Your Advisory Board

Your network is an invaluable resource for your start-up enterprise, and one of the most important is your Advisory Board. It can make the difference between your success or failure.

The primary reason for business failure is the lack of a well thought out and researched plan. Most start-up enterprises do not have an abundance of business experience identify all the issues that will be important and are therefore prone to making mistakes, some of which can be fatal to the enterprise. Your Advisory Board can not only provide an additional pool of expertise but also can give your business credibility with investors, prospective employees and even customers.

This group of people may be the most important part of your startup enterprise if they are chosen correctly. Not only are they likely to be a minimal cost to your enterprise, but they can provide invaluable advice and direction. No enterprise is too small to have an Advisory Board and the earlier you get them, the better.

If you don’t have partners, your Advisory Board may be the only other individuals who have a genuine interest in your business success and with whom you can share your strategies, concerns and ideas. An Advisory Board is an especially valuable management resource for a startup enterprise. No individual can know everything, and a board can fill in for your expertise gaps with sound advice. The great thing about advice is even if you don’t wish to take it, you always want it.

Identifying and securing the best Advisory Board members for your enterprise can be challenging and time consuming but well worth the effort. Make sure you don’t just replicate your experience/skills but rather seek out different ones and especially those that will have the biggest impact on your business success.

The benefit you will receive is obvious (i.e. experience in marketing, scaling, staffing management, funding, technology, accounting, manufacturing, distribution, customer service, etc.). When recruiting Board members, you need to understand what they will get out of the experience. These include but are not limited to:

• Personal satisfaction of helping to build a successful enterprise (i.e. giving back)
• Getting new perspectives and ideas
• Discovering new potential customers, business partnerships, or opportunities for their own ventures
• Extending their network of business contacts
• Increasing their knowledge of a particular industry or business segment
• Improving the experience on their resume

Compensation for your Advisory Board can include one or more forms. These could include out of pocket expenses, an honorarium for the year or each meeting, and even shares. Recognizing that there are many experienced retirees seeking more purpose in their retirement, they may even not ask for any compensation. Compensation may differ for individual members depending on their contribution/value to the enterprise. It is important to preserve shares as much as possible for future investors. Therefore, avoid providing shares unless the member is not only heavily involved in building your enterprise, but will continue to be involved in the future.

You want the best people possible for your Advisory Board. Once you have determined the areas of expertise you require, you should seek out the very best people with a diversified knowledge and experience that you can. The phrase ‘if you don’t ask, you don’t get’ is good advice. Even if they appear out of your league, the worst that can happen is that they reject your offer. Even then they may refer you to good and even better candidates. The bonus here is that you can ‘name drop’ when speaking with the referred individuals.

Entrepreneurs can be so focused on their business vision, that they are not open to any changes that may offer a better path to success. We all are a product of our experience and can’t help doing things the way we have always done them. Your Advisory Board can offer a different perspective and innovative ideas that you may not accept from anyone else. Your Advisory Board will, more likely than you, see new ways of doing things. They can provide the new ideas you need to hear to encourage you to change things up and start doing things differently. Your vision doesn’t have to be bad or stupid to have flaws and board members, who don’t have the same ownership of the idea that you have, will be able to see them more clearly than you. They can help you think it through, and perhaps come up with, ways to navigate around those flaws.

In addition to their own expertise, Advisory Board members will likely have a network of contacts that they can tap into for even more expertise. Some examples of expertise might be angel investors or venture capitalists that can provide funding for your enterprise; small business government support programs; manufacturing in China, software developers in India, exporting, internet marketing, etc.

For your startup enterprise two to four individuals would be ideal. While you might be meeting with individual members more often on specific issues, the group should meet with you at least quarterly.

Advisory Board Meetings

To get the most out of your Advisory Board, you need to thoroughly prepare for these meetings. Their time is valuable and if you want to keep them engaged, you need to be organized, focus on key business issues and challenges, and keep the meetings as efficient (i.e. two hours maximum) and effective as you can.

The first meeting should typically focus on the business plan and include your vision for your enterprise. As with all Advisory Board meetings, a detailed agenda with allotted times for each topic should be sent out at least two weeks in advance and include all documents you plan to discuss. The last thing you want is everyone reading documents for the first time at the meeting. You may be tempted to cram as many topics as possible into the meeting, but you should try to limit discussion topics to three. Make sure someone is taking minutes and plan for refreshments or even a working lunch.

Written by Bob Aslip – BAG Consultant