I’m Steven Byler from GrowthLab Financial. Today I want to talk about advisory boards: the how, the why, and the who.
Advisory Boards Can Be Casual and Flexible
One of the great things I’ve learned as an entrepreneur is the power of good advice. people are most likely glad to give you their feedback and input. To get good advice from great people as an entrepreneur, you simply need to find the right people and provide them with an organized context for them to contribute. That’s the role of an advisory board. It doesn’t need to be complicated. It can be informal and, I argue, it’s a critical element of success for entrepreneurs.
Every entrepreneur recalls those early days. You have a great idea. The team is pumped by the possibilities. Opportunity abounds. But who is there sharpening your idea? Who is tempering your enthusiasm? Who is providing introductions to new networks of people, investors, consumers, and key vendors? When the answer to this is, “No one besides the core team,” let’s face it: at that point, conversations can get circular and stagnant. That’s when you need an external advisory board, some outside influencers to contribute their experience, who can sharpen your idea, hone your business, temper your thinking, capture opportunities, and help you raise capital.
Advisory Board vs. Board of Directors
Let me take a second to distinguish between an advisory board and a board of directors. Your board of directors is, of course, the legal governance for your business. Most startups I see don’t consider bringing in outside board members until they’ve taken on significant investment.
A board of directors has its place, but an advisory board comes first, because an advisory board can be informal and flexible. Meeting for coffee, lunch, individually, as a group, they provide the support that entrepreneurs need. So why don’t entrepreneurs just leverage one another to get the support and advice they need early on? It’s ironic that the early days of an entrepreneurial venture can be lonely despite the fact that we’re often amidst and surrounded by other entrepreneurs. So why don’t entrepreneurs provide the critical advice to one another? It could be inexperience. It could be that each is focused inward on their own business.
Advisors Care about Your Idea and Ask Critical Questions
You need people who care about you and about your idea. You need people who are willing to ask critical questions, questions that challenge your business model and that poke holes in your marketing strategy. You need people who are willing to open their network to suggest the next potential employee, the next key vendor, or the next angel investor to talk to. Most companies start from someone leaving their job—voluntarily or not—to do something they know or something that they’ve been noodling with for a little while. Starting an advisory board at this stage is so helpful and so critical.
Seek Advice at Every Stage
Sometimes I see entrepreneurs who just want to work, keep their heads down, tweak the product, and make it perfect. My advice is to always seek advice at every stage about every aspect. The earlier you can make adjustments, the easier it is to make them.
Advisors can help in three key ways: help capture market opportunities, help with capital raising, and help give context and feedback to the business operations, including people, processes, and systems.
Advisory Boards Are Invested in Your Success
When you engage an advisory board, they begin to buy into your strategy because their fingerprints are on it and because they have helped shape this thing that is your business. When that happens, they have a personal interest in seeing you succeed. They are going to open their network to you, providing you with connections, introductions, and meetings.
Advisors Help You Find Customers and Investors
They are going to do their best to help you find customers, whether that is introducing you to a decision maker and an enterprise client or introducing you to a key influencer of potential clients. They are going to help you find your first investors. Your board of advisors may actually be some of your first investors. They are going to help you run your business more effectively and efficiently. They’ve been there and done that. As entrepreneurs and executives, they know a thing about running a business like yours and they can help you identify issues in your operations, find the next key employee, or sometimes just jump into the nuts and bolts and help solve a nagging problem.
Holistic Thinking, Capital Raising, Industry Specific
Let’s talk about the who and the how. In my experience, you’re looking for people to fit into three categories. First, you’re looking for people with holistic business experience. Second, people with experience raising capital. And third, people with specific industry experience that you need. I often get asked if these people are looking for compensation. No. If you find the right people, they’re not looking for cash. They want you to succeed because they care about you. They like you, and they want to see their own ideas that they’ve brought into your business succeed. Many people will engage in substantive conversation and not need any compensation. They enjoy contributing and enjoy seeing you grow.
Network, Network, Network
However, there may be a core group that you want to take to the next level. With these people, finding the right exchange of value can often come in the form of equity, and this aligns them and you: when you win, they win. How do you find these people? Particularly, how does the first-time entrepreneur find these people? The short answer: network, network, network. You dive into your network. It’s not likely that you are going to have the phone number of the top ten people that you want on your advisory board, but you can still get them.
We all have a network. It starts with our friends, our relatives, our colleagues, former bosses, and former colleagues. All of these are starting points. Make it your goal to have eight to ten meetings a week. Set up your day around breakfast meetings, coffee meetings, business lunches, and drinks. Live and breathe the concept of building your advisory board for three weeks and see where it takes you.