The Board of Advisors consists of a group of individuals selected by the entrepreneur who provides advice on how the business owner can manage his or her company. Because of the informal nature of this type of board, it can be structured according to the business owner’s needs and the necessity of his company. Advisors receive stock-based compensation or benefit from an increased valuation of the business. For example, an entrepreneur could add a lawyer for additional legal advice, a public relations specialist for branding or marketing advice, a former entrepreneur for advice on growing a company and selling to an acquirer, an industry specialist for depth of knowledge and/or partnership development, and/or an investor for fundraising advice.
Importance of Board of Advisors for Start-ups
In the initial stages, it is important for the business owner to get guidance but also when the business entity gets bigger for consistent growth the need for a Board of Advisors becomes stronger for various reasons
Benefits
Start-ups face a lot of competition, ideas and passion will not guarantee start-up growth, the business owner doesn’t have the expertise to be competitive and sustainable, therefore here comes the role of the board of advisors which can be of great assistance to your start-up by filling crucial gaps required for business. At some point, start-ups reach a point lacking some knowledge and skills internally. A Board of advisors help you related to technical or funding issues, they help you transcend barriers and rise to the top.
Here are some of the benefits you can expect from your startup advisory board
1. Advice like hiring, tech and legal
2. Helps in making better-informed decisions
3. Board members can get expert guidance about investing decisions
4. Start-up boards can learn more about establishing efficient workflows
5. Help you solve complex problems
6. Advisory board members fill in the gaps in the founding board’s existing knowledge.
Why should Startups have Advisory Board?
1. Offering an outside perspective
A Board of advisors bring an outside perspective to your business, they bring different opinions, perspectives and experiences. They can look into business performance, market trends and long term strategy through a different lens and in an unbiased way. Having an outside perspective can help you identify blind spots and problem areas. An outside perspective from experience and knowledgeable individuals is one of the key benefits of having a board of advisors.
2. Expanding your business Network
A strong board of advisors can help you expand your business’s network which is essentially important for startups, Having a well-connected board immediately expands your organization’s network and help you build and expand your presence in the market, establishing strategic partners connecting vendors and connecting with other industry experts. A strong network is a key to growing and developing your business. A Board of advisors is an effective way to expand your network and add key connections.
3. Supplementing and expanding organizational leadership
A Board of advisors is there to guide, support and advocate for your team, with the guidance they provide leadership benefits to your team. A strong board of advisors offer areas of expertise and experience that increases the effectiveness of your team. Support of the board of advisors is important for your team to keep growing and develop consistently and effectively. They also ensure that leaders, teams and managers are regularly effective.
4. Increasing your credibility with investors, clients and vendors
Another way board of advisors add value is by building credibility with investors, clients, and vendors. A strong board of advisors made up of industry experts and leaders can effectively increase credibility which in turn could help you build trust with potential investors, customers and vendors. It could also improve your public and community relations which gives instant gain credibility with key stakeholders and clients.
Types of Board of Advisory
Domain Experts
Domain experts are industry experts, sales experts, entrepreneurs, usually their value diminishes but you learn a lot from them through meetings and discovering that they have shared all the relevant information with you.
Tips for working with domain experts:
1. Seek them out. These people can turbo-boost your efforts, saving you time and money.
2. Feel free to end the relationship; it’s okay to meet with someone a few times and then move on. Entrepreneurship is full of changes, you will have employees, advisors, clients, and suppliers that will be there in the early stages and then leave, it’s OK.
Door Openers
These types of advisors are the ones you introduce to your team, clients, investors, employees, partners or other advisors.
Tips for working with door openers:
1. It is very hard to assess their value to you. Some people are just named droppers and some people can change your life with one introduction.
2. The real value of these types of advisors is when they can introduce you to people you never knew existed, or when they have a real influence on the people they are going to introduce you to.
3. By and large, a good door opener will just introduce you to people without asking for too much in return.
4. Assess their value as you go. Before entering into a long term agreement, let them make some introductions and see if they are useful.
Mentors
Mentors are people you meet regularly, they can challenge you and help you think through issues. These types of advisors try to help you understand what should u do and are particularly important.
Tips for working with mentors:
1. They can help with strategy, with managing internal conflicts; sometimes they can support you emotionally, and sometimes they help you to focus and to push yourself (especially in the very early stages when you don’t have a board).
2. Like the golden tippers, it’s important to keep them in the loop.
3. It’s good to agree with some kind of frequency and regularity of meetings, put them in the calendar and try to stick to them.
These types of advisors are not there to reassure you. They are there to challenge you, ask you questions and force you to think. You don’t need to necessarily agree with them. You can argue with them, you can try to convince them, but in the end, go and do whatever you think is right. It is your company.
What can a Board of Advisors do for Start-ups?
1. Open doors & Expand your network – Every Individual on your board holds key to doors that might be closed to you. They can help you expand your network by connecting with business contacts, prospects, and others who can help you.
2. Provide Support – Personal Board of directors will be there in your good times and bad times, providing support during hard times and also celebrating success and milestones of your career.
3. Develop You – You will learn a lot from just modelling, observing and watching competent, smart,versatile individuals apply principles and exercise skills in real life
4. Coach & Challenge – It’s not just a matter of sharing their views, the very best board challenges you to do better and monitor your strategy and plans, this will help you discover flaws in your plan and improve them more
5. Advocate for you – Your board members can act as an advocate for you, they can sell your skills and experience. They can also get you access to key meetings and make sure you take the right training and make it onto a high potential list
And most importantly, they can hold you accountable for your actions and behaviour impacting your professional performance.
How to put a Board together?
1. Map it Out
2. Be specific Be clear
3. Diversify
4. Take stock and evaluate.
Importance of Board of Advisors in Startups
1. Business Development
2. A good Backup system
Conclusion
Having a board of advisors adds value to your business in many ways and can provide invaluable support, guidance, and advocacy for your executive team. For many businesses that want to avoid the expense, formality, and liability associated with a board of directors, a board of advisors can be an informal, inexpensive, and effective way to develop a team of experts. That said, to get the most out of this team, it’s important to be strategic about how it’s developed.
When considering creating a board of advisors, first consider the strengths and weaknesses of your management team and work to build a board with the skills to address and compensate for some of the weaknesses. Additionally, before developing your board, it’s helpful to have some clear goals about what you want the board to accomplish. Finally, going into it with a general idea of the size and structure of the board can help make this process smoother.
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