“Many receive advice, only the wise profit from it!” – Publilius Syrus
One of the most beneficial decisions you can make in the early stages of your startup company is to form an Advisory Board. During your initial stages you may only have the expertise of yourself and potentially a few partners or employees. Employees are limited on your tight budget and may be inexperienced volunteers or interns. Therefore, it would be useful for you to build a team of invested and experienced individuals to assist you with crucial, early-stage planning and decision making. As opposed to corporate boards of directors, advisory boards have no fiduciary responsibility and therefore their advice is not binding, allowing you to retain decision-making power. Their main purpose is to provide you with expert advice and structured counsel to assist you in building your business and achieving company goals.
The following tips can assist you in selecting the members of your first Advisory Board:
- Be assertive and selective – Plan ahead and be selective of the quality of the team you’re building. Many startups make the mistake of selecting friends or relatives to join their boards which can cause unnecessary problems later on. You need to be prudent in selecting individuals who are more experienced and more knowledgeable than you are in areas that are relevant to your business. You should also choose members who share your passion for your business idea and who will commit to being available for counseling. Engaging people who are considered “big-guns” in the business world can be a great asset for early-stage companies as these contacts may help you establish credibility or boost your image.
- Determine clear objectives and expectations for your board – Advisory Boards can have varying objectives that range in focus from global to market-specific. Therefore, it is essential that you pre-set and clearly communicate your expectations. Agreement documents can be used to outline expectations, confidentiality clauses, responsibilities and scheduling requirements and provide structure to members’ participation and contribution. You should also be prepared and able to fire board members who are not providing proper guidance or who are not meeting your team’s expectations.
- Set term limits on your members – As you progress through the life-cycle of your growing business, your business model will inevitably evolve and become more diversified. Providing term limits on your board positions can bring in fresh perspectives to help you manage and refine your short-term goals along the way. Your focus should be on setting and achieving attainable goals within the limited time you have your advisors at your disposal.
- Reward your members – Your board members may not want compensation in the form of equity, however, rewarding people for their valuable contributions is imperative. You can explore other compensation options such as stipends, fees per meeting, travel, or miscellaneous expense compensation. Remember, there is no need to feel obligated to give up equity in your business – there are many other rewarding and fulfilling ways through which you can compensate your members for their assistance without having to forfeit equity. In fact, due to your current stage, your model has not yet proven itself as greatly successful and therefore it is difficult at this point to quantify the true value of this equity.
- Meetings and follow-up processes – Members of your board are most likely going to be very busy individuals with hectic schedules. This should be a key factor for you to consider when planning the functionality and efficiency of your meetings. Ensure that you plan your meetings and their objectives in advance to avoid time being wasted by everyone. It may also enable you to reserve time at the end of each meeting to encourage your members to share any extra observations or suggestions. Here’s a useful tip for planning your meetings: take full advantage of the technologies at your disposal! Vary the format of your meetings by planning web-chats, conference calls or video conferencing to facilitate the hectic and irregular schedules of the different members of your team. This will keep your members excited and engaged as well as increase the attendance and participation of the entire team at your meetings. Lastly, it is important to maintain contact in between meetings to maintain your board members’ interest and enthusiasm. Use this time to provide members with updates on progress and changes to your daily operations or strategic plans.
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