Advisory Board – An integral part of successful startups

Startups do not need to start with many people. But it will be more difficult for you to build a successful startup without an advisory board in your business model. This is especially true if you are a young and inexperienced entrepreneur, like the fact that children need good teachers to bring out the best in them.

What is an advisory board in startups?

It is unnecessary for Advisory Board in startups to become shareholders or members of the startup. Simply put, they do not need to participate directly in the startup operation. Therefore, they often have no formal authority and responsibility in the startups. They usually play the role of mentor and advisor to support your businesses. Particularly, they will be experts that are trusted by you and help fill the gaps in your skills, knowledge, and experience, thus limiting your mistakes in running your business.

Who are the members of an Advisory Board?

Advisory Board can be an individual or a group of experts with knowledge and experience in business management, investment, or the field of your business. They can also include those with legal expertise to bring you and your business thorough support in the legal aspect. Besides, they can help you connect, expand your social and professional network, and build new and valuable relationships for your business operation and growth. With the support of the Advisory Board, your startup will receive valuable and useful advice. It can be a business model or working process that is more suitable for your startup, a method for you to recognize market trends, legal advice, an experience in preparing fund-raising documents and accessing investors, a vision, or a potential business plan to bring you and your business a sustainable growth.

How to select members for your Advisory Board?

As such, the best way to select Advisory Board for your startup is to focus on the skills, knowledge, experience, or connections that you and your business are lacking. For instance, you may need a lawyer to provide you with legal advice; a MarCom (Marketing and Communication) expert to give you advice in Marketing and Brand building; a retired CEO or businessman to advise you on company development and market expansion; an expert in your business sector to have specialized knowledge or help you develop connections; or an investor to support you in fund-raising.

The role of an Advisory Board in startups

As the leader of your company and also the one who puts all of his energy, effort, and passion into it, it will be difficult for you to completely believe others’ plans or words. However, for those who experienced hardship in the initial stage of starting up and leaned on the support of the Advisory Board to overcome, you will understand its valuable impact on your business. According to the BDC report, 86% of entrepreneurs having an Advisory Board to support their business operation confirmed its big impact on their business. Especially, not only startups but also big and reputed firms with experienced Board of Directors need Advisory Board in some of their activities and certain periods. Toyota is one of them. Particularly, in 1996, by appointing the former Minister of Finance, who was Indian Prime Minister at a later stage, into their Advisory Board, Toyota received a lot of support and developed important connections for their market expansion strategy in India. Moreover, according to BDC’s report based on the analysis of Statistics Canada on 3,902 enterprises, businesses with an advisory board had annual sales increased by 24% higher than those without. In the first three years after the businesses applied the advisory board model, their sales increased 66.8% on average compared with the 22.9% increase in sales of those businesses before establishing the advisory board. So, the role of an Advisory Board in startups and businesses is undeniable. Below are some benefits that Advisory Board brings to your businesses.

Support in making decisions

Advisory Board will be mentors and advisors to support your business and guide your business direction. Their support and advice are given based on their experience, knowledge, and understanding. However, you do not need to strictly apply what they tell you as a photocopying machine. What you need to do is listen to their opinions, then actively analyze and select what is right for your business and make decisions upon that.

Bring new viewpoints to help your startup succeed

Since the advisory board do not involve directly in your business operation, they will have different perspectives and viewpoints from that of your Board of Directors. Because of that, they will be able to provide you with new solutions or ideas, helping you have more suitable strategies, plans, or decisions for your actual business situations.

No hesitation in criticizing your business but willing to bring you solutions

Standing as outsiders, the advisory board always gives you frank ideas and assessments. They do not mind making you depressed, have any reasons for flattering you, and have no pressure from shareholders, investors, and other stakeholders. Their responsibility is to speak the truth and give you the advice to find solutions for your business problems. Therefore, do not hesitate to listen to their opinions. The one who makes the decision is you, and objective opinions will help you make better decisions.

Improve business reputation, thus opening more opportunities for fund-raising.

A good and qualified Advisory Board often consists of experts with years of experience in their field or those with a good reputation in the market. Therefore, by being accompanied by their names, your business will receive more attention. It helps increase the reputation of your business, thus attracting a large number of new customers as well as the attention of investors. Simply put, in these businesses, it not only has the advising responsibility but also becomes the face of the brand to boost business value. In addition, many members of the advisory board will support you and your business in creating premium partnerships, expanding your network, and bringing opportunities for you to connect, raising funds as well as providing other supports for your business operation.

Save expenses

Advisory Board does not participate directly in your business operation. Hence, the cost you spend on them is much lower than the cost spent on your Board of Directors or full-time specialists to fill your skill gaps.

Advisory Board is often formed during certain periods, with certain projects of the organization. Some businesses can also hire a long-term advisory board. However, in general, the cost that you spend on these advisors is not as high as the cost you spend on other high-level and high-profile employees, especially those with scarce or high-demanding skills. Moreover, the expenses spent on good and qualified advisors is a good investment in the long term, which will be always profitable, thus never a waste. They are life savers that save time and money for startups instead, by preventing them from losses from unwise strategies or investment plans.

Kounselly – A consulting marketplace and community for Business Management and Entrepreneurship

Join Kounselly, you can access suitable consultants and advisors for your business without traveling, seeking, and inviting efforts. Kounselly is a platform that helps you connect with experienced experts within the country and all over the world, with an E-learning center, that is willing to support you from A to Z. Especially, the cost of hiring consultants and advisors at Kounselly is affordable for SMEs and young entrepreneurs. In addition, experts on Kounselly are categorized into different and various fields, from Strategy to Marketing, Finance, People Management, IT, etc. to help answer your concerns and fill the skill shortage in your startups. Kounselly, Opportunity to connect, Path to success.