No matter how carefully you build your founding team, questions will come up as you start your business that will make you want to turn elsewhere for advice. And so it’s good to have a carefully selected group of people you can turn to for help: your Advisory Board.
As Bernard Lumm notes in “Startup 101, “You may have any number of advisers – friends and family – who you turn to informally for advice and who expect nothing in return except your friendship. But we use Advisers here with a capital “A” to denote someone with an official, compensated relationship with the company.”
Who to Ask
When building an Advisory Board, you want to select people who bring knowledge and credibility and who have the time and willingness to help.
It’s important the members of your Advisory Board have some background in your startup’s field, and it’s good to pick people who have succeeded as entrepreneurs. The members of your Advisory Board should also be able to speak with experience to the challenges and the successes of being executives. In other words, your Advisory Board is not made up of your attorney and your accountant. The latter, you pay for their professional advice. And while you can offer members of your Advisory Board somecompensation, their primary role is to offer mentorship, not to take on a fiduciary responsibility.
As you build the Advisory Board, try to draw from areas in which your startup could use the most advice. You want to balance the board and have its makeup compliment your founding team.
You can approach potential members informally, but you should put together a formal, written agreement to finalize the deal. Lumm recommends this be a formal invitation letter that can also include your business plan executive summary, the Advisory Board’s objectives and focus, and expectations for the length and level of commitment and involvement.
Seek Advice
Ask good questions that take advantage of the expertise your Advisory Board offers. Before a formal meeting with your Advisory Board, send them a summary of the issues you are contending with. This way, everyone is prepared at the meeting to discuss the key questions at hand. (And you can listen to their advice, which is the point.)
Follow up and follow through
It’s good to maintain communication with your Advisory Board beyond just your face-to-face meetings. After a board meeting, you can follow up with members, indicating specifically how their advice will shape your strategy.
Taking care as you shape your Advisory Board will pay off in the long run as you will be able to work with people that can bring credibility, insight, and experience to your startup. And as your startup matures, Advisory Board members can also make good candidates for more formal positions, as in your Board of Directors.
