Do I Need an Advisory Board?
What exactly is an Advisory Board and why is it so important to growing your business? This is a question that I am often asked by founders of early stage businesses. Thankfully, as questions go, it is one of the easiest to answer and, indeed, one of those topics that can make a fundamental difference to your business.
But let us start at the beginning. Each entrepreneur’s journey broadly follows a similar route. The founder (or co-founders) has an initial idea or finds a potential gap in the market that they consider worth exploiting. Once this initial idea has been formed, market research should then be undertaken to see if the results support the idea as it stands, whether the principles hold good but need to be adapted, or whether the idea is flawed in some fundamental way and should be dropped.
Assuming that the research supports the initial idea, then the entrepreneur will morph into a founder, and probably establish a limited company to take the business idea forward. It is, of course, not necessary to establish a limited company, but this is generally regarded to be the cleanest way. Next comes preparing a business model canvas, business plan, and possibly a pitch deck – all of which help to ensure that you have fully thought through all aspects of the business, what is the competition, how it will be set up and scale, and of course, how it will be financed.
Once those initial steps are taken, they will put you in a good position to much better understand the next steps, and how and when you expect to take them. All being well, having gone through this process should give you, as a founder, much greater clarity and confidence. However, it will also highlight any areas of weakness, together with problems that must be overcome. In my experience, perhaps the biggest weakness that early stage business face, is the lack of access to experienced and knowledgeable assistance at an affordable cost.
A sole founder faces the biggest challenges, but even where there are a number of co-founders it is normally impossible to have experience and knowledge of all the areas of expertise required. But, even if they do, then they should still be focused on using their specific skills to develop the product or service of the business rather than the mechanics behind that business.
There are a number of ways around this problem. One is to make senior hires of staff with different skills, but this is normally outside the reach of early stage businesses. Another is to find an investor that brings not just money but also sector knowledge and relevant contacts – that is, smart money. But the easiest, and best, is to appoint an Advisory Board.
An Advisory Board would typically be made up of three to five members, all with complimentary skills, knowledge, and experience, and all ideally plugging the gaps around the knowledge of the founder(s). Only one or two of the Advisory Board members would normally be proactive, with the others there in need or when called upon, and to attend monthly or quarterly board meetings. Not only does an Advisory Board collectively bring much more experience than would otherwise be available to many early stage businesses, but it helps to keep the founders on track and safely steers them through what might be unchartered waters for the founders, but very well known to the advisors.
It is for all those reasons that having a good Advisory Board makes your business much more likely to succeed. This in turn is recognized by potential investors that will almost always want to see such advisors in place prior to investing.
So, from those initial ideas and first tentative steps, I would always advise that getting a small Advisory Board of trusted contacts onboard, as soon as possible, will put you and your business in a much stronger position to take those bold next steps into the future.