Valuable advisors are powerful assets for your startup. According to Startup Genome, a study of a dataset of 100,000 startups from around the world, startups with valuable mentors and advisors grow significantly faster and raise more money.
Another analysis of NYC tech firms shows that companies, where a founder is mentored by a top-performing entrepreneur, are 3.3 times more likely to become top performers themselves.
But having advisors is not enough. As a startup CEO, you must be able to attract the right advisors that will give the most value to your team and then continually extract that value.
Here’s are some tips on setting up and managing your advisory board.
1. Find People with the Right Experience
Finding the right people starts with having a good understanding what your objectives are. Don’t just chase big names. Instead, find people with a domain expertise and a proven track record in whatever area you need the most help.
2. Avoid the wrong people
In general, you want to stay away from professional advisors and consultants who make living through business mentoring. As it is with making your first hires, you want to find people who are inspired by your vision, and it’s their main motivation to join.
3. Look for Credibility
One of the big assets that advisors bring to the table is their name and credibility. A well-respected advisor will help you attract employees, investors, partners and customers. It’s an endorsement and a social proof that’s hard to beat.
4. Find People with Many Connections
As long as it serves it’s purpose don’t be afraid to invite advisors simply for the size of their personal network. CEOs, celebrities and well-respected founders can open many doors, introduce you to top investors, key clients and business partners, new markets, employees and customers.
5. Set Your Expectations
Successful people are busy. You as a startup CEO, you’re going to be busy as well. To avoid complications set an expectation of how often you’d like to meet. Clarify your short and long term goals and then be completely honest and upfront about what you need to get there.
6. Ask for Radical Honesty
Sugar-coating words doesn’t help anyone. Especially if your company, the jobs of your team members, the money of your investors and your future life are at stake. Ask your advisors to be open and frank and don’t be offended if you hear things you don’t like.
7. Establish Level of Involvement
An advisor isn’t your employee – so if you want someone to do your finance or marketing for you, hire someone. Advisors are there to simply advise and mentor you, so be clear in all requests for advice – their time is just as valuable as yours.
8. Keep Everyone Informed
To get the most value of your mentors and advisors, provide them updates at times when you aren’t soliciting their advice. The fact that they’ve agreed to join you as advisors means they care about you and your startup. Thus, keeping them up-to-date will help them be of greater value to you.
9. Compensate Your Advisors
Even though you want to work with people who don’t need or want to do it for money rewarding them for their work is good manners. The most common way is to offer a percentage of equity, typically anywhere from 0.5% to 2%, but it’s entirely up to you.
10. Fire Bad Board Members
We all make mistakes and bad choices. But in a startup you, those mistakes fast. As soon as you realise you’ve made a bad choice, fire the board member. Unlike a board of directors, advisors can be replaced without a lot of legal headaches.