MONACO / ACCESSWIRE / November 21, 2018 / In today's world of business, startups are becoming the norm with most of them changing and disrupting the way business is being done. Startups have a way of challenging how things are done. They also have a unique way of approaching a problem and providing a solution.
Often, startups introduce unique business ideas for a product or a service which has not been thought of before. The entrepreneurs behind such ideas are usually fueled by a passion to solve a real-world problem, which they do so by providing a viable solution. Their passion is backed up with know-how, oftentimes more advanced than usual, and with lots of thinking out of the box. While these entrepreneurs may know their product very well and their market, there may be other areas in running a business that they are not as well-versed in.
Why an Advisory Board?
Mentorship is one of the reasons why startups need an advisory board. Entrepreneurs who recognize that they are lacking in certain skills in certain areas of business see how important it is to learn from others who have gone before them. An advisory board and one whose composition is well thought-of is the perfect vehicle for this kind of learning.
An advisory board is different from a company's Board of Directors however. According to Kelly Hoey, it is "a group of individuals selected by the entrepreneur who provide advice and help the company succeed." Unlike a formal board, the entrepreneur can choose advisors based "on needed skills or voids to fill within their company."
Selecting the Best Advisory Board for Your Business
How does an entrepreneur whether for a startup company or not go about choosing the best advisory board for his or her business? Before one can come up with a list of potential advisors to approach, there are several factors to consider. Startup founders who have done it generously share their experiences for other companies to take note of.
According to Melltoo's founder and COO Sharene Lee, a board of advisors provides crucial help in the areas of building credibility, providing expertise, and giving access to networks and relationships. Choosing advisors who are captains or leaders of the industry where one operates in will be a big boost to the company's credibility. If one convinces such leaders of how viable one's business idea is, it also says a lot about how good it is.
In the case of Melltoo, they developed a marketplace where secondhand items can be traded. While they knew their product and their market very well, they were shorthanded in online and international payment security. Recognizing this, they got an advisor who was an expert in the field. This expert worked with their security infrastructure team and helped them develop a system that lives up to international financial standards. It not only saved them from spending too much resources, it also saved them from spending too much time on such an important aspect of their business.
Finally, when choosing an advisor, an entrepreneur must also know what kinds of networks and relationships an advisor can help them get access to. Looking at the case of Melltoo once again, they tapped a regional payments and lending professional at a time when they were ready to take the next step of scaling their marketplace and payment integration.
Working with An Advisory Board
After the first step of getting a good board of advisors on one's bandwagon, there is a lot more that needs to be done so that an entrepreneur can get the most of out of this major resource. According to an Entrepreneur.com article, entrepreneurs must choose their advisors based on their company's greatest need – essentially, what expertise is missing from their current pool of resources.
Advisors must have a clear idea of what is expected of them. And it is the entrepreneur who should set these expectations as early as possible. "Clarity in roles is important, a board of advisors is comprised of subject matter experts from a multitude of different backgrounds. Entrepreneurs need to keep their advisors informed so that their advisor is fully up to speed when their expertise, skills or help are needed. Further, it enables the Advisor to proactively flag things to the company which they might not see or encounter from their vantage point. is how entrepreneurs should approach advisor deployment," says Lisa McClung, CEO of Lismore Advisors and global management consultancy employing over 400 advisors.
Agreements must be made on how much time an advisor spends on helping the business. Although some people may view an advisory board's role as ad-hoc, it is important to set a regular time to meet or consult with them. Aside from regularity, the entrepreneur can also set how long an advisor can be engaged.
When it comes to compensating one's advisors, there are several trains of thought on the issue. Some would say that paying for advice means that an expert is a paid consultant rather than an advisor in the real sense. The popular suggestion is to offer an advisor their time for equity in the company which ranges from 0.2% to 0.5%.
SOURCE: TechnoMoz