Advisory Boards for Start Ups
Advisory Boards help fill experience gaps in an organization.
The early stages of a company are difficult and making the right decisions is extremely important. Startups often find themselves at a point where they struggle to make the right decision because of their inexperience. Entrepreneurs are usually so passionate about their ideas that their vision becomes myopic, and they lose sight of the big picture. This is where a board of experienced individuals can step in and be useful, by providing quality advice to help steer your company in the right direction.
But how does a company build a board? The makeup of either or both a board of directors and an advisory board depends on your industry, the stage of the business and also the geographical location. We discussed how to build a board for a company with three well-experienced board members.
Advisory Boards for Start-ups: Include Different Experiences
Recruitment of board members requires a balance of knowledge and experience. Ginger Silverman believes “the broader a company can go to include more vast differences in experience and contribution, the more successful the company will be.” Ginger has served on advisory boards and boards of directors for private, public and non-profit companies including Norco Delivery Services, IVIU technologies, Cutagenesis, Oroscience, and Susan G Komen.
Jeff Thompson agrees with Ginger that your board needs to have a combination of knowledgeable individuals from different fields. In this way you get feedback and advice from different angles. Jeff has served in the board of directors for 10 years at Edelbrock Corporation. He was also a member of the executive, compensation and audit committees. Speaking of a time when he had to create a team, Jeff said, “We put a team of financial experts in that knew financials and knew the regulatory requirements. One, another one was a retired accountant that was with the business. And the last one was an attorney that could help give us guidance during the meetings, or anytime we publicized or put out anything making sure it was regulatory compliant.”
Advisory Boards for Start-ups: Stage of the Company
Ginger has also helped early stage companies to build a board. She says, “In those situations there tends to be more of a focus on opportunities to open and support the growth of the company, the early stage growth and exposure of the company and risk assessment along the way. As opposed to the more established companies that maybe have the round, well-rounded approach.”
Startups tend to be short-sighted when looking for new members to build a board. In early stages of a company, having good chemistry with a potential member seems to be the only qualification for getting on board; ignoring their strategic capability or experience, or whether or not they have potential for long-term contribution. The process appears to be more random than methodical.
Advisory Boards for Start-ups: Geographical Location
Merissa Levin is a renowned authour, speaker and expert on boards. She shares knowledge of her expertise in a column in Smart CEO magazine, TED talks and has also written a book on creating exceptional advisory boards. Merissa has noted from her experience serving boards over the country that the government constitutes a larger presence on boards on the east coast, as opposed to the west coast where there is a higher proportion of investors. The reason being, in her opinion, is that “the east coast is a lot more risk aversive when it comes to investment as opposed to the west coast.”
Advisory Boards for Start-ups: The SCALE Model
Merissa’s first company is Information Experts, a 20 year old multi-million dollar government contracting firm. About 7 years ago when Merissa wanted to build a board she found that there was plenty of information on why you should a build one, but none on how to build it. Through some research, Merissa developed a model of her own on how to build a board naming it the SCALE model. She has written a book called ‘Built to Scale’ in which she explains how top companies create breakthrough growth through exceptional advisory boards. Each letter of SCALE stands for a stage in the process: Select, Compensate, Associate, Leverage and Evaluate, Evolve and Exit.
One of the traps in the selection phase is that managers often meet people that they think are great and straightaway ask them to join their board, without thinking about what their role or position will be. Merissa says, “The entire Select phase is very strategic in making sure that you identify who you need according to your holes and your goals inside your organization and you put a very methodical approach to selecting and vetting and then bringing them on.” Since boards are an extension of your brand, you need to integrate them into the culture of your organization and associate members from a legal perspective the right way.
Finding an advisor has never been easier or more reliable. Visit Cerius Advisors to learn how. Avoid painful lessons learned. Talk to someone who has already been down the road before you.