Four WAYS AN ADVISORY BOARD CAN HELP YOUR START-UP GROW

If your start-up is just getting off the ground, or you have seen your growth plateau; you should consider putting an advisory board in place.

What does an advisory board do? By definition there is no legal responsibility for this board. A Board of Directors (“Board”) would have a legal responsibility to the entity of the business, the employees and the shareholders of the corporation.

The advisory board is typically established with a potential high-growth company. The Chief Executive Officer wants to bring in outside talent, experiences, or perspectives to help. They do not have all the answers themselves, so they surround themselves with people that have had unique experiences that can provide direction.

It is hard to define exactly what the advisory board brings to your table, because they can bring so much. But, in most cases, each advisory board member should add at least one of the following four things to your company.

They Fill Gaps in Your Business

High-level skills and expertise can be difficult and expensive to recruit or hire. If you have identified major gaps in your company, you might have better luck filling them by adding someone to your advisory board.

A tech company may lack someone with experience closing high-value deals with a long sales cycle. Therefore they may bring in a gray-haired sales guru to advise them. Or, a company in the manufacturing sector may struggle to hire and retain the best talent. So, they add a Human Resources expert to their board who can show them how to build the right type of culture. You started your business because you are a master of your particular domain. Your advisory board should be masters of everything else.

They Help Close Deals

We just talked about how a battle-proven sales guru can help your sales team. Even if they have never sold anything in your sector before, their experience and insights can have a huge impact on a young sales staff.

But, a well-known or established advisor can also help you close deals by their name and their reputation adding credibility to your business. Their picture and their name in a pitch deck as part of your advisory board can almost single-handedly close deals.

Just be sure they have an active role in your business if you are going to leverage their name. Because, you will be asked detailed questions about their role with your company. If their involvement is in the name only, that will quickly become obvious to whomever you are pitching to.

They Pre-Qualify You to Some Investors

This is sort of a spin-off from the previous point. The first objection any start-up may get from any investor is “You are too green and you are not ready.” This is how they see you until you prove otherwise.

But, if you have a diverse advisory board, you are showing would-be investors that you are ready. They can see that your company has something that has already enticed influential people enough to jump on board.

Your board shows that you have a vision and a direction. It proves you are able to present it to other people and inspire them. This can go a long way to building credibility in the early years of your company’s life and shows that you are not just another floundering start-up.

It forces would-be investors to take you seriously and ask “What do they have that is getting people excited and creating believers?”

They Create a Culture of Accountability

The advisory board can act like a Board, even though you do not have one yet. It forces the President to get into a cycle of responsibility to shareholders to indicate “Here are our sales from last quarter. Here are our expenses from last quarter.” You present that to the advisory board as though it is your own board and build a culture of accountability right away.

You are pre-auditing and putting things in place, so that when you do have to establish a Board, the process already exists.

This also makes you look good to future investors. It shows that you are open and you are actively soliciting outside advice to make better business decisions. All of these things do matter over time in that perspective.

Have you already created your advisory board? What type of difference has it made for your company? Let me know in the comments below!