When you start a business, it is always useful to create a board of advisors. A board of advisors is a group of business people who can help you with your company, by providing advice you may be missing from key roles or staff. Such a group may include accountants, lawyers, marketers, or other entrepreneurs in later stages of company development. Don’t confuse a board of advisors with your board of directors and investors. These folks are there because they want to see you succeed, but they typically don’t have an investment in your company.
Entrepreneur magazine states that: “When recruiting advisors, look for the holes in your business. Silicon Valley startup expert Cynthia Kocialski says to focus on the jobs not already being done by an expert on your payroll. “Advisory boards are for whatever you don’t have,” she says.
It is important to be clear with an advisor about why you’ve asked them to help. Maybe you need their advice on legal matters, but can’t afford them as a full time lawyer or general counsel. Perhaps a top salesperson, now retired, can help you establish some contacts in the industry where you’re trying to break in.
Some companies award advisors small blocks of stock, typically in the less than .5% of the total company, doled out over time as a thank you and additional incentive to continue to advise.
Many start-up CEOs need advice, but feel that they can’t ask for that help since they’re “in charge. Foursquare CEO Dennis Crowley discussed the stress of being a CEO and admitted to using not only investors as advisors, but also having a CEO coach. “There’s a difference between a mentor and an advisor,” Crowley said. “An investor may be an advisor. We tell them our strategy, and they try to help us. I get emails all the time from people who want me to advise their company. But typically that person has skin in the game. On the other hand there are mentors or coaches like Jerry [Colonna, his business coach] who help me solve management or personal problems with my job. These are different discussions than the business model problems. I get different feedback from those types of people.”
In addition to having formal advisory boards, a group of women entrepreneurs I know in NYC acts as a feedback group for each other. They meet monthly for coffee, trade business challenges, hold each other accountable, and pass on contacts and generally work towards the success of the non-competitive companies in the group. Mastermind groups exist in the same vein.
Face it – there are a lot of tough challenges to starting a business. Having an additional set of intelligent minds to support your success is a smart plan.