3 Tips for Setting Up an Advisory Board

3 Tips for Setting Up an Advisory BoardHave you ever had a day when you wished you had a partner to share the ups and downs of running your own business?

With my last company, I remember having days when I felt like it was me against the world-and the world was winning. Without partners to commiserate with, I often felt alone. That is, until I set up an advisory board.

I used my advisory board as part business guide, part support group. Here are three lessons I learned for setting up an effective advisory board:

1. Pick business owners (not your accountant or attorney)

I found the most valuable advisers were other business owners who had accomplished what I was attempting to do. I still paid for the services of an accountant and attorney when I needed technical advice, but keeping these professionals out of my advisory board meetings allowed my meetings to focus on strategic advice on company building.

2. Shut up and listen

I sent my advisory board a one-page summary of the key questions I was grappling with before the meeting. That way, my advisers were “scrubbed in” beforehand, and I could spend the bulk of my time listening to their advice.

3. Report your action steps within 48 hours

Within 48 hours of a meeting, I used to send a quick email to my advisers explaining which of their ideas I planned to implement immediately and which I intended to table for another time. I wanted them to know they were having an immediate and measurable impact.

An advisory board can also play a surprising role when it comes time to sell your business.  Here’s a video of me explaining the secret to using your advisory board to get a higher valuation for your business:

How do you use your advisory board?

18 Comments ▼

John Warrillow


John Warrillow John Warrillow is a writer, speaker and angel investor in a number of start-up companies. He writes a blog about building a valuable – i.e. sellable – company at Built To Sell.

18 Reactions

  1. To make this very important technique work, one must have an open mind to new ideas and constructive criticism which can be very difficult for small business entrepreneurs. We can sometimes think our way is the only way :).

    People to bounce ideas off of as well as “fresh eyes” is even more important for online small businesses as you can lose the interaction with customers and vendors.

  2. Thank you, John.

    One of these days, I’m going to get into one of these, or set one up!

    The Franchise King

  3. I really appreciate the idea of NOT using accountants or attorneys for this type of advice. When a person is not on your payroll and they have also already gone through the same problems you are going through, they are much more likely to be able to give you candid advice.

    There is a critical place for the others as well, but not on the advisory board. This is strictly for getting yourself on the right path.

    -Joshua Black
    The Underdog Millionaire

  4. I may be off base on this but I also ask non-entrepreneur experts to be on the advisory board. I am looking for the latest technology and theories to give an edge over the competition.

  5. Hi John,
    Good video summary (and I watched several on YouTube). I have had advisory boards and did find them mostly helpful and meaningful. How often did you meet with your Adv Board? Monthly? Quarterly? By phone only or in person? Could you join Vistage or another coaching circle and achieve similar results?
    TJ

  6. Choose a group of experts who have been there and done it before… have proved the model… and where their strengths play to your weaknesses. I highly recommend OneCoach as a great business growth resources for small business owners.

  7. TJ:

    I met with my advisory board in person once per quarter. I was also in EO and The Strategic Coach at the same time. For me, the advisory board offered a different perspective than I was getting through or TSC. My advisory board was 100% focused on me and they had all achieved what I was trying to achieve already so they weren’t my peers. Peer groups like EO play a different role (almost more support than advice). All the best with your business!

  8. John- Great article. I used an advisory board for general business issues and it worked well. All small business owners need someone outside the organization to assist them in today’s complicated business world.

    Thanks much.

    Kip Marlow
    TECA

  9. Can’t add enough emphasis about choosing the right people for your advisory board. They should be friendly, but brutally honest. Strategic, not nit-picky.

  10. thank you for posting. great article!

  11. What are your thoughts about inviting prospects to be on your advisory board?

  12. Lynne:

    Do you mean sales prospects or prospective acquirers?

    I had clients and prospects on my advisory board and it changed the dynamic a bit. It went from being a personal advisory board to help me run the business to a customer feedback session of sorts. I would do it differently next time by having both an advisory board for my company (entrepreneurs only)and have a customer advisory board (customer and prospects only). I think doing both muddies the water too much.

    As for inviting a prospective acquirer to your board. I think there are pros and cons. On one hand, they’ll get to know you well and realize you are an attractive acquisition candidate. On the other hand, they will see the guts and behind-the scenes mess of running your (mine too!) business.

    Therefore, I’d probably err on the side of not inviting prospective buyers to your board.

    Hope this helps.

  13. i cant understand that what functions done by it

  14. John, thank you for your insights. This is extremely helpful!

  15. kelly warrillow

    are you related to me my second name is warrillow to n if you not were does your second name come from im curious to find that out ?

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