I have been asked a few times recently on how an entrepreneur should look at and build an advisory board. Here are 5 thoughts on building an advisory board to gain the most value by having diversity of thought and ideas.
- Define what you are looking to see in an advisory board. What skills are you looking to have surround you? What are areas that you aren’t as strong in and want to have advisors help you learn? What are areas the business needs more depth – roles that you don’t have within your team? What industries is your business playing in that their rolex will be helpful in making connections for you?
- Understand what you want from an advisor. Do you want them to mentor you or the company? Do you want them to give advice and you make the decisions on what to do with that advice or do you want them to help you run the company? These answer will help define how you interact with them. If you want them to mentor you – than it is typically more of an informal situation where you build relationships and meet with them on a semi-routine basis say 2x a year or when you need their advice. If you are looking to build more of a board of advisors where they collectively provide advice on the business then more formal meetings 1x-4x a year are fairly traditional. The answer also depends on how much you want to spend too. If its informal, your cost is more a lunch or dinner, a phone call. A more formal set up could be travel, hotel, meeting rooms etc. A stipend for them early on is not typically expected but, you also get what you pay for.
- Be honest with yourself. Do you want individuals who are going to tell you what you want to hear, or advisors that will provide you constructive and meaningful feedback to help you grow your business. How will you take this information – discount it? state they don’t know your business like you do? or evaluate their feedback, solicit other inputs, see how their feedback can be applied.
- Care and feeding of the advisory board. It takes time to build these relationships and gain value from them. You will need to put the work into fostering and nurturing the relationships and making them feel like they are a valuable part of your team. If they see you are listening and implementing their advice, they will freely give more. If they see their advice falling on deaf ears, they may refrain from participating. This doesn’t mean you have to take their advice, just that explaining why you didn’t, is just as important.
- How to approach potential advisory board members. Once you have identified people that you would like to have, find how you have connections into them and use them. Ask for introductions. If you need to make blind connections, be honest and let them know how their expertise could help you, for example: “You are building a business, and would love their insights into how to build a sales team”. People love to talk and share about what they know.