How to Construct an Advisory Board
Throughout the building of Emerging Demographics, my advisory board has played an instrumental role in helping me mitigate my inexperience. An advisory board, if constructed properly, can be the main difference between a successful company and a “learning experience.” This is especially true for young entrepreneurs who need to rely on others for a knowledgebase of experience.
The 5 steps to building a strong advisory board:
- Asses your strengths and weaknesses:
A board of advisor’s primary responsibility will be to advice you, the CEO, on key decisions. Therefore, understanding your strengths and weakness is paramount to constructing an advisory group that will help guide you in areas that you need help with. Knowing that you are not a great marketer is not enough, you need to dig deeper and think about all issues relating to managing a business. Do you have the financial acumen, do you have the operational experience, can you manage diverse personalities, do you have the technological prowess, do you know enough people (i.e. connections), and just about all other aspects of business.
2. Understand your business
Not all businesses are the same, and therefore the experiences needed vary widely. While a financial guru is always a big help in establishing a business, a manufacturing guru probably won’t help an emerging blog network. The point is, try to find advisors in similar industries to your business or with an understanding of the market you operate in.
3. Identify advisors
At this point you already have a clear guideline of the needs that must be met by your board of advisors. So the next step is to find people who can help fill those needs. There are a couple of things to consider for each candidate, firstly do you work well with them. Second, do you respect their opinions? Will they be able to provide you with enough time? And finally, are they just a big name or will they add insights, advice or direction? Being a big name might be something you need, but again, at this point you understand what you are looking for and are just trying to fill the needs in the best possible way.
4. Balance the group
Hopefully at this point you have a few candidates who are willing to join the board, and now your job is to create a good mix. No point in having two great marketing advisors when you don’t have someone who can help you with accounting. Try to maintain a good balance and don’t be afraid to leave a hole or two, as you will undoubtedly encounter potential advisors over the next few months that can join the board then. Filling a position for the sake of filling it, is much worse than not filling it at all.
5. Bring ’em on
All that is left now is to officially invite the chosen advisors to formally join the advisory board. Before you do so, make sure you have a very clear understanding of exactly the roles they will play and communicate very clearly what the responsibilities and parameters are. I am no expert on what kind of stock and warrant grants are appropriate to give, but you can read more about it on Brad Feld’s excellent blog.
Entry filed under: Start-up.