Does Your Business Need an Advisory Board?
Here’s a great article by one of our clients – Zooomr. We found this article super helpful, and wanted to share it with fellow startups. For many entrepreneurs, the thought of adding a board conveys instant anxiety. Visions of rapid-fire inquisitions and another layer of bureaucracy vie with fears of losing autonomy. However, advisory boards are quite unlike governing, working, executive or policy boards, for example. An advisory board often lets you reap many of the advantages of those others but few of their drawbacks. Altogether, you might better view your potential advisory board’s members as an invaluable business-building resource offering often astounding flexibility and versatility.
Customized in Purpose
So what function does an advisory board actually serve? You are but one person, with your own ideas, expectations and experiences. However, no single businessperson can know everything or foresee every pitfall.
The goal is to bring together a trusted group, three to five veteran advisers who can share their unbiased insights and help you grow. What that team looks like depends on you, your strengths, your weaknesses and how you want to interact with your team.
You can form an advisory board for a specific mission, a portion of your business or the entire venture. You aren’t legally mandated to heed your board members, and your board may well change and evolve over time to keep pace with your mission and objectives.
Balancing Skills and Talent
Ideally, you’re looking for talented individuals outside of your company’s day-to-day operations who can offer impartial advice and a broader view to balance your shortcomings. After all, running a business entails thousands of business, financial and legal decisions across a wide range of tasks—from selecting physical locations and maintaining a website to overseeing hiring, recordkeeping, sourcing, marketing, IT, manufacturing, distribution, delivery and more.
The right board members can support and expand your strengths as well as compensate for your weaknesses. They can supply that objective second opinion confirming what you already suspected. Likewise, they can be the voice of caution, lessons learned and revealing enlightenment. You may be good at what you do, but an advisory board offers the opportunity to learn from people who are good at what they do.
Because an advisory board is an informal body, you determine how often you should meet and with whom. While some organizations benefit from quarterly input from the entire group, others may choose to do so monthly or on an ad hoc basis. More mature businesses may need less frequent advisement. Meanwhile, young businesses or a significant expansion of services may require more. Whether everyone gathers around VTC screens biweekly or you engage one-on-one as needed is up to you, but securing those semiformal relationships beforehand ensures that needed perspective will be available when you need it most.
Alone, you have only the people that you can reach out to. Even if successful colleagues or influential acquaintances know about your business—and even if they appreciate what you’re trying to do—they’re still not committed to it. As an advisory board member, however, they agree to invest some reputational skin in your game. In doing that, they also potentially confer to you a level of credibility and potential access to all the people that they know. Whether you need to expand or shift business-to-business connections, secure a patent, launch a media campaign, negotiate a better interest rate or scrape together an infusion of cash, chances are, someone on your board can introduce you to someone who knows someone who knows just how to go about it.
Compensation, Boundaries and Terms of Service
The subject of compensation and boundaries can be a delicate area, but experts caution entrepreneurs looking to form a board of advisers to be up front with expectations as well as terms of compensation and duration of service. While many loyal board members have been known to serve ad infinitum for free, a more common expectation is some form of payment. Since most startups are cash-poor, a typical recourse is to set aside a percent or so of equity in the company to be divided among the board members according to a long-term vesting schedule. Some advisers have also been known to contract for cash payments per meeting, forgoing investment in the company.
Would an Advisory Board Work for Your Company?
Advisory boards come with many benefits, a few reservations, plenty of responsibility and unlimited opportunity to grow. Used wisely, a skilled set of experienced advisers can recommend new strategies, guide you toward new challenges, and provide a fresh outlook and focus. You may find the perfect board member through any number of venues—a close friend, business contact, small business development center or professional incubator, for example. Ultimately, however, control over your venture remains with you and what you decide is best for your company’s future.
Types of Boards http://www.policygovernanceconsulting.com/about-governance-and-board-work/different-types-of-boards
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