written by MO.com Subject Matter Resource Dave Lavinsky
One of the best things you can do when seeking funding is to build a Board of Advisors. Particularly since most other entrepreneurs and business owners don’t know to do this, it will give you a major competitive advantage.
Unlike a formal Board of Directors, a Board of Advisors is much more informal. While I do suggest giving Advisors warrants so they profit if the company succeeds, you do not have to pay and/or insure them like you do with typical Board of Directors members.
So, let me explain why I recommend forming a Board of Advisors and who you should ask to join. Having an Advisory Board gives you credibility. If successful people are on the Board, then investors will be impressed. Because they know a legitimate person wouldn’t join your Board unless your company was legitimate. A second reason is for networking. Your Board may be able to introduce you to investors and/or others (customers, employees, partners, etc.) who can help grow your business.
A third reason I like Advisors is that they can help you operationally. Have a question about marketing, or about how to handle an employee who’s causing problems? Well, one or more of your Advisors may have handled those precise issues before in their businesses and can give you quality advice. And finally, getting Advisors is good practice. If you can’t convince Advisors to invest their time in helping your company, how will you possibly convince investors to lend money?
With regards to the types of people you should have on your Board, here are some thoughts to help you. Any successful business owner or executive who can lend credible business advice would be beneficial. As would a local or industry celebrity who is well known, respected and/or connected. Consider Advisory Board members who would attract others; e.g., someone who if you told other prospective members he/she was on the Board, would get others to join right away. Board members that know the media, know potential big customers, have had success in your industry, etc., would all be great fits.
Overall, building a Board of Advisors can help you raise funding, get new customers, gain media attention, and make better decisions among others. All things which would greatly benefit your company. The downside? Other than the fact that it takes time to identify, contact and secure Advisory Board members, I can’t see any.