1. How can your Advisory Board (AB) help you?
Objective feedback is more valuable than blind
Your AB should be a sounding board comprised of competent service providers and experienced vendors who are invested in the growth of your company. Not, your uncle Joe who has loaned you the money, but has NO business experience at all.
Utilize the existence of an AB in your dispute resolution mechanisms within your Bylaws/Operating Agreement. Bring expansion goals and strategic planning. Decide deadlocks amongst the members/shareholders. Disputes can be sent to AB before progressing to Mediation and/or Arbitration. Each person is a referral source and advertising (either through their website, word-of-mouth). Aids in public relations of the growing company. Keep goals accountable and defray the isolation of running a business by oneself or with another partner.
Who do you want on your team?
Start here: What do you need for the growth of your business?
Then, ask yourself who do you know that has those
Be careful of too many cooks in the kitchen. Ideally, you want complementary disciplines represented in the AB so each member ADDS TO versus CONFLICTS with the overall goals of your company.
Key players usually represented: Attorney, Accountant/Finance, Marketing, Vendor/Mentor in Company field. Try for an ODD Board count (at the very least 3 (to detract from an AB deadlock). Enthusiastic, problem solvers are still preferred over “Debbie Downers”. Keep in mind that some service provider’s may charge for time for service/expertise. Each person may or may not be compensated (depending on the SP and the services required).
Generally, the two types
of advisors are: CORE and ANCILLARY
Core advisors are
subject-matter experts in your traditional business advising roles: Finance,
Strategy, Marketing, Legal, Technology. Typically, these are people who are
either in the business of that expertise or who have a strong background
resulting from a previous role in this area of expertise. For instance, you
might select a business attorney with specialty in small business and mergers
and acquisitions if you’re looking for basic legal advice as you grow and have
goals of an exit through merger or acquisition, so that they can guide you
through any execution that needs to happen and can steer you away from missteps
along your path.
Ancillary advisors are
subject-matter experts who either operate in a small niche specialty, are in
your business or industry, or have expertise in an area that is not their core
business. For example, whether you are a realtor or not, you may have
identified a realtor who is an expert at marketing their business through viral
social media. If you’re looking to find success marketing this way in your
business, you may seek out this realtor as a member of your advisory board
because of their expertise in this area and their respective connections.
To be clear, your
advisors aren’t meant to be used for pro-bono work. Should you secure an
attorney as a member of your board, their role should be to let you know what
legal documents and processes are necessary and unnecessary based on your goals
and to advise you so that you aren’t making any legal missteps in pursuit of
your goals. This attorney would not be expected to draft any legal documents on
your behalf or otherwise become your legal counsel in any company matters
pursued unless you have decided to retain them outside of the advisory board
relationship in a official capacity, and have discussed any potential conflicts
How do you approach a potential AB member?
Nothing ventured, nothing gained! Put your fears aside
and go for it. You have nothing to lose. Be clear and concise: You should have
a very clear goals and objectives for your company and how you would utilize
this Board member’s time and expertise. Utilize their time but don’t waste their
kindness nor hourly rate. Give them a schedule of when the proposed meetings will
be conducted. Draw up NDAs consistently here if you are in the midst of filing
for or have concerns about trademark and patent issues. Be prepared for them to
decline due to timing or conflicts. However, all is not lost. At the very
least, you have met another person that could be a passive referral source.
They said YES! What, now?
Once an NDA is signed, send a simple charter outlining meetings and company expectations of each member, Consider indemnification especially if listing your Board members on your website. Send out the Anti-Business plan to ALL members. Make sure everyone is on the same page from the beginning. Outline the Goals and Objectives for each quarter. Propose quarterly meetings –highly recommended for the first year. Have an agenda (See sample below) that will be sent to the Board at least 10 days before the meeting so that any changes/edits can be brought to everyone’s attention.
How often should you meet?
It depends. Quarterly is best for first year. Individual
meetings with each member are also recommended if scheduling/timing is an
issue. With technology, Skype, teleconferencing, this is becoming less of an
issue. One-on-one meetings OR grand meeting planned out throughout the year.
You want to create consistency. Keep minutes (much like your company meetings)
and share the Minutes with absentee members along with decisions and next
How do you keep everyone connected?
There are various ways to run an AB.
You can run it OR have an outside Service Provider conduct it to maintain diplomacy. Always continue to keep communication open by copying all meeting updates to everyone on the Board (don’t flood their inbox!). A good rule of thumb is to send an agenda ahead of the meeting AND updates to everyone after a meeting to keep everyone abreast of your progress.
Starting and growing a company is an endeavor! It can
be daunting and complications are sure to arise – quickly and often. That’s why
an advisory board (AB) or team is essential.
Here’s a SAMPLE AGENDA:
Call to Order. Take Roll Call
1. Voting Decisions
a. Sign lease with X commercial space etc.
b. Upcoming investment opportunities
2. Quarterly Accounting
a. Goals and Profits met?
b. Losses and Lessons learned?
3. Next Quarter goals and resources needed
** The information herein is solely for educational and informational purposes only, and NOT constituted to be legal advice. Please consult your legal and business advisor for further questions. © BIZTO.CO 2020**