By Steve Snyder
One of the greatest assets an entrepreneur can have is an Advisory Board. And the best part is that it costs very little. The “right” Advisory Board members contribute invaluable guidance and advice and provide access to networks of industry, target audiences, and financing resources.
When I suggest the formation of an Advisory Board, the entrepreneur often responds, “But how can I afford that?” My answer is that if an Advisory Board candidate asks how much they’re going to be paid, they’re not the right choice. The “right” candidates want to be on the Advisory Board to “give back”. When they started their companies, they had mentors and guides and now it’s their turn. They want to pay it forward. Initially, dinner every two to three months and a few stock options will be appreciated.
Who should be on an Advisory Board? I always suggest three types of people:
- A serial entrepreneur: a person who has taken more than one company from start-up to liquidity event, a person who has walked in the entrepreneur’s shoes, who has experienced business ups and downs, has had success in businesses that are directly or indirectly related to the entrepreneur’s business and can provide valuable insight on subjects ranging from attracting and retaining star employees to equity milestone incentives to creative ways to drive revenue to increasing the odds of gaining financing and working with investors and the challenges of an acquisition process, just to name a few…
- A serial CFO (and I don’t mean a numbers cruncher or bean counter): a person who has been a CFO at more than one company from start-up to liquidity event, who has validated business models and built revenue models, has worked with management teams to scale up and/or scale back, who has been through stage-appropriate financings, can provide both strategic and tactical financial insight and can provide guidance on essential financial metrics and KPIs.; and
- A person who knows the target audience of the entrepreneur’s company and can open doors to new customers, synergistic relationships and down the road, even acquisition targets. This person could be a former CEO but may also have focused “revenue driving experience” and have been a VP of Marketing, VP of Sales or VP of Strategic Relationships (Head of Business Development).
A major key to an entrepreneur’s success is the team around them. Having a great CFO or CTO or VP Marketing/Sales is important but a strong Advisory Board can be invaluable.