When a startup succeeds, much of the credit often goes to the founder. That praise is well-deserved, but many of the most successful businesses also have an advisory board to thank. In fact, if you’re planning on launching a startup soon, you should consider assembling your own advisory board. It’s absolutely worthwhile.
What Is an Advisory Board?
An advisory board is a group of individuals selected by an entrepreneur. Each member of the board may be chosen because of their expertise or to fill in a specific knowledge gap the founder has identified.
For example, a person launching a tech startup may realize that they need expert feedback on attracting investors. So they include a finance expert on their board.
Because of this, the board of advisors for each business will look slightly different. The most important takeaway is that you hand-select experts with a proven track record in launching startups. For example, Kris Duggan has worked as a startup advisor and an investor — and has even launched several tech businesses of his own.
What Are the Benefits of an Advisory Board?
If you create an advisory board, you’ll have to compensate the members. It’s standard for an early-stage startup to pay advisory board members a 1% equity stake. If you bring on five advisors, that’s not an insignificant investment. However, it’s absolutely worthwhile if you bring on the right team.
Attract More Investors
If you create a team of well-respected advisors, you can boost investor confidence significantly. This is especially helpful if you are a new startup founder. You may not have a proven history as an entrepreneur, but you can show investors that you can build a team of experts and follow their advice.
Make Well-Informed Decisions
As an entrepreneur, you’ll be faced with many decisions that go beyond your area of expertise. You may have other team members to rely on for help, but even their expertise may not be enough.
When that happens, you can turn to your advisory board. Their expertise and insights can be invaluable when you’re faced with mission-critical choices to make.
Your ability to create growth depends on:
- Offering quality products and services
- Creating a good customer experience
- Making excellent financial decisions
- Building efficient workflows
- Implementing an effective marketing strategy
You should be able to lean on the expertise of your advisory panel to help you develop and execute the strategies required to ensure that these things happen. They can also help correct your course should you take any missteps.
A Range of Perspectives
A team of advisors also brings a range of experiences and perspectives. This is valuable for decision-making and can help counter your assumptions to ensure you always have the insights you need.
Help with Personal Development
Many entrepreneurs start with subject-matter expertise and drive. However, they lack other competencies such as:
- Attracting investors
- Hiring and training staff
- Making industry connections
- Conflict management
Members of an advisory board aren’t just there to help the company grow. They can also offer excellent advice to the entrepreneur and their team members.
Creative Ideas from Industry Leaders
It’s easy to get bogged down in the daily tasks of running a business. You may find yourself short on time and inspiration. When this happens, your advisors will be there to help you identify growth opportunities and find creative solutions to problems you might encounter.