Why Do I Need an Advisory Board?
Advisory Boards are an interesting study topic for many academics and business researchers. In the real business world, they can either be a fantastic source of wisdom and guidance for a company if used properly. Far too often, companies set up an advisory board with little consideration or effort put into what kind of people would be the best suited to serve on their company's advisory board. Sure, they may be great names, even legends, in your industry but it does your company zero good if they are not contributing.
So what's the point of an Advisory Board and why do you need one?
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The first thing you need to know is that you don't know everything. Getting experienced and successful businesspeople in the same or complimentary industries to serve on your advisory board can be a fantastic resource for you. You will be amazed how valuable the input that such people can give just based on their experience and knowledge of growing and exiting successful business ventures. People who can honestly say that they have "been there, done that" are the kinds of people you need to surround yourself with as mentors. Try to avoid too much functional overlap or non-core expertise (i.e. don't get six ex-CFO's to comprise the board of software development company) but it is OK to have more than one opinion from a seasoned veteran. A balanced advisory board that compliments your company's strengths and addresses your weaknesses is the best way to set yourself up for a productive advisory board.
Another important element of why you may need an advisory board is the fact that important industry participants may not really know you very well (or possibly not even think fondly of you, through no fault of your own... especially if you are growing rapidly and taking away market share from your competitors!). A solid advisory board comprised of individuals who are well-respected, have extensive industry experience and possess a network of key contacts in areas that affect your continued success is critical. For example, if you are growing rapidly and could use some mentoring on how to effectively raise capital, you may want to bring an experienced ex-CFO on the board that has good contacts in the investment banking world. Another example would be if you were considering being the target of a merger or acquisition, you may want to think about bringing an individual on the board who used to work for or advise a potential suitor your company to help guide you through the process. The importance of having board members who are able to provide good referrals that help you and your company achieve your collective goals cannot be overstated.
When it comes to finding the right people to serve on your advisory board, the best place to start is by talking to your existing trusted advisors. This could include your accountant, lawyer or other advisors who also work with companies in your industry or in complimentary markets. As an example, once you start asking around, you may find that, if your accountant doesn't know of anyone in their network who can properly assist you, they may know other accountants who work with companies in your industry or advisors who have helped others be successful. These are the kind of warm advisory board leads that could end up landing you the right group of people to help provide solid direction and advice to achieve your goals.
If you feel that certain members of your advisory board are important long-term assets to your company, you may want to consider giving them an opportunity to invest in your business or even some nominal compensation through equity or by paying them a consultative fee. Equity is preferable because it gives them some 'skin in the game' and can motivate them to help ensure your success. If their wisdom and insight are indeed valuable, you may want to consider paying them a month-to-month fee and also giving them some form of equity. The latter approach can help make sure they are adequately motivated to keep getting paid for their efforts and provide an opportunity for them to share in the success of the business down the road.
In short, find the people who are right to help you establish your business in the present and who are also mindful of what it takes to achieve long-term success. Especially in the current economy, there are many exceptionally talented resources out there who are looking to get involved in the next corporate success story - you may as well make that success story your own business.
So what's the point of an Advisory Board and why do you need one?
Click here to know more about Advisory Board
The first thing you need to know is that you don't know everything. Getting experienced and successful businesspeople in the same or complimentary industries to serve on your advisory board can be a fantastic resource for you. You will be amazed how valuable the input that such people can give just based on their experience and knowledge of growing and exiting successful business ventures. People who can honestly say that they have "been there, done that" are the kinds of people you need to surround yourself with as mentors. Try to avoid too much functional overlap or non-core expertise (i.e. don't get six ex-CFO's to comprise the board of software development company) but it is OK to have more than one opinion from a seasoned veteran. A balanced advisory board that compliments your company's strengths and addresses your weaknesses is the best way to set yourself up for a productive advisory board.
Another important element of why you may need an advisory board is the fact that important industry participants may not really know you very well (or possibly not even think fondly of you, through no fault of your own... especially if you are growing rapidly and taking away market share from your competitors!). A solid advisory board comprised of individuals who are well-respected, have extensive industry experience and possess a network of key contacts in areas that affect your continued success is critical. For example, if you are growing rapidly and could use some mentoring on how to effectively raise capital, you may want to bring an experienced ex-CFO on the board that has good contacts in the investment banking world. Another example would be if you were considering being the target of a merger or acquisition, you may want to think about bringing an individual on the board who used to work for or advise a potential suitor your company to help guide you through the process. The importance of having board members who are able to provide good referrals that help you and your company achieve your collective goals cannot be overstated.
When it comes to finding the right people to serve on your advisory board, the best place to start is by talking to your existing trusted advisors. This could include your accountant, lawyer or other advisors who also work with companies in your industry or in complimentary markets. As an example, once you start asking around, you may find that, if your accountant doesn't know of anyone in their network who can properly assist you, they may know other accountants who work with companies in your industry or advisors who have helped others be successful. These are the kind of warm advisory board leads that could end up landing you the right group of people to help provide solid direction and advice to achieve your goals.
If you feel that certain members of your advisory board are important long-term assets to your company, you may want to consider giving them an opportunity to invest in your business or even some nominal compensation through equity or by paying them a consultative fee. Equity is preferable because it gives them some 'skin in the game' and can motivate them to help ensure your success. If their wisdom and insight are indeed valuable, you may want to consider paying them a month-to-month fee and also giving them some form of equity. The latter approach can help make sure they are adequately motivated to keep getting paid for their efforts and provide an opportunity for them to share in the success of the business down the road.
In short, find the people who are right to help you establish your business in the present and who are also mindful of what it takes to achieve long-term success. Especially in the current economy, there are many exceptionally talented resources out there who are looking to get involved in the next corporate success story - you may as well make that success story your own business.