How to structure an advisory board for a growing family-owned SME

For any owner of a growing family SME, the dilemma is constant: how to seek external advice to accelerate development without diluting authority or losing control of the vision? The fear of an external board becoming a counter-power is legitimate. We often think it’s enough to surround ourselves with “trusted people” or follow standard advice on holding regular meetings. This approach, while well-intentioned, often leads to surface-level governance that brings no real strategic value.

But what if the true key was not to protect yourself *against* external advice, but to build a structure that transforms it into a major asset for your own sovereignty? Setting up an advisory board should not be seen as a concession of power, but as the architecture of your sovereignty. It is a powerful tool that, when well-structured, becomes a strategic shield, a flight simulator for your decisions, and a value catalyst for your legacy. It is the way to steer growth with more foresight, without ever letting go of the wheel.

This article will guide you through the crucial steps to build this strategic rampart. We will see why the foundation of a family charter is a non-negotiable prerequisite, how to select members who provide real added value, and how this structure protects and increases the value of what you have built, by leveraging the unique strengths of the Montreal ecosystem.

To effectively navigate through these strategic steps, this guide is structured to accompany you from the foundation to the optimization of your future advisory board.

Why a family charter is essential before integrating the 2nd generation?

Before even thinking about inviting external experts, the first step in structuring healthy governance is internal. The integration of the second generation is a critical moment, often a source of tension if the rules are not clear. The family charter acts as the constitution of your family business. It does more than just define roles; it formalizes a shared vision, common values, and, above all, decision-making and conflict-resolution mechanisms. It is the document that separates family emotions from business imperatives.

The urgency of this process is highlighted by the facts: insufficient preparation is the norm rather than the exception. According to a recent study, only 47% of family SMEs have a structured succession plan, a figure that drops to 26% for those who have already designated a successor. This lack of anticipation creates a vacuum ripe for misunderstandings and power struggles. The charter fills this void by establishing factual and objective bases for the involvement of family members.

This tool is not a bureaucratic straitjacket, but insurance for sustainability. It protects the founder by ensuring the successor is competent and prepared, protects the family by preventing professional disagreements from becoming personal, and protects the business by guaranteeing strategic continuity. It is the first brick of your sovereignty architecture, ensuring that future growth respects the legacy of the past.

Lawyer, accountant, or fellow entrepreneur: who to invite to your board?

Once the family charter is established, the composition of your advisory board is the next strategic decision. A common mistake is to surround yourself with familiar faces: your long-time lawyer or accountant. While useful, these profiles are not enough to create the strategic shield your SME needs. The goal is not to duplicate your own skills, but to complement them with expertise you do not possess.

To build a high-performing board, aim for cognitive diversity. Look for individuals who will bring radically different perspectives to challenge your certainties and shed light on your blind spots. The illustration below breaks down the key profiles to consider for a multidisciplinary team.

As this mosaic of talent shows, a robust board combines field experience, academic vision, and functional expertise. Alchemy is born from the constructive confrontation of these different points of view.

How governance increases your SME’s valuation in the eyes of a buyer?

Beyond decision-making support, setting up a structured advisory board is a direct investment in the value of your company. For a potential buyer, an SME that depends entirely on its founder represents a major risk. What happens if the leader leaves the ship? An independent and competent advisory board is proof that the business is bigger than its owner. It is a guarantee of stability and predictability.

This governance structure de-risks the investment for a third party, which translates into higher valuation multiples. A buyer pays a premium for a well-oiled machine, with clear processes and a documented strategic vision, rather than for an opaque company relying on one person’s intuition. In the Quebec market, this impact is quantifiable: SMEs with structured governance can obtain EBITDA multiples of 5-7x in professional services and up to 6-10x in technology for the 2024-2025 period.

The presence of an advisory board acts as a strong signal of maturity and professionalism. It indicates that a strategic dialogue exists, that decisions are challenged, and that the company is prepared for the future, with or without its founder. The following table concretely illustrates the valuation gap.

Comparison of valuations with and without a governance structure

Evaluation Criterion	Without Advisory Board	With Advisory Board
Average EBITDA Multiple	3-5x	5-8x
ESG Premium	0%	+15-20%
Average Time to Sell	14 months	9 months
Renegotiation Risk	High	Low

The risk of having suppliers or close friends on your advisory board

The temptation is great to invite people with whom you already have a relationship of trust, such as close friends or long-term business partners. However, this familiarity is a trap. An effective advisory board relies on the independence and objectivity of its members. A friend will find it hard to confront you harshly. A supplier, even in good faith, will always have a conflict of interest, however subtle: their advice could, consciously or not, favor the commercial relationship they have with you.

The goal of the board is not to comfort you in your choices, but to challenge them constructively. Member independence is the foundation of the trust capital you build. It is this independence that guarantees frank debates and bias-free recommendations. As noted by Donald Riendeau, corporate governance specialist at the BDC:

An effective board can provide enormous benefits for an SME, but for that to happen, you must have the right people. The more business owners trust their advisory board members, the more likely they are to be open with them.

