How to Build an Effective Board of Advisors for Your Startup
Why Your Startup Needs a Board of Advisors
As a startup founder, you're probably used to wearing multiple hats and making critical business decisions on your own. However, as your company grows, it's essential to have a team of trusted advisors who can help you navigate challenges, identify opportunities, and make strategic decisions. That's where a board of advisors comes in.
Who Should You Choose for Your Board of Advisors?
When building your board of advisors, it's important to choose people with diverse backgrounds, experiences, and perspectives. Look for individuals who have expertise in your industry, as well as functional areas such as product development, marketing, and operations, especially in the areas which may not be your core strengths. You should also consider people who have experience scaling businesses, managing teams, and navigating complex challenges.
How to Recruit and Onboard Advisors
Recruiting and onboarding advisors is similar to hiring employees. You want to find the right people, make sure they're a good fit, and provide them with the support they need to succeed. Start by networking and asking for referrals from people in your industry. You will want to find advisors that you feel comfortable communicating and being fully transparent with, so it may take a few conversations with them before you are ready to offer them the role. When you find potential advisors, be clear about your expectations and what you're looking for in an advisor.
Advisory Board Member Compensation
It's essential to compensate your advisory board members to ensure they remain motivated and committed to your startup's success. Common compensation methods include equity, cash, or a combination of both. Equity is an excellent option if you're looking to incentivize your advisors to contribute their time, effort, and expertise to your startup's growth when your company may be restricted by cash, such as an early-stage bootstrapped company. On the other hand, cash compensation is ideal if you're looking to compensate your advisors for their time and expertise during growth stages when cash flow isn’t as critical a consideration. The specific amount of equity or cash will be unique to each company, but be sure that any equity grants are on appropriate vesting schedules.
Once you've selected your advisors, onboard them with a clear understanding of their roles, responsibilities, timeline, and the expectations you have for them.
How to Manage Your Board of Advisors
To get the most out of your board of advisors, it's important to manage them effectively. Set a meeting cadence and create and share an agenda that outlines the topics you want to cover in advance. Encourage open and honest communication, and be receptive to feedback and suggestions. You should also provide your advisors with access to key information about your business, such as financial reports and market data. Finally, make sure to show appreciation for your advisors' time and contributions.
Not all advisors will be engaged equally, and some you may meet with more frequently than others. Some you may be able to call ad-hoc, while structured meetings will be more appropriate for others. Ensure you have alignment with each advisor on communication and meeting preferences.
How to Get the Most Out of Your Board of Advisors
Your board of advisors can be a valuable resource for your business, but it's up to you to leverage their expertise effectively. Make sure you're using your meetings to discuss strategic issues and get input on key decisions.
We suggest spending the first 3-5 minutes of any meeting with advisors giving an update on the business. To do this, you can use a template for consistency and simplicity, that hones down on:
What’s going well
What’s not going well
What’s on your mind
Each category should contain no more than 5 concise bullet points. Doing this effectively gives an advisor the broad stroke current updates on the status of the business and where the remaining meeting time will be best spent.
Don't be afraid to ask your advisors for introductions to potential customers, partners, or investors. And be sure to follow up on any action items that come out of your meetings.
Conclusion
In conclusion, building a board of advisors can be a game-changer for your startup. By choosing the right people, onboarding them effectively, and managing them well, you can tap into a wealth of knowledge and experience that can help you overcome obstacles and achieve your goals. Don't be afraid to reach out to potential advisors, and remember to show appreciation for their contributions. With a strong board of advisors by your side, you can take your business to the next level.
Looking to build a board of advisors? Contact Whip Ventures to see how they can help.
