Entrepreneurs have a reputation for being intelligent, independent, self-starters. Those are great qualities for success in business, but they are often accompanied by another trait: Isolation.
It’s easy for a normally broad-thinking person to develop business myopia. We can become so focused on what we’re doing that we lose sight of the big picture. That’s why a good board of advisors is so crucial.
You may be thinking: “I have a small company. I don’t want or need a big board. That will just slow things down and muck things up.” You don’t need a big board. Personally, a group of four to six people is ideal. Any more than that and it starts to get cumbersome and hard to coordinate. And don’t get hung up on big meetings, either. You don’t have to bring everyone together at the same time for a meeting. These are your advisors. Meet with them when their schedules (and yours) can accommodate it. Trying to get six people together at the same time in today’s business climate can be really tough. Carve out smaller, shorter meetings instead.
Regardless of exactly how many people you select as advisors—and how you actually get together with them—there are three key perspectives that a good advisory board brings to the table. You should make sure your board is comprised of individuals who can bring the following perspectives.
1. Market Knowledge: You need to have an advisor who knows your target audience well. He or she must also understand your company and your unique value proposition (and hopefully be excited about it). This person can help you discover new customers and can point you in the right direction when it comes to developing business relationships that are mutually beneficial.
2. Entrepreneurial Experience: Not every businessperson is an entrepreneur. What you’re looking for is someone who has taken more than one business from the idea stage to the start-up stage to a liquidity event (sold the company). You really need to have someone around who understands first-hand the challenges that start-ups face and can talk you through some of the common pitfalls.
3. Start-up Financial Acumen: There are a lot of people out there who are good at crunching the numbers, but that’s not what you’re looking for. You need someone with start-up CFO experience who knows how to build revenue models and has taken a company through multiple financings and contacts. Financing is a whole different game when you’re just getting started.
What About Compensation? The people you want on your advisory board aren’t they kind of people looking for a big pay-off. You should have people who love startups and are looking to help people do what they’ve done. You don’t want to abuse their commitment and help—so it’s always appropriate to say thank you in a tangible way. But this doesn’t have to be a huge financial burden on your company. A quarterly dinner (a nice one!) is often appreciated. And if you are in a position to offer something like stock options—that’s appropriate as well. But you’re not “buying” their time and expertise—you’re expressing appreciation—so you don’t need to go overboard.
You don’t have to go it alone in business. As a matter of fact, you’ll be miles ahead if you don’t try! Advisors are worth their weight in gold—if they know the industry and know how to steer you in the right direction, like the people described above.
In what other areas would you want advice for your business?