A small business does not need an advisory board, but can benefit a lot from one if it lacks something: knowledge, a network or someone who questions old choices. Research shows that outside members help mainly with strategic change in companies with one or a few owners. A board does not automatically raise profit. What it delivers depends on what you want it to solve.
In short
- An advisory board has no place in the law. A supervisory board does: it supervises and can be liable.
- Companies with concentrated ownership change strategy less readily. Outside members on the board help to partly break through this.
- More outside members does not automatically mean better results. Choose people for what you lack, and keep the board small.
In this article
What is the difference between an advisory board and a supervisory board?
A supervisory board is a body set out in law, with supervision as its task. An advisory board is a voluntary arrangement between you and a few advisers. The law does not mention it, so it has no legal powers.
In a private limited company (bv), you can provide in the articles of association that there is a supervisory board. That board supervises the management's policy and the general course of affairs, and advises the management. In doing so, the members act in the interest of the company (art. 2:250 of the Dutch Civil Code).
Supervisory board members also carry responsibility. The rules on directors' liability, including in bankruptcy, apply correspondingly to the supervisory board (art. 2:259 of the Dutch Civil Code). An advisory board does not have that legal role. This makes it lighter to set up, but it cannot enforce anything either.
| Feature | Advisory board | Supervisory board |
|---|---|---|
| Basis | agreement between you and the advisers | articles of the bv |
| Task | giving advice when you ask | supervising and giving advice |
| Powers | no legal powers | under the law and the articles |
| Liability | no statutory rules | like directors, art. 2:259 Dutch Civil Code |
Are you required to have a supervisory board?
For most small businesses, no. A supervisory board only becomes compulsory under the structure regime, the rules for large private limited companies. For that, a company must meet three conditions at the same time.
The three conditions are: the issued capital and reserves together amount to at least a sum set by royal decree, the company has set up a works council as required by law, and as a rule at least one hundred employees work in the Netherlands. A bv that meets these conditions must report this to the trade register within two months after the annual accounts have been adopted (art. 2:263 of the Dutch Civil Code).
The heavy rules only apply once that report has been in the trade register for three uninterrupted years (art. 2:264 of the Dutch Civil Code). A company with ten or twenty people does not come close to this. For you, a board is always a choice.
There is also a third form. In its articles, a bv can also provide that the management board consists of executive and non-executive directors. The non-executive directors then supervise from within the board. That supervisory task cannot be taken away from them (art. 2:239a of the Dutch Civil Code). This is called a one-tier board. For most small companies this is heavier than necessary, but it shows that you can arrange supervision in different ways.
What does a board actually do in a small business?
A board has two roles: control and service. Control means checking whether the company is being run well. Service means offering advice, knowledge and contacts. Chief executives of small and medium-sized family businesses consider that second role the most important.
Research into boards in small and medium-sized family businesses showed that it is useful to look at these two roles separately. The chief executives valued the service role most. Yet the researchers warn that the control role should not be forgotten. It helps in steering succession, and in countering too much leniency of the owner towards family members (Van den Heuvel, Van Gils & Voordeckers, 2006).
For an advisory board, this is an important lesson. A board that only gives advice when you ask for it misses the control side. If you also want someone to follow you critically, agree on that explicitly.
Does a board with outsiders deliver more profit?
Not automatically. Research into boards in small businesses shows no clear link with profit. One study even found that more outside members went together with worse results.
That study looked at 307 Spanish small and medium-sized companies that are not listed on the stock exchange. A larger share of outside directors and a larger board were associated with worse company results. The researchers think that inside directors know their company better, and that large boards find it harder to work together (Arosa, Iturralde & Maseda, 2013). That is an association, not proof that outside members do harm.
An overview of research into boards in small businesses concluded earlier that the knowledge on this topic is fragmented (Huse, 2000). So anyone promising that an advisory board will raise your profit by a fixed percentage is claiming more than the research shows.
When does an advisory board help?
Mainly when your company is stuck or lacks something. Companies with one or a few owners change strategy less readily, and outside members help to partly break through this. Outsiders also give more support when a team lacks knowledge.
A study that followed more than 800 small and medium-sized companies over several years found that companies with a small circle of owners made fewer strategic changes than companies with more widely spread ownership. Those companies could partly make up for this by adding outside members to the board or expanding the management team (Brunninge, Nordqvist & Wiklund, 2007).
Research among young technology companies shows where outsiders contribute most. Outside board members gave more support when the team was less varied, had less experience with research and development, had more financial experience, and when the product was still early in development (Knockaert & Ucbasaran, 2013). In short: the board fills in what the team itself lacks.
Whom do you choose for your advisory board?
Choose people for what your company lacks, not for whom you already know. In family businesses, the composition of the board turns out to mainly reflect the family. A board delivers most when it adds knowledge and contacts.
Research among Belgian small and medium-sized family businesses looked at the choice between a board with mainly family, with mainly people from the company, or with outsiders. Characteristics of the family determined that choice much more strongly than characteristics of the chief executive. The composition was mainly explained by the need for resources and added value, less by the wish to control management (Voordeckers, Van Gils & Van den Heuvel, 2007).
Translated into your choice, these questions help:
Which knowledge or network does your team lack?
Outsiders contribute most where the team itself has gaps.
Do you only want advice, or also someone who follows you critically?
Agree on the control role explicitly, otherwise it will be missing.
Will this person dare to contradict you?
Outside members help companies with few owners to change strategy. That only works with someone who dares to say what they see.
How small can the board stay?
In research, a larger board was associated with worse results. So it is better to start small.
Finally, record the arrangements: what the board does, how often it meets, what the members receive and how long they stay. Because the law does not regulate an advisory board, you decide this entirely yourself.
Sources
- Dutch Civil Code book 2, article 250 (supervisory board of the bv), version in force from 1 July 2026. wetten.overheid.nl
- Dutch Civil Code book 2, article 259 (performance of duties by the supervisory board), version in force from 1 July 2026. wetten.overheid.nl
- Dutch Civil Code book 2, articles 239a, 263 and 264 (non-executive directors and structure regime), version in force from 1 July 2026. wetten.overheid.nl
- Van den Heuvel, J., Van Gils, A. & Voordeckers, W. (2006). Board roles in small and medium-sized family businesses: Performance and importance. Corporate Governance: An International Review, 14(5), 467-485. doi.org/10.1111/j.1467-8683.2006.00519.x
- Arosa, B., Iturralde, T. & Maseda, A. (2013). The board structure and firm performance in SMEs: Evidence from Spain. Investigaciones Europeas de Dirección y Economía de la Empresa, 19(3), 127-135. doi.org/10.1016/j.iedee.2012.12.003
- Huse, M. (2000). Boards of directors in SMEs: A review and research agenda. Entrepreneurship & Regional Development, 12(4), 271-290. doi.org/10.1080/08985620050177912
- Brunninge, O., Nordqvist, M. & Wiklund, J. (2007). Corporate governance and strategic change in SMEs: The effects of ownership, board composition and top management teams. Small Business Economics, 29(3), 295-308. doi.org/10.1007/s11187-006-9021-2
- Knockaert, M. & Ucbasaran, D. (2013). The service role of outside boards in high tech start-ups: A resource dependency perspective. British Journal of Management, 24(1), 69-84. doi.org/10.1111/j.1467-8551.2011.00787.x
- Voordeckers, W., Van Gils, A. & Van den Heuvel, J. (2007). Board composition in small and medium-sized family firms. Journal of Small Business Management, 45(1), 137-156. doi.org/10.1111/j.1540-627X.2007.00204.x