Many entrepreneurs shy away from asking for help, especially, first-time entrepreneurs. They feel in order to maintain control (a.k.a. full ownership) of their company; they must be in charge of every aspect of their business. However, this mentality is often what kills a start up. Here’s why…
No business is too small to benefit from a board of advisors. It is a powerful management tool that every sized business, small or large, should not be without. Establishing a Board of Advisors is cost-effective way to gain critical expertise and skills in areas outside the company’s core competency. Advisory boards can contribute to innovation and the bottom line. For a start up, it can be the difference between success and failure.
Here 13 ways a Board of Advisors can assist an entrepreneur or start up:
- Analyze market conditions.
- Recommend technological innovation.
- Suggest product or service changes.
- Forecast trends.
- Provide a set of “fresh eyes” for the organization.
- Source of ideas or trends.
- Give honest advice.
- No axe to grind and will be on your side.
- Be an inexpensive alternative to a formal Board of Directors.
- Provide a level of talent they could not normally afford.
- Support entrepreneur so they don’t navigate unfamiliar waters alone.
Tip: For Effective Board of Advisors Usage, Honesty is Key
To use a Board of Advisors effectively, entrepreneurs and their management team must be open and frank with the Advisory Board, sharing both hopes and fears. They won’t be able to advise you properly if you hold back.
When Should You Create a Board of Advisors? Day One of Your Business Existence!
Experience shows, every day that goes by without a Board of Advisors lowers your odds of success. No single person can know everything, and ad hoc, on the fly advice can be worse than none. An Advisory Board that meets regularly and gets to know you and your business can provide the management expertise you need to avoid shoals of mistakes and set your business on a true course.
Bonus: Board of Advisors Can Create Competitive Advantage
Additionally, a Board of Advisors composed of specialists, generalists or critical thinkers from diverse backgrounds can expose the positive or negative aspects of major decisions. This can be a competitive advantage and help build a company’s visibility, credibility, and revenues.
Your Next Step – Get Some Help Starting a Board of Advisors
I wouldn’t be writing about this important topic if I didn’t want to help companies like yours. Feel free to contact me to discuss your situation. At the very least, I can provide some suggestions on how you can get started. Smart entrepreneurs know when to ask for help!
What other ways can a Board of Advisors assist entrepreneurs and start-up companies? Share your thoughts below.
P.S. – Do you need an Outside Director, Advisory Board Member, Trusted Advisor, or Interim CEO? Someone who can help you see your business and your goals through “Fresh Eyes.” Contact me and I will work with you to look at where you want to go and help you find the best way to get there. Sometimes all it takes is someone with a fresh viewpoint, unencumbered by company politics or culture to help find the right solution.
Excellent article, Larry. You have been a very helpful advisor to me as I have grown my company and I highly recommend you to other’s looking for similar.
Josh, thanks for your first-hand comments and recommendation.
Larry, good observations… I agree. I covered this topic myself (read article here) and two key points I’d highlight are to be aware of the three different types of mentors and to keep the amount of equity you give to advisors low and the vesting fast so that you can evolve your board as your company evolves and don’t have people hanging around waiting to vest and butting into things where they are no longer helpful.
Christopher… great comments. Thanks for your insight and article.
Great article! Companies of all sizes can always benefit from executives who have ‘been there and done that’ to evaluate the entire corporate landscape from a higher level point of view. This really saves time and resources plus helps to keep operations moving in the right direction — towards maximizing profitability and increasing market share.
Bill, good point! You need advisors like myself who has been there and done that. It is better to learn from others than to have to learn the hard way. In this fast moving world, you want to use your time and resources wisely.
Good thoughts, Larry. Nonprofit startups can also greatly benefit from having Advisory Boards. When I started up the Center for Women & Enterprise in Rhode Island, members of my Advisory Board introduced me to key financing, government and small business organizations in the community. All of these resources then became “only a phone call away” to my customer base – women who were starting and/or growing their businesses.
Carol, great example of how an advisory board multiplies the ways you can help others. Thanks for your comments.
Love the article, Larry! I’m on several Boards of Advisors and have loved watching the evolution and growth of the companies involved. In every case, they have chosen advisors who complement and complete the present management’s skill set. One other bonus is that the Board of Advisors will provide the entreprenuer with a new and expanding network of contacts that can be available for additional assistance in the future.
It always helps to have an set of outside eyes looking in on your company. Even better when those outside eyes come with additional benefits!
Leann, good points. I call it “fresh eyes.” The management team and the founder are working hard to expand the business and need a Board of Advisors to give them different perspectives.
Larry, excellent article… I agree companies of all sizes do excel with advisors. Start ups can reap the benefits from the first day, there is nothing like having a mentor(s) by your side to help guide you through the maze. In fact with my company once the board of advisors were put into place things changed for the better and has kept on a clear direction. The experience can not be replaced in any way. I often wonder what would of happened if I did not establish a Board of Advisors.
Rick, thanks for sharing your real life experience.
This is my first interaction with you. I thought about it a little while ago but your post made me think again about having a Board of Advisors for my own consulting services. But I think I see it from a different point of view. I mean my idea of a Board of Advisors is a collection of thought leaders from around the world in the areas of my consulting services i.e. Strategy, Performance, and Risk Management for their expertise and insights (the 13 ways as you mentioned) for growth and success in global marketplace.
Ehtisham, you need to decide what you want in an advisory board and what specialties you need. The next step would be to target individuals that meet your criteria and decide how they will be rewarded. I would start small and test your model and expand and tweak as you go. The nice thing about an advisory board is that they are there for you. If something is not working or you need another specialty, make the changes as needed. Thank you for your comments.
Larry, building a business is tough and any smart CEO would be well served to have a strong group of advisors that bring diverse experiences and perspectives to the debate. Whether it is technology licensing, international expansion, product or channel strategy. JMK
For startups and early stage companies, Advisory Boards should be small with more of a mentorship role focussing on ensuring the inventor/founder/entrepreneur has a clear business plan and straegy and maintains a clear “line of sight” to commercialization, while carefully husbanding cash and minimizing “burn rate” internally. This is balanced by Advisors providing a unique external network, not usually known to the founder, in order to facilitate development of relationships with strategic partners or “alpha” test sites or “beta” test sites and obtaining strategic customer input on enhancement of the emerging product and/or service. Another important role for such Advisors/Mentors is to identify missing skill sets in the core business and identifying the need for external contractors for non-core capabilities emerging as needed.
For later stage entrepreneurial companies, the Advisory Board can assist in strategy enhancement, identifying next stage funding as well as providing a nucleus for an Independent Board of Directors while recommending key skill sets for new Independent Directors.
Enjoyed the post very much. The concept of a volunteer advisory board for start ups and entrenpreneurs is excellent.
I helped to develop the first business mentorship program for women in Canada, and think that what was learned still applies Guiding, mentoring helping entrepreneurs and start ups is critical and meands build ing solid business basics that encompass not only a good business and marketing plan, but the help they need to execute is critical.
Even if a entrepreneur or startup launches with great results, the need to help buildinig out in a way that aligns strategy, agile systems and tactics is critical.