There are those entrepreneurs, in particular first-time entrepreneurs, that have an idea, some money and the advice of a few friends. Armed with a book or two and perhaps a business plan created with an online tool, they are off to the races. A passion for your new business is crucial to success, without a doubt. However, launching into a new business without any backup or support is not the path to take.
Putting together a board of advisors early on can increase the likelihood of your success. There are three questions to ask: Why an advisory board? Who should be on the advisory board? What does the advisory board do?
There are two fundamental reasons to have an advisory board. The first is to assist you by providing knowledge that you may not have. Chances are that you are an expert in the field that your business is going to pursue, whether that is manufacturing a product or providing a service, you should know your field reasonably well. If you are a first time entrepreneur, then right away we know that you lack experience in starting a business. It is very possible that there are other areas of business, finance or operations where you have knowledge lacking. The first role of an advisory board is to fill in those knowledge areas that you lack.
Running a new business (or any business) can be a dizzying experience. There are so many things to keep track of that you, the new business owner, are running from one detail to the next. You can very quickly be inundated with a great number of seemingly important affairs to be looked after. Midst the rush, it may be very difficult to discern what is really important and what is secondary. A good advisory board can help you keep your balance by advising you on where your focus should be at any given time, in particular at a strategic level.
In addition to helping you guide the operations of your business, your advisory board can guide how your business relates to the rest of the world. A good advisory board will help you make crucial connections with other businesses, be they potential partners or customers. Board members might also help you find financing either with investors or banks.
What role the advisory board is going to play for you is a good guide to who should be on the board. It would be a good thing to have someone on your board that is recognized as a top expert in your field, to start with. Beyond that, you should choose board members who fill in the gaps in your knowledge and experience. If you are new to starting a business, then someone who has successfully started a business would be an asset. If you are not an expert in business operations, a COO experienced in your field would be helpful. A financial expert and someone who knows about finding investors can be key.
You also want to look at some of the other qualities that members of your advisory board may bring to the table. For example, have they had experience guiding entrepreneurs in the past? Are your advisory board members available on a reasonable basis, so that you can get the advice you need but not burden them unduly? Do they have experience in mentoring and coaching entrepreneurs? Do they themselves have a passion for helping entrepreneurs succeed?
In addition to giving advice, a good advisory board is going to challenge you. They should challenge your assumptions about who your clients are and how you will serve them. They should challenge you assumptions on how you will make money. They should challenge you on how your company will operate. When you bring the answers to all of these challenges, they should also let you know when they feel that you are moving in the right direction.
In sum, your advisory board can be a crucial facet in developing a successful business. If you do not have an advisory board in place, you should be looking to do so now!