Getting a business off the ground isn’t easy. There’s far more to it than having a great idea. Every step of the way, startup owners face challenges that they may have never experienced before, especially if the company they’ve founded is their first.
An experienced and credible business advisor can help owners to meet those challenges. If you feel like your startup could do with an injection of added expertise and knowhow, you’ll want to read on. This guide will give you the answers to the crucial questions you may have about finding a credible business advisor for your startup.
Board Advisors, Part-Time Executives and Other Alternatives
Your main priority as a startup owner is to get your company moving in the right direction. Guidance and advice from someone with experience can make all the difference. Fortunately, there are lots of different avenues to explore to get it.
You might choose to put together a Board of Directors, and this can be the first step towards professionalising the company. The Founder or Co-Founders should obviously be on the Board, but who else should be?
The Board is there to make strategic, medium and long-term decisions about the direction of the company. So, you need people on the Board who can think strategically and not have their minds constantly on day-to-day tactics, as most Managers are bound to. Consider having an independent Chairman or a Non-Executive Director, or both. People who have been there and done it and got the battle scars; people that are likely to have founded, run, grown and sold their own businesses in the past.
You won’t need much of their time in the early days, so even if their day rate seems high, it is unlikely to break the bank as you might only need half a day at a time to start with. Startups often start with quarterly Board meetings, moving over time to bi-monthly and then monthly. Their connections alone should be worth the money, let alone their experience.
Part-Time Executive Directors
Many smart startups give advisors a more formal position within their day-to-day business, often appointing them as part-time executive Directors on the company’s Board. That way, the advisor’s responsibilities and duties are easier to define.
A part-time CEO, for instance, is focussed on helping define and maintain a firm’s strategic direction. A part-time COO, meanwhile, can take a larger role in shaping and improving day-to-day operation. Other roles that might be considered as part-time positions might be Commercial Director, Strategy Director, etc.
What makes this such a good option for your startup is that it’s cost-effective. Even a startup with a limited budget can afford to bring a highly experienced executive on board if they go down the part-time or interim route. You can have a heavy hitter without a heavy cost. And they will look great on the slide deck for your next funding round and may introduce you to some investors as well.
Business mentors are another option for startup owners to consider. They often assist with your growth as a business owner, as well as the growth of the company itself. A business mentor with experience in your field can offer:
- Practical step-by-step advice to meet specific challenges.
- Hands-on assistance, as and when you need it.
- Advice and guidance regarding your own performance and wellbeing.
- An outside perspective on how your firm can grow.
Mentors in Accelerators and Incubators may come as part of the package, but outside of these agencies, the cost may be similar to Non-Executive Directors.
When is the Right Time to Seek Out Advisors?
There’s no such thing as a bad time to add extra knowledge, experience, and skill to the pool your startup has to draw from. There are, however, certain times when doing so can be the difference between success and failure.
What Common Challenges Can Advisors Help With?
All startups face similar challenges. They must be risen to and overcome if a new company is to become established, grow and thrive. Some of those challenges are far easier to meet with the help of a business advisor:
- Strategic direction
- Business growth
- Strategic funding
All startups need to define a clear strategic direction. It’s what gives the business purpose, as well as objectives to aim at. Founders and owners can use analysis tools like SWOT and MOST to help with this. There’s little more helpful than advice from someone who has been there and done it.
Once a startup has taken root, you as its owner are responsible for fostering growth. There are a huge number of things involved in this complex process. You need to identify and respond to new opportunities. You need to generate new leads for your firm and turn them into customers. You might even have to think about diversification. That plethora of decisions can sometimes feel like too much to face. If that happens, it could be time to find a business advisor.
An injection of finance at the right time can help take any startup to the next level. There are many different ways to raise funds for your business, whether that’s through Equity-based or Debt-based funding options, or through other alternative routes. Your Board, NED, or business mentor can help you make the right decisions.
Why Your Startup Needs Credible Advisors
You now know what advisor options you have and when they might help you. What you may be wondering is whether the help of a business advisor will truly make that much difference. Isn’t it possible that you could rise to the challenges ahead without their help? The answer to that is yes. It’s possible, but it’s much more difficult.
A study by Startup Genome suggests just how much easier advisors or mentors can make things on a startup. They found that startups that have helpful mentors track metrics more effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.
There are plenty of less tangible reasons your startup needs the help of a business advisor too. They’re a great way of filling the knowledge or experience gaps in your founding team, as well adding legitimacy and credibility to your organisation.
If you and your founding team have no experience as business owners, it can make your business seem less credible, especially in the minds of prospective investors or other sources of finance. Having experienced, respected individuals on your advisory Board can help overcome that issue.
Finding and Approaching the Right Advisor
Before you reach out to a business advisor, make sure you’re properly prepared to approach them. The first step in that process is defining what you want from the relationship with an advisor. That way, you’ll know what skills or characteristics the right advisor will have. Some useful qualities to look out for, include:
- Coaching Mentality – The best business advisors and mentors help you develop your own skills and abilities. As well as helping make business-critical decisions.
- Startup and Scaleup Experience – Prior success at establishing and scaling a startup.
- Shared Values – To get the most out of a relationship with a business advisor, you need to work well together. If they share your values and priorities, this will be much more likely.
When you understand what you’re looking for, you can draw up a brief for any prospective advisor. This is a document that you can present when you reach out to them. It should include a brief description of your company. You need to outline your goals and why you need help with them.
This brief should also explain what you need from the advisor. Detail the exact role you want them to fill – whether that be as a part-time CEO, a role as Non-Executive Director, the Chairman, or anything else besides. It always helps to be clear at the outset of any relationship.
Draw Up A Brief For An Advisor
- A brief description of your organisation – its purpose and values, what it does, its size and structure
- What you are trying to achieve and why you need help
- What role do you want them for – Chairman? NED? Board Advisor? Mentor?
- The skills and experience you are looking for
- The specific goals you expect the advisor to achieve and the timetables for doing this
Then, you can start the process of actually finding a business advisor to approach. There are lots of ways to go about this. A good start is often with your own professional network. Do you already know someone who could fill the role for you? If not, is there anyone you know that can recommend an option?
Networking events can be great places to find a business advisor. Conferences or events held by non-profits are often chock-full of professionals from your field. If you put yourself out there, you might be surprised at whom you may find to help your business grow.
Professional platforms and networks exist to put entrepreneurs in touch with advisors. What’s more, companies like Boardroom Advisors specialise in connecting startups and scaleups with the right advisors for them.
Reaching an Agreement and Setting Compensation
When you’ve located a business advisor that’s a good fit for your firm, it’s time to get the relationship established. Your first step is to open a dialogue with them. It doesn’t matter too much by which channel you first make contact.
Share the brief you created with your prospective advisor and try to get to know them. If they’re on board with your plans and there’s chemistry between you, you can move forward. That starts with drawing up a formal, written agreement. This is critical. It sets down the exact nature and scope of your relationship with your business advisor.
There are a few key things you need the agreement to contain:
- The advisor’s title and how they fit within your organisation.
- Their responsibilities and the time commitment they will give to your business.
- The goals you want them to help you meet, and timeframes for doing so.
- The length of your relationship, or intervals at which the relationship will be evaluated.
- The compensation package you will provide to your business advisor.
Setting compensation or remuneration for an advisor can be tricky. A startup will often be working with a tight budget. That can limit how much you’re able to pay an advisor. Going down the route of appointing part-time advisors can help in this regard, as it allows you to work with a much higher level of an advisor than you’d be able to afford on a full-time basis.