Growing a brand-new company can be challenging, especially if you don't have a lot of entrepreneurial experience. For some startups, the answer to this dilemma is setting up an advisory board.
According to Entrepreneur.com, an advisory board is a small group of business professionals who have been selected to help advise a business owner on such issues as marketing, sales, financing, etc. These individuals can guide founders through some of the hurdles and growing pains of getting a business off the ground.
Unlike a corporate board of directors, an advisory board is informal and unofficial, and can be structured in any way that suits your company.
Why create an advisory board?
Having and leveraging a network of advisers can really help you as you build your business, said Jeb Ory, CEO of fundraising software Phone2Action.
"Creating an advisory board is a great way to invite industry leaders into an ongoing relationship with your company so they can be partners in your success," Ory said. "They can be sounding boards, provide introductions to prospective funders and clients, and they can provide public validation for your business."
These advantages can be especially important for startups who are in the early stages of funding. [See Related Story: Starting a Business? 7 Entrepreneurs Share Their Stories, Advice]
"A board of advisers is a great way to get sage business advice but also fill in gaps in your team," said Neeraj Sharma, head of growth at Rally, a company that organizes crowd-powered event travel. "Bringing on subject matter experts can help you ensure critical business functions are being addressed, even if the staff isn't quite in place yet."
Boards aren't just for high-growth startups, though. Ory said that even a small consulting firm or service provider can benefit from an advisory board, because getting more perspective and connections can help any entrepreneur succeed.
Sharma said it's best to wait to set up your advisory board until your concept is fully fleshed out and you are starting to see traction.
Who should serve on the board?
Once you're ready to build your board, which of your contacts and industry leaders should you ask to serve on it? At minimum, Entrepreneur recommends having experts in the legal, accounting, marketing, human resources and financial fields on your board. If you wish, you can ask other successful entrepreneurs who understand the basics of running a business.
Ory advised looking for diversity when choosing board members.
"You want to surround yourself with people from different backgrounds who have different perspectives," he said.
It might be tempting to bring on "big names" in your industry, but Ory cautioned against inviting people just for the publicity.
"If the person you are approaching for your board can't commit to an hour a month to help, especially in the first one to two years of your business, they are likely only going to be valuable for PR purposes," he said.
How to work with your board
When it comes to meeting with your advisory board members, the Entrepreneur staff wrote that you can either bring everyone together every month or two, or meet with each adviser separately as needed.
"It really depends on your business's needs, what you're comfortable with and the dynamic you wish to develop between your advisers," said the article.
It's important to remember that your advisory board shouldn't just offer the occasional tip or serve as yes men; they need to add real value, Sharma said. Ory agreed, noting that good board members are willing to roll up their sleeves and help you succeed.
"One of our board members made an introduction to a partner that has now been a key client for the last two years," he told Business News Daily. "That's the kind of support you need when growing your company."
Finally, Ory said your board members should push you and challenge you to evaluate issues a different way.
"[Boards] should be helpful, but also challenge management," Sharma added. "A board that just agrees with you all the time isn't necessarily driving the best value, so find members who … have the discipline and strength to drive real change if it is needed."