Creating an advisory board is the best decision an entrepreneur can make, but many entrepreneurs fail to create an advisory board. I speak to entrepreneurs daily about creating an advisory board and hear many excuses about why they don’t have a board. Most common excuses:
- Ego: What do they know that I do not?
- They don’t have the time.
- Do not understand role of advisory board.
- Do not want to pay for advice.
- Do not know how to setup.
- Do not know what type of advisors to solicit.
- Do not see value proposition.
- Using Vistage or another organization.
- Had a bad experience.
- I can do it all myself.
- Afraid of being fired: Advisory boards cannot fire a CEO.
- Believe they must take advice.
Advisory boards are setup to provide business advice. They are informal. Advice given is non-binding. With an advisory board, you do not need to chart unfamiliar waters alone. Advisory boards give you objective advice. Advisory board uses:
- Marketing advice.
- Gauging future trends.
- Seeking introductions.
- Finding investors.
- Sounding boards.
- Helping enter new businesses.
- Provide a set of “fresh eyes” for the organization.
9 tips for creating an advisory board:
- Determine the objectives of the advisory board: Boards can be targeted or general. Determine your needs and set your objectives.
- Create a board that complements existing management: Look for people who bring new expertise to your company. Have members with diverse skills, expertise and experience.
- Set expectations: Tell prospective members what you expect of them.
- Compensate your Advisory Board: Compensation can be in cash or stock.
- Keep board size manageable: The smaller your board, the more efficiently it will operate. Start with 3 or 4 board members and add, as different skill sets are needed.
- Get the most out of your board meetings: Prepare to get the most out of your meetings. You need to set goals, prepare an agenda, and take minutes.
- Ask for and expect honesty: You may not like what you hear, but accept that there are other ways to look at a situation.
- Respect your board’s contribution: You do not have to do everything that is suggested, but you should evaluate the advice before making decisions.
- Fire bad board members: If you have made a bad decision replace the board member.
An advisory board will make a company successful and a successful company more successful. Having an advisory board is an opportunity you cannot afford to miss. In 13 Ways a Board of Advisors Can Help Your Company, I explain ways a company can successfully use a board of advisors. How has a board of advisors helped your company? What unique advantage did it give you?
P.S. – Do you need an Outside Director, Advisory Board Member, Trusted Advisor, or Interim CEO? Someone who can help you see your business and your goals through “Fresh Eyes.” Contact me and I will work with you to look at where you want to go and help you find the best way to get there. Sometimes all it takes is someone with a fresh viewpoint, unencumbered by company politics or culture to help find the right solution.
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