How to Build an Advisory Board
Think you're too small or too new to need a board? Not if it's an advisory board populated by pros with specific expertise regarding the ins and outs of your company. Startups of all types can benefit from teaming with the kind of people who can help them grow to become established businesses--at little to no expense. For advice on how to get started, we spoke with Boston-based business coach Susan Hammond, author of the Advisory Board Kit.
What is the advantage of having an advisory board?
Many times entrepreneurs and business owners get myopic. They're just trying to get their business off the ground, and they forget to look at the big picture. Your advisors won't, and they also become your advocates and network on your behalf.
What types of experts should I look for when assembling the board?
Start by conducting an honest skills assessment of yourself and your senior management team (if you have one), and figure out where the holes are. If you know what your goals are and you know what your skills assessment looks like, there will be a gap somewhere--those are the expert advisors you're looking for.
Where do I find the right people?
Anywhere: chamber of commerce, your kid's PTA, your church, Rotary Club--it's basic business networking. You might read about someone in the newspaper and cold-call them. I recommend that you approach any [potential advisor] with a letter or e-mail--be very specific about what you're looking for--and then interview them. Generally when you get a critical mass of three people onboard, you'll find that they have connections that can help you find those other advisors. A total of seven is as large as you want to get.
Any potential advisors to avoid?
My cardinal rule is do not invite family or friends, because they become yes people. Plus, they're going to give you advice whether you want it or not, so why put them on your advisory board? I also don't believe in putting people such as your accountant, attorney or marketing consultant on your board; you already pay those people to advise you. You're looking for people external to your company, who are going to challenge you, who may have gone through the same issues you have and will bring a different perspective.
How do advisors benefit from helping me?
In companies that might ultimately raise venture capital, advisors will probably get some type of stock option. In a non-venture capital type environment, it's really going to depend on what the organization can bear; it could be $100 a meeting plus a great meal, or it could be $1,500. However, if an advisor makes it a priority that they get paid or get options, they're the wrong kind of person for you. You want people who want to give back. Maybe they had help when they started their company, or they think your idea is wild and want to be a part of it--or maybe they just like to give advice.