Building a Stellar Advisory Board for Your Business
“Creativity to drive innovation is the most valuable and the rarest skill. Maybe 5% of people maximum are truly ‘Creative’, being able to build something from nothing.” – Unknown
When it comes to growing a business, the support and guidance of a Board of Advisers (BOA) can be invaluable. But what’s the ideal time to assemble this team of experts? The answer is straightforward: start as soon as you’ve crystallized your company’s mission. While it may seem daunting, developing a BOA is a gradual process, with informal interactions that eventually lead to a formal arrangement when the time is right.
Informal Beginnings: Launching an informal BOA can be as simple as inviting potential advisers to lunch for candid discussions about your business plan. Transparency is key; share all aspects of your vision and strategy, demonstrating that you’re open to advice and coaching. Remember, a founder can’t be an expert in every facet of running a company; that’s where a diverse team of advisers comes into play.
Patience is Key: In the early stages, don’t rush into a formal arrangement. Think of building a business as a marathon, not a sprint. Allow your relationship with potential advisers to evolve naturally. Perhaps meet every other month for three to six months before considering a more structured partnership. Respect their input and acknowledge the specific areas where you value their expertise due to their experience.
The Ideal Adviser: The most valuable BOA and Board of Directors (BOD) members are former or current CEOs who have navigated the path you’re embarking on. Industry differences matter less at this high level, as about 80% of skills are transferable. These seasoned executives bring both experience and the lessons learned from past challenges. Ideally, your advisers should excel in areas where you, as the founder, may be less proficient. For instance, if your strengths lie in technology, seek advisers with marketing or sales expertise.
Domain Expertise Matters: While many boards lean heavily toward finance expertise, your BOA should prioritize domain-specific knowledge, whether it’s understanding your industry landscape, possessing technical insights, or excelling in sales and distribution. The goal is to fast-track your journey to product-market fit.
Complementary Skill Sets: Building a BOA mirrors forming your full-time or virtual team; it’s about assembling individuals with complementary skill sets. In business, five key areas matter most: Marketing, Sales, Product/Domain expertise, Finance, and Operations. As Peter Drucker, the Father of Management, asserts, a company’s two primary functions are Innovation and Marketing, as these require the most creativity and expertise.
The Value of Creativity: Creativity is the rarest and most valuable skill in the business world. It’s the ability to build something from nothing, a skill possessed by a mere 5% of individuals. This creativity is what sets visionaries like Elon Musk apart. Musk, now the world’s richest person, combines vast knowledge across various domains to drive innovation. Great marketing follows as the second most critical area that demands creativity, as it requires a unique blend of creativity and experience.
Experience Matters: When selecting BOA members, insist on a minimum of 10 years’ full-time experience. Look for those with 15 to 20 years of expertise; the gray hair and extensive connections often come with valuable experience.
Formalizing the BOA: As your BOA progresses, formalizing the relationship becomes beneficial. Meetings can transition to every other month, and advisers can receive compensation through stock options, typically ranging from 0.1% to 0.25% per year of service, depending on their contributions and time commitment. An ideal BOA comprises five to seven members, as exceeding this number often leads to political complexities and less effective brainstorming sessions.
Bob Norton is a long-time Serial Entrepreneur, CEO and investor who founded six companies with four exits that returned over $1 billion to investors for a 25X ROI. Two others are still in development. He has trained, consulted and advised thousands of Entrepreneurs, CEOs and boards since 2002. Mr. Norton works with companies to 2X to 10X growth rates and valuation using AirTight Management™, the world’s most comprehensive Leadership Operating System. He also helps companies raise capital to fund growth. He is also the Founder of The CEO Boot Camp™ and Entrepreneurship University™ for early-stage companies that have not reached product-market fit and $1M ARR.
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