Beyond the Pitch
Advice on Taking Advice
As an entrepreneur, there are plenty of things you don’t have enough of: money, time, help, customers, sleep, and more.
I’m certain, however, that there is at least one thing you’ve been getting in ample supply: advice.
Good advice can be more valuable than money. Bad advice is at best a distraction, and can often be much worse.
How do you tell the difference between good advice and bad advice?
Here’s my advice on advice.
When considering the advice that someone is offering you, ask yourself these questions about the advice and the person offering it.
1. What is the motivation of the person offering the advice?
If the action you are considering could benefit the interests of the person making the recommendation, take that advice with a grain of salt. The possible exception: if the interests of the advisor are aligned with yours, then even though the advice may be self-motivated, at least it comes from a perspective consistent with yours.
Sometimes it is easy to identify the self-interest of an advisor; other times, it may be subtle. Always think about whether the advisor has a personal stake in the outcome of your decision.
Advice from someone in the business of giving advice will tend to be more detached and dispassionate (and should be thoughtful). The advisor has an independent reputation to maintain.
TIP: Advice from a professional may or may not end up being correct, but high-quality advisors will bring subject matter experience and a strong incentive to be helpful to the table, and usually will not have a self-motivated reason to lead clients astray.
2. What is the background and experience of the person offering advice?
Evaluate whether the person providing advice has the functional background and experience to be helpful.
Some situations and individuals are easy to assess. If you’re a startup facing a legal issue, for example, get advice from a lawyer with startup experience. Not all lawyers have experience working with new young companies and entrepreneurs. Having an attorney with the right experience—one who has worked with startup clients before—can help you and your business avoid a lot of mistakes.
Similarly, if you’re trying to set up a sales team, get advice from a sales leader who has sold and has effectively led sales teams, ideally in your industry.
Some business issues aren’t industry-specific. An advisor with broad general business experience can be extremely helpful, even if she has no experience in your particular industry.
For example, if you’re running a software business, you can certainly get useful financial or human resources advice from an individual who has run non-software companies. But, you probably wouldn’t turn to that person for advice on development costs, SaaS (software as a service) models, what bug-tracking software to use, or the best way to prototype and test a new application.
TIP: General business experience is beneficial, but some situations require an expert. Learn to recognize which is which.
3. Does the person offering advice understand your situation completely?
Even an advisor with an excellent background and relevant experience can be the source of inaccurate advice if he doesn’t understand the nuances of your situation. Off-the-cuff advice, even from an “expert,” can be worse than no advice at all.
When I was running a SaaS startup about eight years ago, more than a few experts told me we needed to move aggressively to a “freemium” model. These were genuine, well-intended experts, who were probably giving good generic advice. But in the case of our company, we were financially dependent on the subscription revenue stream from the paying customers we already had, many of which we would have lost had we implemented a “freemium” model.
In this example, our company wasn’t in a financial position to follow the advice of this expert (and a fundraising round wasn’t an option at that point either); following this advice would probably have put us out of business.
Advice from support groups or advisory boards can also create this problem. The people in your group may have great experience and truly be motivated to help, but if they don’t have all the facts, consider their advice with caution.
I remember a situation where an entrepreneur described a problem he was having with an employee to his support group. The group quickly came to the advice that the entrepreneur should fire this employee, and do it immediately.
Maybe that was good advice; maybe it wasn’t. But without many more facts than were available to the support group, the advice was only partially informed. Firing an employee is almost always a situation that requires time and much discussion for someone outside the business to deeply understand.
On the other hand, an experienced advisor who has seen a lot can get to the core of an issue without knowing a lot of facts. Some things really are that obvious and not all that fact-specific.
TIP: It’s important not to stubbornly ignore good advice, because “they just don’t understand my business.”
In the end, the decision is yours to make.
The role of an advisor is just that, to advise. As the leader of your business, you cannot delegate important decisions to any advisor. The buck stops with you. Your job is to listen to the advice, evaluate it, and make the decision.
After all, you are the one who must live it.
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