals and the ownership team, where it belongs.
How to compose the board
Two rules I hold firmly on composition. First, exactly one seat goes to someone with significant experience in your industry. You need that person: they know the players, the economics, the traps. Second, beyond that one seat, push for no direct industry experience at all. That sounds backwards to most founders, and it's the most overlooked source of value in the whole exercise. Your industry's assumptions are part of the bubble too, and the person who scaled a business in a completely different sector will ask the questions your industry stopped asking twenty years ago.
The linchpin of the board is the strategic seat: the person who specialises in commercial strategy. In a board of 3 you need 1 of these people. At 5 or more, I like having 2. They don't have to be the chair, though more often than not they will be, because the skill sets overlap. Beyond the industry seat and the strategic seat, the archetypes you choose, such as finance, operations, brand, channel, market entry, depend entirely on your industry and your business, which is exactly why you design the seats around your actual problems rather than collecting "impressive people".
Pay your board
When I talk to founders about boards one of the early questions is always - do I actually pay these people? My position is a firm yes, if you can. Around $2k-$3k a month per advisor, and $5k-$8k a month for the chair. And yes, you need a chair, a genuinely experienced one who knows how to run a board, drive outcomes between meetings and turn discussion into outputs. A table of smart people without a good chair is a dinner party.
Will experienced people do it for free? Maybe, and honestly, often yes. But paying them changes the relationship in both directions. It shows respect for their time, and you'll both treat each other differently because of it: they turn up prepared and accountable, and you actually use them, because nobody shelves advice they're paying for. Free advice is easy to give and easy to ignore. Paid advice is valued.
Do the maths on what those rates add up to. Three advisors and a chair costs about the same as one good mid-level employee. A good mid-level employee improves a function. A good advisory board can move the growth and enterprise value of the entire business, an impact an order of magnitude beyond what that salary buys anywhere else. On a pure return basis it's one of the cheapest senior capabilities ever available to you.
If you can't afford to pay the full board, at least make the commitment to pay the chair, even modestly. At five to ten staff, even $2k or $3k a month tells an experienced chair you value what they carry and you're committed to the journey, and that signal matters more than the amount. And if you're not ready to commit to that, you're not ready for a board, and you're probably standing in the way of your own success.
If circumstances genuinely force a volunteer board, structure it rather than drifting into it. Ask them to serve unpaid for twelve months, and commit out loud to paying them from that point on. If they're a good board, you'll be making more than enough by then to cover it. If you're not, that's its own finding.
On cadence, let the money decide. If you're paying the board at the suggested standard levels above, every two months is fair. On lighter or volunteer arrangements, quarterly. Either way the meeting is four hours. Anything shorter and you'll spend the whole session on updates and never reach the questions that justify having a board at all.
What about a board pack?
Having a well crafted board pack is important. The chair defines what goes in it, and it gets sent out by the Founder or CEO to the board members 4 or 5 days before the meeting, far enough ahead that everyone arrives having ingested the numbers and formed their questions and discussion topics. A board meeting isnt spending 4 hours presenting the pack. Everyone in the room has read it, and walking through it page by page is a waste of everyone's time. The meeting is for what the pack raised: the numbers and what's really driving them, the strategic questions you genuinely haven't answered, and a round of asks, the doors you need opened and the introductions you're missing.
If you're thinking you can't attract that calibre of person at 8 staff, you're overestimating the ask. You're not recruiting a public company director. You're asking someone two steps ahead of you for a handful of meetings a year on a business that's genuinely growing, which is interesting work, lightly paid, with none of the liability of a directorship. That's an easy yes far more often than founders expect.
This week, write down the three problems that will define your next three years, then design the three seats around them: the commercial strategy seat first, then one person with deep experience in your industry, and a third who has solved your kind of problem somewhere else entirely. Put a real name against each seat, and this week, ask the first one.
Pull the lever.
