To whom do you turn for advice about running your business? How many people have knowledge of your most critical organizational problems? Do you have the credibility you need to make the difficult, necessary decisions your team needs you to make? The day when a sole entrepreneur’s operation grows into a company is an important milestone. Once more than one individual depends on the continued success of the business, however, the pressure to make the right decisions mounts. Many new executives find themselves overwhelmed at this point, lacking a strong compass and unable to share their uncertainty with the workforce that relies on them for guidance. In part 1 of this series , I described how advisory boards provide a safe space for entrepreneurs to test out ideas, get feedback, and hear differing opinions about the direction of their companies. If you have considered the benefits of an advisory board and decided to move forward, naturally the next question to ask is “which people should be on it?”
Define the Purpose of Your Advisory Board
Every advisory board should have a distinct and identifiable purpose. Define your objectives at the outset. They could be short- or long-term; they may encompass a broad range of administrative concerns, a set of issues in one category (e.g. sales, marketing, technological innovation), or a single subject (e.g. environmental impact, FDA compliance, adopting better cybersecurity standards). Whatever their aim, the best advisory boards are founded with a clear direction in mind. By coming up with the board’s mandate, you establish criteria for deciding on members and their terms of engagement. Identity the proper “seats at the table.” Although the composition of each board is unique, typical roles may include:
- Financial/budget planner
- Risk analyst
- Tech specialist
- Leadership mentor
Begin the Advisory Board Recruitment Process
As the one in charge and principal beneficiary of the advisory board, you will have to take the lead in assembling the board. Candidates may appear to you organically in the course of everyday business, but more likely you will have to proactively identify and recruit the team from the ground-up. Generally, executives build their advisory boards through one of two methods:
1. One-on-One Recruitment
This method entails networking with influential people in your professional and social circle, as well as engaging prominent leaders and experts outside of your ordinary reach. Look for candidates within your pools of employees, investors, confidants, and current and former colleagues. Social media sites like LinkedIn are especially useful during this process. If you belong to a church, synagogue, or other spiritual institution, you may find appealing candidates there. The same is true for recreational associations, athletic clubs or gyms, parent-teacher associations, neighborhood groups, and so on. If there is a well-known speaker, writer, or public persona you admire and believe would add value to your advisory board, don’t hesitate to reach out to that person with a call or email. You might be surprised to find out who is willing to support your company given the opportunity.
2. An Advisory Board Program
Myriad entrepreneur organizations, business accelerators, CEO forums, and industry associations offer advisory board programs, wherein they assign their members a group of consultants and set the meeting schedule, rules, and the level of involvement. On one hand, these advisers come pre-vetted; you can trust that they will show up on time and participate fully. On the other hand, you may forgo say over aspects of board membership and structure that, in retrospect, you would have preferred to determine for yourself.
Evaluate Advisory Board Candidates
If you choose to assemble the board on your own, decide what you are looking for in candidate profiles. Which types of experts and specialists do you need? Whom can you entrust with sensitive information about the business, and can they be counted on to deliver quality, unbiased advice? Consider each candidate’s…
- Industry, sector, and field: Is the candidate knowledgeable about your line of business and customer demographics? Does his or her knowledge cover a variety of categories, or is he or she exceptionally credentialed in a particular topic?
- Relationship to you: How do you know this candidate? Is he or she an old friend or associate, or a more recent contact? A client or customer? Be aware that long-held relationships can actually act as a detriment in board meetings. You need members with fresh eyes and a capacity for doubt. This is why industry peers, and even former competitors or competitor-aligned, can make for valuable advisers: they’re primed to see things differently than you. By contrast, those with time-honored relationships to you may become sycophants, or work against the rest of the group out of a belief that they “know better.”
- Age and experience: Seniority can be a major benefit—or a major drawback. Think about how the candidate’s experience (or lack thereof) influences his or her attitudes about current industry practices and trends, as well as their ability to discern historic patterns. Younger advisers may be savvier when it comes to the technological and cultural zeitgeist.
- Visibility in your community: How networked is the candidate? Is he or she connected to other executives you admire? A person’s social or business circle can say a lot about him or her, and there are pros and cons both to insiders and outsiders.
- Other areas of proficiency: What “soft skills” does the candidate possess? Is he or she a good communicator, mediator, planner, or ambassador? While you cannot plan for the eventual dynamics of the group, you can detect personality traits that would facilitate or impede board meetings.
Want to learn more about this subject? In the third part of this six-part series about advisory boards, I’ll walk you through running effective board meetings. In the meantime, please feel free to reach out to me with any questions you may have about advisory boards or any related topic. As a Principal in Offit Kurman’s Business Transactions and Governance practice, I regularly advise clients on matters related to business formation and transactions, governance, mergers and acquisitions, IP, and more. I also manage New Paradigm Counsel®, a service offering through which Offit Kurman delivers customized, comprehensive and cost-effective outsourced legal departments.
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ABOUT JONATHAN WACHS
Jonathan Wachs provides strategic counseling and operational advice to clients in the areas of intellectual property, commercial transactions and outsourced legal departments. As head of the firm’s Intellectual Property Group, Mr. Wachs works closely with clients to develop, register, analyze, enforce, and transfer intellectual property assets in a customized, cost-efficient, and highly effective manner. Additionally, he conducts intellectual property audits through which clients learn the nature and value of their intellectual property assets and the steps needed to protect such assets from misappropriation or dilution. As a business lawyer, he has successfully negotiated and completed several multimillion dollar business transactions and has served as general counsel to several small and midsize businesses and organizations in various industries and professions. He also manages a blog about intellectual property issues, Friday Factoids. Mr. Wachs co-manages New Paradigm Counsel, a service through which Offit Kurman delivers customized, comprehensive and cost-effective outsourced legal departments. Through New Paradigm Counsel, Jon served as outsourced general counsel for a government contractor, a large printing business, a payment processing company and an identity theft restoration business. You can connect with Offit Kurman via Facebook, Twitter, Google+, YouTube, and LinkedIn.
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