Startup Advisory Board Best Practices
Advice from people with experience and insight is always a good thing, especially when you’re setting off on a new venture. Building a startup advisory board will ensure you have people to turn to for their input when you’re making crucial decisions and setting the course for your new company.
A startup advisory board can provide you with information, direction, and mentorship to give your new business the greatest chance of success.
Although it’s not a board of directors that operates according to your business’s articles of incorporation, it still takes planning and structure to make an advisory board a valuable asset for your business. Follow these nine best practices as you establish and work with your advisory board.
Form Your Advisory Board at the Right Time
Experienced founders may choose to create a viable product and business structure before putting an advisory board in place. For new entrepreneurs, however, it may be helpful to have an advisory board from the get-go.
Your board can help you define your market, test your products, and structure your business. Evaluate your own strengths and weaknesses to determine when you’ll need to rely on the expertise of an advisory board.
Choose People With the Right Expertise
A smart tactic is to choose people for the advisory board that complement your skill set. If you are launching a software startup, for example, it’s probably not the best idea to form an advisory board only with people who have other software companies.
A better strategy may be to choose experts in public relations, marketing, branding, law and IP, or fundraising. You may also want to include people who can offer broad entrepreneurial advice. Creating an advisory board with members who bring a wide range of knowledge to the table will be the most beneficial.
Choose People With the Right Vision
Although it’s tempting to try to fill advisory board seats with well-known names in your industry, make sure they aren’t advisory board members in name only. You want people who will participate and who are sincerely interested in helping your company succeed.
Of course, if one of them happens to be an industry rock star, it could help raise awareness of your new brand and influence investors.
Set Expectations & Sign Agreements
Although members of your advisory board don’t have a formal spot on your organizational chart, you still need to formalize agreements with them. Make it clear exactly what you expect, the time they need to commit each month, and the term of their seats on the board.
If you will compensate board members, typically 0.1 percent to 2 percent of equity, explicitly include those terms in your agreement.
Hold Regularly Scheduled Meetings
There’s a rationale for holding scheduled advisory board meetings that’s hard to dispute. Without a placeholder on a dozen-or-so busy calendars, it will be nearly impossible to find a time at the last minute that will work for everyone. Also, if too much time elapses, you’ll spend most of your agenda on updates since the last meeting. Have everyone commit to attending a regularly scheduled meeting each quarter or at another interval that you’re all comfortable with.
If it’s acceptable to members of your advisory board, you can also speak or meet with members individually when specific issues arise.
Have Formal Meeting Agendas
A formal meeting agenda will help make the best use of everyone’s time. Send the agenda in advance using a consistent advisory board meeting agenda template, such as the template suggested by The Balance Small Business.
Also provide any supplemental documents or information in advance that your advisory board may want to familiarize themselves with prior to the meeting. Once the meeting begins, stick as closely as possible to the agenda — and remember to respect your board’s schedules by ending the meeting on time.
Listen to Your Advisory Board
You have chosen your advisory board for their expertise and insight. You won’t always agree with everything they say, but it’s smart to take their advice seriously.
A high profile example of what could result if you go your own way is an ex-advisory board member’s account that Facebook ignored warnings about risks to data privacy. Keep an open mind.
Communicate Between Meetings
Inevitably, issues will arise between meetings or you’ll have news you want to share. Establish a way to stay in contact with your advisory board, whether through email, phone calls, or collaboration tools.
Even for people with entrepreneurial or subject-matter expertise, a new startup will be a learning experience. It’s important to keep your startup advisory board informed of progress — what’s working and what isn’t. They’ll need this feedback to help you correct your course and overcome challenges.
Also, be sure to report wins. It will be encouraging and energizing for your advisory board to know their advice is resulting in progress and success. And if you’ve built the right advisory board structure following best practices, plan on having a lot of wins to report.