Learning from the Right Advisors is Like Getting a Second MBACapital Access — By Tom Walker on May 7, 2014 at 8:00 am
“You can observe a lot just by watching.” – Yogi Berra
Like the best catchers, successful entrepreneurs watch and learn from every play. There’s no better way to do this than to build a trusted team of advisors and then watch what they do and listen to what they say.
What should an entrepreneur look for in an advisor?
When we use the term advisor at TechColumbus, we are referring to individuals who have knowledge and experience relevant to the startup’s business.
These individuals could be professors, scientists, researchers or technical experts. They could be entrepreneurs or leaders in companies that are possible strategic partners. They could also be industry consultants, angel investors or folks with regulatory experience.
Often the most helpful advisors are potential customers who have the business problems that the startup is trying to solve.
An entrepreneur will develop multiple advisory relationships over time. You don’t have to be friends with all your advisors. In fact, it’s not a bad idea to listen to the advice of some people you don’t agree with or even like.
Regardless of their expertise, the best advisors are people who know more than you know.
What is a Board of Advisors?
A Board of Advisors is a small group of these types of individuals, at least three but no more than five, who the entrepreneur knows well and trusts. These folks participate in a more structured, defined role at the request of the entrepreneur. Unlike a Board of Directors, Boards of Advisors have no legal or fiduciary responsibility.
Advisory boards provide guidance and insight and serve as a sounding board at the Proof of Concept and Seed Stages of a company. They have the time and willingness to participate with the entrepreneur and the company on a regular and ongoing basis.
An entrepreneur can learn a lot from these folks by listening and by putting on his or her “Yogi hat” and observing them in their own environments.
How do I go about forming a Board of Advisors?
Entrepreneurs who learn how to seek advice before they start structuring an advisory board get better results. The whole idea is to supplement what you already know with skills and talents that you don’t have.
Even catchers like Yogi–arguably one of the best of the best–are never asked to be catchers and pitchers simultaneously, but the same isn’t necessarily true for entrepreneurs. The good news is that entrepreneurs can ask for help at any point in the game. So the first step is to figure out what kind of help you need.
If your background is marketing, look for technical folks. If you are a technologist, run, don’t walk, to find marketing and finance expertise. If your background is engineering, look for people who know what it takes to make sales.
Have a timeline, but don’t be in a hurry to fill out your board. Diversity is highly desirable. So is good chemistry. You will also want to ensure that there is no conflict of interest. While there are no hard and fast rules for setting up an advisory board, we advise against bringing relatives or best buddies on board.
How do I work effectively with an advisory board?
Be clear about what you need when asking for help or advice. Be respectful of your advisors’ time. They are busy people, otherwise you wouldn’t be seeking their advice. Choose someone locally if possible.
When talking with advisors, frame the discussion in scenarios. Don’t expect advisors to tell you what to do. You are the company founder. They are the sounding board.
Keep advisors informed about key milestones via email periodically. Meet with them as a group every quarter. Have an agenda. Promptly follow up the discussion with advisory board notes.
Advisors are in a sense volunteers. Many of them, especially those who are entrepreneurs themselves, consider advising a startup as a way to give back. Still, entrepreneurs should consider appropriate compensation for the Advisory Board’s participation. Always pay their expenses.
There are so many advantages to working with an advisory board.
To re-quote Yogi, “You can observe a lot just by watching,” and there’s more.
Advisors can become advocates for the company and references for the integrity and skills of the entrepreneur. Notes from advisory board meetings and discussions can contribute to due diligence. Experience with an Advisory Board helps prepare entrepreneurs for working with a Board of Directors when external investment does occur.
Entrepreneurs who want to achieve the milestones that attract investment capital deliberately build business relationships beyond their companies with people they can trust.