A mistake that I made early on in my career as the co-founder of an EdTech company was assembling a high-powered advisory panel with unconditional compensation. However, one thing I didn’t count on was absentee advisors. More often than not, advisors would skip out on meetings or take weeks to respond to emails. I understand many of them were busy individuals with lots of irons in the fire, but in essence, we were paying big bucks for ghost advisors. That is why I now tie my advisory board’s comp directly to participation. Under the agreement, pay is directly tied to attending meetings and responding to a minimum number of calls and emails within a specified timeframe. If they don’t participate and advise us, they don’t get paid. It's that simple. In short, I wouldn’t give my advisors carte blanche pay - no matter how respected or powerful they are in the industry. You need to make sure you’re getting some bang for your buck.
One tip for building an advisory board is to pay close attention to the questions candidates ask during initial conversations. While you do not necessarily want an advisor who aggressively interrogates you, you do want a partner who asks thoughtful and interesting questions about the business. Questioning signals that the advisor is interested in or even passionate about your business, and can be a sign that this partner will raise important considerations and challenge you to grow. Intense curiosity can also be an indication that an advisor will continue long term, which is important considering that advisory compensation often consists of equity.
No matter the industry, there is always someone that has accomplished what you\'re trying to accomplish, so do your research and seek them out. But first, consider what you\'re trying to accomplish and the information that you might need to get there. This should be your guiding light, use the information and resources you need to know and get some referrals. Look for workshops, programs, conventions, webinars, etc. During your quest for knowledge, you are bound to find quality advisors along the way. The perfect advisors can help you break into the industry so be sure to compensate them well. Depending on your working relationship consider an equity compensation structure.
The number of years in the industry is often an excellent proxy for the network size. Advisory board members usually lack time, and their professional contacts are a significant way to leverage their assets efficiently. When facilitating it, they can bring people on board and pave the way to licenses and specialised know-how otherwise challenging to obtain.
When building your advisory board it is important to ensure that you receive advice and mentoring from a variety of experts, that represent your customers or market sector. It is also vitally important to ensure that you have expertise on the Board from people skilled and experienced in disability and diversity issues and inclusion and best of all people who have true personal lived experience through being disabled and/or diverse themselves. There are over a billion people with disabilities worldwide so don't forget that customers with access and inclusion requirements are a vital part of your market, no matter what market you are in and without the right makeup of your advisory Board you could design your product badly, implement a bad marketing strategy or have a bad talent acquisition strategy that ignores this large population. I am blind myself, use a seeing eye dog and the founder and CEO of several startups.
it's important to find qualified advisors. This means looking for individuals with the relevant experience and expertise who can provide valuable insights and guidance. Make sure you do your research to identify individuals with the right skills and contacts.
Value a skill like cooperation above personal passion–but only slightly. There’s an important and difficult balance to make in selecting board members with differing opinions who will be able to work productively with each other. Gathering too many like-minded board members will defeat the purpose of having an advisory committee, yet gathering experts in any field will lead to disagreement and potential contentiousness. When building an advisory board, seek out good team players who are willing to compromise, but ensure all of your board members are qualified and committed to their oversight.
No matter the industry, there is always someone that has accomplished what you\'re trying to accomplish, so do your research and seek them out. But first, consider what you\'re trying to accomplish and the information that you might need to get there. This should be your guiding light, use the information and resources you need to know and get some referrals. Look for workshops, programs, conventions, webinar, etc. During your quest for knowledge you are bound to find quality advisors along the way. The perfect advisors can help you break into the industry so be sure to compensate them well. Depending on your working relationship consider an equity compensation structure.
Building an advisory board from scratch is a process that must start from the evaluation of your business strategy. The demand for advisory boards for startups is at an all-time high level but considering the wide range of tasks they may be crucial at, approaching it wrongly will affect your business progress. Evaluate what crucial role the private company board will play; this could be offering expertise on marketing, customer relations or their main role may be to guide your business on its expansion ambitions. Along with building such a board, the compensation should be decided beforehand. For established businesses, a monthly or annual retainer works well. However, for a business still, in the infant stage, a carefully crafted equity compensation arrangement is the best option for it guarantees continued interest and dedication to growing the business.
Advisory boards are tricky things. They can be used to "reward" people that have had positive impacts on your business in the past, or they can be used to try and win business in an industry, but are they really able to help improve your overall business? Advisory boards should bring a wide range of expertise to your business. Boards should be people with diverse points of view, but they can help guide your business to improved outcomes from an operational and revenue perspective. Compensating boards on the metrics your business needs to improve the most is an easy way to align your company with the advisors that have agreed to spend time with you. Example: If revenue is great, but profitability is lagging, compensate them on milestones the company is able to reach. This gives them additional motivation to help you get the business to the next level. The key is to have milestones that can be hit, but are also a stretch.
Depending on the type of company you’re building an advisory board for, a great way to compensate and find the right team is to offer equity in your company. Typically, this will draw in an experienced investor, who will be inclined to help you grow your company because it will benefit them in the end if you succeed. This means that you aren’t having to directly pay an advisory board member and risk failure on top of it. It helps you to ensure success for your company and anyone involved.
CTO at Spreadsheet Planet
Answered 4 years ago
Seek people who are interested in equity: The most effective advisory board members have more opportunities than they can accommodate into their hectic schedules. Depending on how big of a household name or expert they are and how much time and resources they are prepared to commit to your firm, you may need to offer them 0.1 to 1.0 percent of your company's ownership on a two-year vesting schedule to get a Rockstar advisory board member.
You must drive to process: To keep everyone on the same page, organize a monthly Advisory Board meeting with a formal agenda and casual communication. Advisors will be unable to assist you if they only hear from you every six months. Rather than asking for updates, they expect you to make explicit requests.
Appropriately compensate your board members: The majority of advisory board members will not be in it for the money; simply being a part of your company will be sufficient compensation. People, on the other hand, prefer to feel appreciated, so give them some type of monetary reward. Host an elegant lunch at each meeting, or pay each member a small honorarium per meeting. And, of course, thank them frequently for their time and grin when you use their ideas, whether or not you use them.
Try to find advisors who have done before what you are trying to do now in your company. Compensate them with equity, ideally some that vests over a long horizon, so that your interests remain aligned.
Compensate in a formalized manner: The majority of advisory board members agree to serve because they want to help you, not because they are paid. However, to demonstrate that you are serious about the role, you should charge a small monthly fee and/or provide stock options. You pay for out-of-town board members' travel fees if you want them on your board.
An equity option works best as compensation for an advisory board it allows the small business to get help from its board of advisors without much financial pressure to compensate them. Moreover, this cost consideration also ensures that during the building process of the advisory board, you can vet would-be advisors who are only after financial gain. Steering clear of such advisors gives your startup a better chance of survival because you have genuine advisors who stay even during hard times. To build your advisory board, start by enlisting mentors that helped get your startup to where it is now. This line of continuity ensures the startup's vision remains in tune with its intended future without losing its original identity. Proceed to team up these mentors with other reputable leaders and dealmakers from your network for the best shot at success.