Establishing an advisory board for your company can be one of the smartest things you do as an entrepreneur—if you do it correctly.
An Advisory Board is terrific for entrepreneurs on many levels, whether you are a start-up or an established business. I am a big proponent of Governance in any business. I have had the great privilege to Chair or be a Non Executive Director (NED) on numerous Boards. I have helped numerous businesses set up the right governance structure and put in place the right Advisory Board. This helps to take their business to the next level. It is something I recommend highly to all business I work with.
As a start-up, the right advisors with the right experience and expertise will bring their credibility and substantial network to your businesses. They also play an important role in helping you gain momentum. Directors on a Board can be very useful in providing an objective, third-party viewpoint and be a reality check on leadership matters, and in filling in knowledge gaps in your business.
Ideally it is best to have a functional advisory board that should operate as a seamless part of your business. Its culture rather than a group of outsiders you happen to assemble periodically.
Here are 8 things to keep in mind as you create and solidify your board.
Assess the Skills gaps in your business
Having a board is far more than just having a set of person to oversee governance and how the business is operating. Members of the board should bring needed skills to help the business grow and develop. Do an assessment of the skills you are missing or that need boosting. Make a list of these skills and then seek out the right qualified persons to invite on the board to fill these gaps.
Align Values and Assess Cultural Fit
Before signing up any members to the board you should meet with them and ensure your values aligned. Once you are satisfied you have selected the right persons, provide all potential advisors with as much written documentation on your culture as possible, and if you’re already using an assessment in-house for first time employees, adapt it for advisor candidates. This will ensure that advisors fit seamlessly into your organizational culture. This is just as important as it is for employees. Hopefully, you and your advisors overlap on the most critical values and philosophies.
You will get the most value from your advisors if you’re honest, transparent and upfront with them. That means opening up about your business’s challenges, strengths and weaknesses. Lay out your business plan, objectives, and short- and long-term goals. Share how you think each particular advisor might be able to help and solicit their feedback.
Manage the Board with respect
A well-run advisory board will operate like an integrated extension of your business. this means someone has to spend a significant chunk of time managing and doing the organizational heavy lifting. Advisory board tasks can easily add up to a full-time job. Don’t be afraid to outsource this responsibility or delegate the task if necessary to someone in your business. Just make sure whoever takes over understands your culture and the advisory board’s role in it as well as you do.
Compensate and treat the Board appropriately
The most common way to compensate advisors is either to pay them per meeting attended or offer to share a percentage of equity. This can range from 1 to 2 percent depending on the level of involvement. You pay your employees fairly for their work and advisors are no exception. Be warned however, put all agreements in writing, and while you’re at it, have your advisors sign a nondisclosure and an indemnification clause. In that way they aren’t liable in any business-related lawsuits.
Get PR from the Board
Work with your communications team to craft appropriate internal and external messages announcing your advisory board, profile of its members and its activities. The advisory board should be a part of all companywide initiatives and marketing materials, including your website and social media platforms.
Keep the Board engaged
You should ensure that board members meet regularly with the leaders in your business so that everyone is on the same page and works in step. It’s very important to keep the board engaged and vibrant. Too often I see business that allow their board to fall asleep at the wheels by no fault of theirs but because the business leaders do not keep them engaged. Keep a minimum of semi-annual gatherings on the calendar and set up systems for back-and-forth communication between board members.
Should you find out too late that an advisory board member is not the best fit for your culture, don’t despair. It happens. If the person is influential, it’s probably not worth it to dismiss them. Rather, consider how their presence might contribute positively to your culture in a less conventional way. You can reduce their involvement so clashes are minimised.
Board Member Equals Mentor
An advisory board can offer many benefits, from advice on research and development, organizational structure, investment opportunities and lead generation to tangible ROI such as reduced costs and increased productivity. The right advisors will tell you honestly when you’ve screwed up or are about to screw up. They’re simultaneously responsible for nurturing your business and mentoring you as the chief—and that’s priceless. Now, to make it work, you just have to be certain that your culture supports them.
Finally, having a strong, vibrant board in place can play in your favour in a big way when if you ever need to secure funding from any source, especially if you are looking to get funding from the market. Investors are fare more comfortable to invest in a business with good governance structure, which includes aboard. So if your business don’t have an Advisory Board then its time to explore putting one in place. It helps to build credibility and will set you apart from the other businesses in your industry.
If you want guidance in setting up your business governance structure and putting in place an Advisory Board please email me at firstname.lastname@example.org
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