An advisory board is a critical tool for getting your business to the next level. These 5 tips will get the right people around your table.
One of the smartest growth initiatives a business owner can implement is an advisory board: a hand-selected group of advisors that believe in your leadership, are aligned with your culture and mission, and are committed to your success.
The vast majority of business owners who implement an advisory board fail to see a strong return on investment because they haven’t followed guidelines to pick the right advisors, and haven’t set them up for success.
If you are considering implementing an advisory board, follow these first steps to attract and recruit your best advisors:
1: Complete your Values, Mission, Vision, and Strategic Plan first.
To create a comprehensive board search document, you must have your foundational elements constructed. What do you stand for, why do you exist, and where are you going? You must be able to articulate this to any prospective board member. In addition, you must be able to share your target customer profiles and your competitive landscape.
It is not the advisory board’s job to complete this work.
2: Select Advisors That Are Ahead of You.
Choose advisors that have already achieved what you are trying to achieve so that you can learn from both their successes and their mistakes. You don’t want to sit around a table with others that are exactly where you are.
For example, a company is currently at $60 million in revenue. The company expects to double in 18 months. It’s CFO has never managed the finances of a $120 million company. Therefore, they defined a board seat to attract a financial advisor who has run a company with revenues of more than $100 million.
Another example is a professional services firm that has developed a suite of products they want to bring to the market. This requires a re-engineering of their business model. They created a board seat definition to attract experts that have successfully pivoted their business models, so that they could advise their business of the many potential pitfalls.
3: Make Sure Your Advisors Fit Your Needs.
Are you expecting your advisors to only work with your C-level execs? Or do you want them mentoring your other employees? Are you expecting them to be available during meetings? Or only show up quarterly? Are you expecting your advisors to make key introductions to customers or investors? These are just 3 of the many considerations you must think about when selecting advisors.
4: Start Small.
An advisory board takes on a life of its own. In addition to running your company, you will have to manage the individual and collective contributions. Start with no more than 4 advisors. If you successfully identify your needs, you will be able to prioritize your top 4 seats.
5: Institute a One-Year Agreement with Each Advisor.
An advisory board is an evolving, dynamic entity that will likely change as your business grows. You want the option of re-evaluating each advisor at the end of each year to determine if they are aligned with your goals for the coming year, and if they have met your expectations.
We advise businesses to institute a restricted stock agreement if they are giving equity to their advisors so that they can buy back the stock at the termination of their service.
Aligning Advisors to Your Holes and Goals
Selecting the right advisors is just as important as selecting the right employees. The wrong advisors will be a waste of time and money, and can potentially lead you down the wrong path.
Especially in today’s rapidly changing environment, companies must constantly evaluate what types of expertise they need. For example, an expert in cybersecurity is now a critical addition to any board.
The more intentional you can be when selecting your advisors in aligning them to the “holes and goals” of your organization, the more successful they will be in helping you achieve your growth objectives.
Edited excerpt from Inc.