There seems to be a limitless pool of advice for founders. Even investors are flooded with tips and tricks on investing in startups. But for board advisors, the prevailing belief is that, as their name would suggest, advisors don’t need advising.
For any first-time board advisor, the experience can be daunting, and you’re expected to know exactly how to advise founders on their growth journey from the moment you start in the position. Most likely, you have far more experience on the other side of the table, helping to grow businesses and gaining knowledge from external advisors yourself.
Having been an advisor for a number of years now, I’ve experienced the challenges and hurdles you need to overcome to become an invaluable board advisor to the company you’re working with.
If you’re a first-time board advisor, start here.
1. Be the best of both worlds
Startup founders value two key qualities in advisors: lengthy experience and expertise in the area of business in which they need advice, and the skill to unpack that knowledge through the art of advising.
Advisors usually sit somewhere between these two points. The way you can show real value is by bringing/offering the best of both worlds. Get skilled up on advising – there really is an art to it – and make sure you know everything there is to know about your speciality. And there’s a way to achieve the latter quickly.
2. Get specific
Building knowledge is of course a fundamental part of becoming an expert in a particular area - but shrinking that area gets you there a lot quicker.
If you feel knowledgeable about a broad area of business, but you know you’re the best person to go to on one particular area, only offer advisory services for that one subject. You’ll have all the answers any founder will ask and you’ll feel confident in your ability to be an advisor. Build your experience through a narrow focus on your area of expertise which will allow you to build out your skills and move into different areas in subsequent roles.
3. Communication is key
When you become a board advisor for the first time, the first step you should take is determining exactly what the company expects of you. The role of an advisor is incredibly varied and expectations differ from organisation to organisation. Some founders only expect an advisor to be there in times of difficulty, to advise through a big business challenge while other founders expect an advisor to be a little more hands-on.
Define the amount of time you’re prepared to devote to the company and make sure they’re on the same page. Define your role and responsibilities within the company.
While you’re a first-time advisor, this may be the founder’s first experience of having an advisor too. If this is the case, look for the areas they need the most help with. This is likely to be decisions they’re hesitating on. Try to compensate for their weak spots. By identifying where they lack skills or experience, you’ll be of most help in growing the company.
4. Investigate like you’re investing
You may not be parting with cash, but you’ll be investing a lot of your valuable time into this company. You need to make sure it’s worth that investment. Treat it like you’re about to hand them a big sum of money that you expect a return on.
This means conducting thorough research, getting to grips with the financials and the less quantifiable aspects of the business like the character of the founder for instance. Make a note of any questions that pop to mind when doing so.
You’re also investing time into a founder, perhaps even more than the company itself. Don’t let your research extend to the bounds of the startup. Make sure you have confidence in the person (or people) behind the company.
5. Try to avoid the 80/20 rule
In advising, there’s something called the 80/20 rule. This is that 80% of an advisor’s time is usually spent on getting the mechanics of the business right. They work out logistics like recruiting, PR and equity splits. Basically, reducing friction.
The other 20% is spent on real strategic advice and guidance. It’s what has the biggest impact on the company, but it’s what advisors only dedicate 20% of their time to.
Try and avoid this. You want to be having maximum impact on a business, so try and make introductions to the right people who can help with reducing friction, and dedicate the bulk of your time to being a strategic advisor.
6. Critical feedback is essential
While it’s important to build a good relationship with the business owners, you have to provide critical feedback where necessary to ensure the business grows.
Some founders have a hard time taking this. It’s understandable. The business is their baby. But make sure you set expectations that it’s your responsibility to provide critical feedback and that they should expect this. It’s all about managing expectations to avoid fallout later on down the line. Which leads me on to my next big tip to first-time advisors.
7. You are the editor, not the creator
Sometimes an advisor can get a little too involved. It’s helpful to think of your role as the editor of the business owner’s decisions. The founder is the creator, moving the business in the direction they see fit. You come in to edit those decisions based on your own experience.
8. Forge a close relationship
It’s worth connecting with founders outside of board meetings. Schedule time to get to know them better so you can understand their way of working, their thought processes and for them to get the most from you.
This is important, but remember that time is valuable, to both you and the founder. Make sure catch ups outside of the boardroom are not wasted.
These eight pieces of advice to advisors will go a long way in generating success for both you, the founder and the company, especially to those in the role for the first time. It can be difficult when first stepping into any role, let alone one which relies on self-directed learning and independently transitioning and building skills.
If you’re still on the search for companies or founders to invest in, or perhaps you’re looking for your next company to work with, Connectd’s Smart Matching Technology will help to point you in the right direction.