Build a Better Advisory Board

I recently attended a great panel discussion at Atlanta’s StartupChicks. The topic was advisory boards, including when and why you need one and how to get the most from having one.

The panel covered a lot of ground in the hour-long discussion, and it occurred to me that even if you’re not a start-up – or a chick – there were many valuable kernels of information. Before I hit the high points, let me introduce the panelists:

Mary Madden, Chair and Executive Director at the Atlanta Chapter of the National Association of Corporate Directors

Karen Robinson Cope, SVP Sales & Marketing at NanoLumens and Founder of Atlanta Council of Directors

Laurie Baird, Strategic Consultant – Media and Entertainment at Georgia Tech – Institute for People and Technology

The panel was moderated by Cindy Cheatham of the Georgia Center for Non-Profits and formerly Venture Catalyst at the Advanced Technology Development Center.

Do You Need an Advisory board?

Surprisingly, the panel’s consensus was that regardless of whether you have an early stage startup or have been in business for several years, most companies can benefit from an advisory board. Even a board of just two or three people can be helpful to a very small company.

Is your start-up pre-revenue? The panel suggested that early stage companies should consider assembling an advisory board at the point when your business plan is coming together. The advisory board can help guide you through critical decisions in these early days, avoiding costly mistakes that may hurt your business later.

Another advantage to having an advisory board is that “your board can be a great marketing tool,” says Laurie Baird, spreading the word about your business to their friends and colleagues.

If this all sounds good to you, there’s one more essential step before proceeding. Ask yourself if you are really open to the input advisory board members will provide. To be successful, you should be open minded and willing to consider advice from other professionals. Otherwise, you will just be wasting everyone’s time.

Pick the Right Advisors

Once you’ve decided that it’s time to form a board of advisors, where do you turn to find the right people to join it? Who makes a good advisor, and who would be better to bypass?

Cindy Cheatham recommends finding someone with a successful track record of building companies to serve as a generalist advisor. Add skill-based advisors to augment your professional financial and legal team.

Look for passionate people who “have your back” and will be straight with you. These people don’t need to be friends or even current business associates. In fact, people who know you too well might not be the most objective advisors.

Fill the Voids

“Think about deficiencies on your team, and fill them with advisors,” said Karen Robinson Cope. “Strategy, markets, business model…you need a 30,000 foot view. This forces you to think about the business at a high level so you don’t get stuck in the weeds.”

At executive levels, many key skills are highly transferrable. Sometimes an advisor from a different industry can provide a fresh perspective on a particularly troubling issue.

Laurie Baird advises finding people who know your market well, even if they are in a different industry.

Seek out specific skills, knowledge and talents. Do you need insights on marketing, finance or product decisions? Identify people with expertise in these areas without limiting your search to those within your industry.

Recruit the Best

To build the best advisory board for your business, don’t be afraid to seek out someone who you believe would make a good advisor for your company even if you don’t know them personally. Ask people in your network or professional advisors like your accountant or attorney for recommendations to address specific needs.

Once you get an introduction, schedule a meeting or coffee to get to know this person. Tell them what you need and why you would like them to work with you.

As you talk with prospects about joining your advisory board, let them know about the expected time commitment. For a potential advisor it can be very helpful to know, “We have quarterly meetings with diner the night before, and then meet from 9am – 1pm.”

Don’t worry if you get turned down a few times. Many executives are looking for board experience and are open to helping developing companies, so you should not have much trouble building a solid advisory team.

Making it Work

Once you have your advisory board in place, you want to get the most from this valuable asset. Be intentional in your approach to utilizing your advisory board, and be respectful of their time and contributions.

Think about what you need help with before scheduling a meeting. What are your challenges, and what kind of input do you need?

Cindy Cheatham says it’s vital to “Use people’s time wisely, be grateful, communicate successes and challenges,” so that your advisory board members feel valued and connected to your business.

Use your advisory board to address your business needs, not the advisor’s wish list. If advisors have their own agenda, you can easily get sidetracked and lose focus on your strategy.

Keep in mind that unlike a board of directors, “the board of advisors works for you. You can fire them,” if things aren’t working out, says Mary Madden.

It’s Your Decision

Don’t feel obligated to do everything your advisors suggest. It’s your business, and you bear the responsibility to evaluate the advice you are given. Ultimately, you decide what advice to act on, and what to disregard.

If you’re not prudent about which advice to follow, you may end up a victim of what Jen Bonnett, founder of Start-Up Chicks, calls “Mentor Whiplash.” That’s the painful byproduct of listening to too many opinions, and trying to follow them all.

Jen says she once knew an entrepreneur who changed her business model every time she met with a different advisor – hardly a productive way to manage a company.

Treat Them Right

When you meet with an advisor, put specific parameters around your demands on their time. Let them know, “I need an hour (or a lunch, a short call, etc.) to discuss ____ topic.” That way they know what the time commitment is, and what you need and expect from them.

It’s also helpful to create an environment where your advisors can get to know each other. This helps build rapport and facilitate them working well together.

At the same time, remember that advisory board members are not your employees. Don’t ask them to do things like build your website or research a market for you. Remember, your relationship is about getting guidance, not free work.

Structure is a Good Thing

The panel agreed that a little formality is a god thing. Putting a framework around meetings and creating a structure for your board of advisors with things like a time limit on board service can be beneficial. This way you can set expectations, and bring on fresh talent and gain new perspectives when you need them.

A more structured approach forces you to be organized and intentional. You will need to prepare for board meetings, getting materials out in advance as you would for a meeting with your board of directors. This makes you more prepared and helps your advisory your board be more productive.

While structure can help your board function more smoothly, there’s no need to be rigid. You may choose to have occasional one on one meetings with advisors to address specific needs or concerns, especially if you need to “go deep” into an issue, explained Karen.

Show Your Appreciation

Your advisors are voluntarily contributing time to your company, so it is important to show your appreciation. Compensation isn’t necessary, but recognition of your advisors’ contributions is considerate.

In fact, Laurie advises steering away from monetary compensation or equity for advisors who are already successful in their own right. “What is a big amount for you is nothing to them,” she explained. “People are doing it because they’re passionate, not for the money.” If you are considering offering advisors equity in your company, remember that you can’t get it back later.

A better way to show appreciation is to make a donation to a favored charity or host a nice event or outing for your advisors once a year, suggested Karen.

Does Your Company have an Advisory Board?

If you already have an advisory board, please share you success and lessons learned from the experience. What tips would you share?

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