– Donald Riendeau, BDC – Corporate Governance Specialist

This “trust” is not born of friendship, but of respect for integrity and impartial expertise. To preserve this impartiality, it is essential to set clear safeguards from the start.

When to start the transfer of power to the designated successor?

Transferring leadership in a family business is one of the most delicate stages. Doing it too early can destabilize the company; doing it too late can frustrate the successor and push them to leave. The advisory board plays a crucial role here as a “flight simulator.” It allows for a gradual and controlled transfer, where the founder can let go in stages while ensuring the successor is ready to take the reins.

Rather than a sudden passing of the torch, the board allows for a smooth transition. The designated successor can first be invited as an observer, then be tasked with leading an agenda item, and finally pilot an entire meeting on a strategic issue. Each step allows for evaluating their leadership skills, strategic vision, and ability to interact with high-level experts, all within a secure framework.

This method allows the founder to change roles without leaving the company. They can move from operational leader to Chairman of the Advisory Board, thus retaining a role as guardian of the long-term vision while leaving daily management to the successor. It is an elegant solution to avoid the “founder who never leaves” syndrome while reassuring employees, customers, and partners about continuity.

Why joining Aéro Montréal or CargoM is crucial for a local SME?

For a Montreal-based industrial or technological SME, to isolate oneself is to perish. The city’s unique ecosystem, with its world-class industrial clusters, is a major strategic asset that must be exploited. SMEs are the backbone of the local economy; in Quebec, the approximately 250,000 SMEs represent 99% of businesses and contribute to 50% of the provincial GDP. Actively integrating into this economic fabric is not an option, but a necessity for growth.

Joining a cluster like Aéro Montréal (aerospace) or CargoM (logistics and transport) offers much more than just a contact list. It provides direct access to:

• Market Intelligence: Understanding trends, innovations, and threats before your competitors.
• Talent Pool: Identifying and recruiting experts to serve on your advisory board.
• Strategic Partnerships: Collaborating with other SMEs, research centers, or major prime contractors.
• Visibility: Increasing your company’s awareness and attracting business opportunities.

This interconnection is the lifeblood of the Montreal economy, a network where information and opportunities circulate. The following image metaphorically represents this dense industrial mesh.

Being an active member of these clusters positions you at the heart of the engine. It gives you legitimacy and privileged access to human and informational resources that are otherwise out of reach for an isolated SME. It is a distinctive competitive advantage of the Montreal ecosystem.

Part-time or consultant: which contract formula to keep the expert available?

Attracting high-caliber experts to your board is one thing; compensating them in a fair and motivating way is another. SMEs have limited budgets and must find creative formulas that align advisors’ interests with those of the company. There is no one-size-fits-all solution; the right structure depends on your company’s maturity and the expected level of involvement from your members.

Compensation is not always monetary. For many experts, particularly retired executives, the primary motivation is to share their experience and stay connected to the business world. As Pierre Cléroux, Chief Economist at BDC, notes, practice varies: “Many business owners offer a small stipend to their advisory board members while others do not compensate them beyond a meal or dinner on meeting days.”

However, to formalize commitment and guarantee availability, some form of compensation is recommended. The choice of contract formula must be strategic, balancing cost, flexibility, and motivation. Here is an overview of the most common options, with their respective advantages.

Comparison of compensation formulas for advisory board members

Formula	Advantages	Typical Costs	Tax Implications
Attendance fees	Maximum flexibility	$500-$2,000/meeting	Business income
Consulting fees	Regular commitment	$5,000-$15,000/year	GST/QST billing
Phantom stocks	Long-term alignment	Variable based on performance	Deferred capital gain
Volunteer + meals	Minimal cost	$200-$500/meeting	None

The phantom stocks formula is particularly interesting for high-growth SMEs. It does not dilute the owner’s capital but offers the advisor a bonus based on the increase in the company’s value, creating a perfect alignment of long-term interests.

Why establish your industrial headquarters in Montreal rather than Toronto?

The choice of a location for a headquarters goes far beyond tax or logistical considerations. It is a decision that anchors your company in an ecosystem. For a growing family SME looking to structure its governance, Montreal offers a cultural and structural competitive advantage over metropolises like Toronto. It’s not just about a lower cost of living, but access to a different type of human and collaborative capital.

The Montreal ecosystem is characterized by a more collaborative, less transactional business culture. This mindset greatly facilitates the recruitment of high-level advisors, who are often more motivated by the project and impact than by compensation alone. The high concentration of universities and research centers creates an exceptional talent pool where cutting-edge expertise is accessible. Furthermore, government support programs, driven by entities like Investissement Québec, as well as generous R&D tax credits, create an environment conducive to innovation and structured growth.

Ultimately, structuring an advisory board in Montreal means relying on a complete ecosystem to build your sovereignty architecture. This is where you will find the essential building blocks: experts from clusters, bilingual and multicultural talent to diversify perspectives, and a culture that favors experience sharing. Choosing Montreal is not just choosing a city; it is choosing a strategic partner for your growth.

To realize these benefits and transform your governance into a true growth lever, the next step is to formalize your vision. Start today by laying the groundwork for your family charter to build your company’s future on solid foundations.