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Startups

Why should your startup have an advisory board ?

Written by Milan Demeter

on October 19, 2022

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The author

Milan Demeter

Hey! I am Milan and I am a young marketeer working for TheHub as a Marketing Assistant. My main tasks are focused on paid campaigns, social media & producing product visuals, but I am always excited to learn more! Besides that, I am finishing my degree in Marketing Management with an interest in Digital & Marketing Communication, Social Media, and Design within the B2B market.

Have you ever considered having an Advisory Board? No? Then let me explain all the benefits you can gain! Whether your advisory board is focused in one department or on the whole company, they have the biggest impact on the success of your startup. 

Just sit down and think, “How could 4-6 senior executives help my startup?” Well, just simply they will share their ideas, resources, connections that will have an immediate impact on the growth of your business! So, what are you waiting for? Hurry up and start looking for your advisory board on thehub.io right now! Afterwards you will be able to say ! “I gained knowledge that will help scale my startup!

What_is_an_advisory_board

An advisory board is a group of individuals whom you trust, as the leader of a startup, to provide valuable business advice. The role of an advisor is, in essence, to serve as a mentor for both you and your company.

The most common suggestions and guidance that advisors offer are in the following areas:

  • Finding investors
  • Building company culture
  • Implementing growth tactics
  • Acquiring and retaining employees
  • Planning or executing an exit strategy

Tip from Hub : Make sure to hire a diverse advisory board. Therefore it doesn’t really matter if you hire a CMO who can guide you through marketing or a lawyer that will help you with all of the legal challenges that you will be facing. Make sure that you start with advisor in area that you are lacking the most, therefore you will be able to scale up and have an opportunity to expand your advisory board even further. 

Benefits_of_having_advisors
At this point you are probably asking yourself “Does the return of an advisory board justify its cost?”

The answer is YES, with prior experience to offer, advisors allow entrepreneurs to eliminate countless mistakes that could be very harmful to your startup. It only takes a few occasions to see an advisory board investment return tenfold, on that note let’s have a look at some of the benefits you can gain from having an advisory board. 

  • Ability to fill knowledge gaps and improve your performance as a founder and CEO
  • Serve as a testimonial for your business to foster trust among investors and customers
  • Offer advice around critical business functions to help accelerate your startup’s growth
  • Establish credibility if lacking in the eyes of both internal and external stakeholders

Once you find your dream advisory board, it’s time to start searching! 

How_to_select_members_for_your_board

Finding people is easy, but finding the right people is not. Here are some Hub tips on how to find the right advisors for your startup!

  • Assess your needs: What areas do you lack most in terms of knowledge? For example, if it’s your first time raising capital, you may seek an advisor that has experience dealing with investors. Once you establish your needs, you can then narrow the search.
  • Leverage personal relationships: Ideally, an advisor will act as a close confidant, providing advice on short notice when required. Consider whether you have any personal relationships in your network that could add value to you and your business.
  • Screen candidates thoroughly: Always do your due diligence. Make sure to research the prior roles of a candidate and obtain testimonials, if possible. Additionally, determine if a candidate has potential conflicts of interest that may affect their judgment.
  • Go to entrepreneurial hotspots: Sometimes the best place to find advisors are geographic hotspots where other startups are located. Many of these cities have conferences, conventions, and shared workspaces where entrepreneurs and alike come together to network.

Do not forget to be inclusive with your hiring! How? We will explain that in our article on “How to do inclusive hiring?”

Terms_offered_to_startup_advisors

Once you find the right advisors, make sure that you make an agreement with them. Make sure that expectations on both sides will be met. Normally, this is a written agreement that outlines the tasks, responsibilities and compensation of your chosen advisor. 

Here are a few ideas that should be included:

  • Meetings – Will advisors be expected to meet regularly or ad hoc when necessary?
  • Confidentiality – Prevents a leak of information that could be detrimental to success.
  • Equity – Compensation often varies from 0.25 to 1.50% of your total shares per individual.
  • Vesting – Contracts range in length from two to four years and equity is dispersed accordingly.
  • Cliff – Advisors can be terminated within six months, for example, and you’d retain all equity.
  • Non-compete –  Restricts advisors from offering similar services to companies in your space.
  • Ownership – Any ideas or developments put forth by either party belong to the company.
  • Disclosure – Do you want advisors to disclose their relationship with your startup publicly?
Tips_for_managing_an_advisory_board
  • Connect regularly: Make sure to schedule meetings consistently and in advance. This will allow both you and your advisor to prepare for discussion prior to it, but this also marks areas which you need help with. 
  • Create an agenda: Create a draft of topics for each discussion and share it with your advisors beforehand. Make sure to follow up on issues!
  • Be open and transparent: If you’re not fully open and honest with advisors, they won’t be able to offer valuable advice. Remember, they’re part of your team and are rooting for you! Make sure to share your lows as much as you share your ups. 
  • Foster each relationship: There’s a strong chance that whatever you’re working on does not work for you. Startups fail every day for a million different reasons. Establishing a strong connection with each advisor may lead to future collaborations down the line.

As any successful entrepreneur can agree, the people whom you surround yourself with determine your success. Building an advisory board can accelerate your company’s growth in more ways than one and help navigate that oh-so-treacherous early startup phase. 

Convinced ? We certainly hope so, what is left to do now is to create your advisory board posting on thehub.io where we keep more than 100.000 entrepreneurial talent for you to grab!  

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