5 Ways an Advisory Board Can Help Your Startup Accelerate
Filling your advisory board with expertise and connections
“The best way to make a fire with two sticks is to make sure one of them is a match.”
– Will Rogers
When you are starting out in business it can feel like everyone is willing to offer ideas and advice.
It can be useful to receive ad hoc advice—fourth quarter accounting suggestions from your brother-in-law, the CPA, or high-level marketing ideas from the social media manager who happens to sit next to you on a plane.
But there’s a better way. While your company is still in the Pre-concept Stage, begin looking for mentors and experts to serve as advisors to your company. These may be former professors, executives that you’ve reported to in earlier jobs, or industry experts that you met at conferences or other events.
During the Pre-concept Stage, solidify these relations. When your startup reaches the Concept Stage, add structure to the advisory relationships you have built by inviting three to four individuals to participate on your company’s advisory board.
An advisory board adds advice, credibility, and connections.
A board of advisors is a small group of people you trust who understand the industry, your vision, and strategy, and have functional expertise and contacts that can benefit your business.
1. Boards of advisors provide insight, offer suggestions, and can be a trusted sounding board when you need to talk.
On many days, being an entrepreneur is a lonely job. From Pre-Concept until you’ve validated your prototype, the entrepreneur may be a team of one. You will need someone beyond family and friends to talk to—especially when it comes to the tough trade-offs that every early stage company faces. Advisory boards, unlike boards of directors, do not carry legal or fiduciary responsibilities. They are there voluntarily to help the entrepreneur.
2. Advisory board members can help fill in the gaps in your personal experience and expertise and find key talent when the time is right to expand the founding team.
Seek out advisors who have different functional backgrounds than yours. If you are an engineer, especially, look for experts in marketing or finance, especially if those experts are connected to the industries you plan to serve. If your background is marketing, seek the advice of a technologist. An advisory board is a great way to increase diversity.
3. Advisors can connect the startup with potential customers.
Concept and Seed Stage companies need customer validation to prove that early customers value the solution and are willing to pay for it. This requires customers to beta test to confirm not only that the product works, but that the assumptions about the marketing and sales approach connect with both solution users and buyers. It’s hard to sign up the first betas or customers. A well-connected advisor can open many doors.
4. Advisors will tell you when you are heading down the wrong path.
Entrepreneurs can be stubborn. They make mistakes. An advisor who is there because he or she wants to help you succeed may be able to stop you before you take the next wrong step. If not, they can help you figure out, based on their experience, how to clean up a mess.
5. Inviting a trusted person to participate in your advisory board expands and strengthens the relationship with that person.
Even if the advisor turns down this more structured role, they will appreciate being asked to be your advisor. People at this level have many demands. If they can’t devote the time to be on your advisory board, ask they will make themselves available for periodic telephone calls.
6. The process of building and then working with an advisory board helps prepare an entrepreneur for building and working with a Board of Directors.
Corporations are required to have a board of directors elected by the stockholders. Once you secure outside funding, your company will have a board of directors. Learning to work effectively with an advisory board gives you hands-on practice for learning to work with a board of directors. It’s a smart way to plan for success.
Business people of all types tend to admire entrepreneurs who take the risk to put their creativity in play—and they seem to want to share the things that they believe can help the entrepreneur succeed. Leverage this good will and expertise by establishing deliberate and defined advisory relationships that can benefit the company (and its founders) from Concept stage through exit.
Learn more about the importance of an advisory board.