You’ve taken the leap and launched that business idea you had, now you’re in the throes of a startup. One piece of the puzzle you may have disregarded, but really shouldn’t have, is building an advisory board. An advisory board plays a critical role in providing support to the startup founder in a multitude of areas. What is an advisory board? You may be unclear of exactly what an advisory board does and how it differs from a
corporate board of directors. An advisory board is a group of people who give a founder information they need to help get their startup off the ground, and continue to provide advice as the business grows. The representatives of your advisory board should have diverse skills, coming from various backgrounds and business areas where you may need more support. Typically, advisory boards do not share the same governance responsibilities nor regular meeting cadence as a formal board of directors. In fact, the startup founder can decide if they want to meet with the advisory board as a group or individually as they see fit. How do you find advisors? Step number one is to think about the gaps you may have on your team. Do you need legal skills, product development experts, other founders who have achieved success, investors with strong networks? Compile a list of people you know in the areas where you need support. Reach out to individuals in your existing network who you can leverage, and tap into the people they know as well. Don’t be afraid to reach out to your “dream advisors” and ask.
Do you need big names on your advisory board? While it’s not a requirement, having established members on your advisory board may be beneficial when seeking funding. But will those busy leaders have the time and investment bandwidth to be advisors in the truest sense of the word? Likely only if you have a strong relationship to start with. However, don’t despair if you feel your closer network doesn’t provide all the advisory material you need. Leverage your existing network by asking individuals to make introductions across strategic areas and recruit members of your advisory board. Should you pay your advisory board? In some cases, people are happy to serve as advisors for free, especially with nonprofit or social enterprise startups. It is unusual to pay advisors directly for their time, but you may offer to reimburse any expenses on their part. In the private sector, a small equity stake (typically 0.25-1%) is occasionally offered. However, many advisors take on the role not for compensation but for the intrinsic reward of supporting a new organization. Once you’ve established your advisory board, write up a formal agreement with your advisors, touching on topics like confidentiality, intellectual property, non-compete clauses, term limits and any other expectations that should be formally addressed. Founding a startup can feel like a lonely process at times, but it doesn’t have to be. If you create a solid advisory board with members who can provide advice and support in areas where you really could use a helping hand, you’ll have just the backup you need to grow a successful business.