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Category: ENTREPRENEURSHIP, The Entrepreneur


A Board of Advisors: The advice you cannot afford to hire
Written by Tendai Tambudze
1 October 2012

As the first time CEO of your own company, getting a board of advisors is one of the best things you can do. A board of advisors is a group of people who meet periodically to give advice and direction to a company.  The advisory board is typically chosen by the entrepreneur and is not to be confused with a board of directors which is a more formal and legal structure comprising of a elected or appointed members who jointly oversee the activities of a company.

There are many benefits a board of advisors will bring as it guides and directs a business, especially during the start-up and growth phases. Most companies start with limited capital and do not always have the expertise to cover the many different bases such as strategy, marketing, sales, finance and operations. Choosing a board of advisors with people that fill in these gaps will add value to the business.

Start-ups are usually very dynamic and advisors can help in giving long and short term strategies on how to best implement certain policies and business models. The board will keep an eye on the mission and vision of the company and will be able to raise the alarm when the company is drifting away from its objectives. Tunnel vision is very common in entrepreneurs that are bogged down with running the business on a daily basis and the board is able to take a more strategic and objective perspective.


How to pick and assemble the board

There are no hard and fast rules to how many people you should have on your board. It is up to you to identify the most critical gaps in functionality or strategy and find people to help you out. At the beginning, even one or two people will suffice.  These people do not have to be people you know personally and have a long standing good relationship with

Look for people who are smarter, more experienced and more successful that you. If you already have a mentor, consider asking them to join the board.  A board of advisors can also have industry experts who will be able to add credibility to the business. Members of your board with an entrepreneurial background will help you avoid making common mistakes. They can give management advice and help you grow your network.

Go out an approach people you admire and ask them to be on your board. Look for retired experts who have been in the same industry.  Make the expectations clear and ask them to advise you for a term of 6 months to a year and then re-evaluate.


Getting the most out of your advisors

Some advisors may ask for equity in return for advice. This could be a high price to pay for advice and there are usually others who will do it for free. You can always make a decision on giving someone equity once they have proved they can add the kind of value you are looking for. Be completely honest about how you are willing to compensate them; after all it’s your business, so you do things on your own terms. Agree on the terms and find other way to pay back that person for their time. You could propose a small stipend, cover travel costs, offer a free service from the company or even just lunch. You may also find that some people are willing to add value and advise for free different reasons so don’t be afraid to ask.


Keep it flexible

You do not have to have structured formal meetings, with everyone. There can be as much value in meeting one person for a quick cup of coffee to discuss a particular issue.  When you do want to have a group meeting, always realise how valuable everyone’s time is and set up structured meetings and ensure you get the most out of it by coming prepared and having an agenda. You should never expect them to do all the work – they are your sounding board so approach them and talk through all your ideas or engage them when you are having problems.

Finally, always remember that the advisors are not your employees. They are not accountable to you and are not the people you should expect to do all the work to grow the business.

 

 

Picture credit: www.inc.com

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