An advisory board is a body that provides non-binding strategic advice to the management. It’s different from a Board of Directors because a BoA is informal, advice is non-binding, and Advisors don’t have the authority to vote.
Benefits of a BoA, and why did Legacy choose to have one?
- It feels lonely at the top. A BoA acts like a sounding board for the CEO. Most members of our BoA are either entrepreneurs or senior leaders at other startups. They understand the feeling of loneliness and can relate
- Everyone needs a boss… even the boss. Everyone needs to be accountable to someone, especially when striving for a lofty goal. A BoA is probably not necessary if you’re trying to build a lifestyle business. But if you’re aiming for the impossible, you need a Board to keep you on track… and to reprimand you when you’re falling behind.
- Perspective. Our Board consists of experts in accounting, finance, operations, and HR. They provide me with an invaluable perspective to our business. More specifically
- We had to let an employee go. The Board provided great advice on how to approach this delicate situation
- We acquired a business in January of 2017. The Board helped me think through this idea, helped me with the due diligence and supported me through the whole transition
- We had difficulty implement all of the great ideas from the book Scaling Up, but one of our Advisors had worked at company who had successfully implemented these ideas. He gave us lots of guidance on how to do it
- Helped me identify KPI’s to track. Right now we are tracking the following. It gave us lots of great insight.
- Gross Margin
Who would want to be on a BoA and how did we build it?
- Have a grand vision
- Before you start recruiting for a Board, have a grand vision, a dream, a BHAG. People want to be part of a cause, especially if they are going to be volunteering their time. So the bigger your cause, the more talented people you can attract.
- Start with friends and colleagues.
- If you’re an entrepreneur, I’m sure you have lots of friends that are entrepreneurs as well. Start with them! Ask if they want to sit on your board as one of your advisors? Guess who’s on the Board of Apple, Google and Facebook? Often times, it’s the friends and colleagues of current, or past directors.
- Make sure it’s a win-win
- Why would someone want to volunteer for your BOA? Sure, some want to help from the goodness of their own hearts, but often times, they want something out of this deal as well. Make sure to have a conversation with them, asking them what they are looking to accomplish in the next little while. If their goals are to be an entrepreneur in the next few years, then they get to experience, first – hand what entrepreneurship is like. If they want to be a consultant in the future, then this would be a great opportunity to gain experience for themselves as well. Make sure to know where they are in their careers and be creative about how you can add value to them.