Choosing and managing an advisory board can be one of the most rewarding activities for a founder when growing their company – but it requires careful handling to do it right. As an angel for GTAN, I’ve been asked to serve on advisory boards for many different types of founders and companies, and I’ve learned some valuable lessons about what makes a founder-advisor relationship productive. For founders looking to build an outstanding advisory board, here are some best practices:
Understand the purpose of advisory boards
Many founders fail to understand the function and workings of advisory boards, and it’s important to realize that normally, members of advisory boards for emerging companies are intended to be temporary. Typically, an advisory board will join a founder to provide advice and assistance over a period of 12-24 months, to help the company solve a specific issue or navigate a particular phase of growth.
Your advisory board should be there to help you and your company succeed, and when the agreed-upon term of service comes to an end, your organization should be able to carry on successfully. When you approach someone to serve on your advisory board, be as specific as you can about the time commitment you’re seeking.
Build relationships with prospective board members
Many founders make the mistake of asking people to serve on advisory boards before really getting to know them. The person you’re approaching to serve on your advisory board should never be a stranger to you. If you’re aware of someone within the industry or investing community that has valuable experience, take the time to form a relationship with them before formally asking them to be on your advisory board.
In the process of getting to know your potential advisor, pay attention to how passionate they are about your cause and your company. Your advisory board will be more dedicated to your company’s success if its members care about what your organization is trying to achieve, so choose advisors who believe in you and your cause. There are no shortcuts around this process – you must get to know them first.
Give and take: what you’re offering, what you’re receiving
In the Region of Waterloo, founders are usually not expected to pay their advisory board. Having said that, when the company does succeed, it is usually nice to find a way to share that success with the advisors who helped you get there. When you ask someone to serve on your board, it’s important to understand that they stand to gain something out of the advisory relationship as well. For many advisors, it’s important to them to feel that they are leaving a legacy and passing on their hard-earned experience with founders who can use it, and this sense of satisfaction can also be a powerful motivator for advisors.
When you create your advisory board, you should set a quarterly or monthly meeting schedule with them. Having a meeting schedule that your board follows will benefit both you and your board members. For you as a founder, meeting with your board regularly will instill a sense of discipline in you and provide you with regular, reliable advice from people who have more experience than you, and want to help you avoid repeating the mistakes they made. Knowing you have a dedicated advisory board will also encourage you to think more strategically about your business as you ask for advice.
While it may seem that advisors aren’t getting much out of the deal if they’re not being paid, remember that holding regular meetings provides them with the valuable opportunity to regularly socialize and network with the other board members, many of whom will likely be in similar industries.