Are you looking for funding to start or grow your business? If so, build a Board of Advisors.
Advisors are simply successful people you ask to advise you on growing your business. A “Board” of Advisors is simply a group of these advisors (typically 4-8).
Unlike a Board of Directors, which is more formal and typically requires paying each Director, a Board of Advisors is more informal. While you don’t pay them in cash, I recommend paying Advisors with warrants in your company. When you do this, they take the position more seriously and have a vested interest in helping you succeed.
So, why is having a Board of Advisors so helpful in raising money? Here are four key reasons:
1. Practice: If you can’t convince an individual to invest their time (perhaps one hour per month for one year) to be part of your Board, you won’t be able to convince someone else to invest their money in your business.
2. Connections to Capital: People you ask to be on your Board will generally be people who are very successful (that’s why you want them on your Board). Such people can generally invest in your company themselves if they want, and/or have vast networks of successful contacts to which they can introduce you.
3. Credibility: Having brand name Advisors (individuals who are local, national or industry celebrities) gives your company a lot of credibility. For example, if Donald Trump were on your Board, wouldn’t it make your company seem like a clear winner to investors? Even much smaller name advisors than Trump help in this regard.
4. Operational Success: Once you raise your funding, your goal is to grow a successful company. And if your Board includes seasoned entrepreneurs and executives who have already achieved such success, they can and will give you great advice and guidance.
As you can see, creating a Board of Advisors has real advantages to any company. Start by creating a big list of individuals you respect and who have the track record, brand name and/or connections to help your company succeed. And then start meeting these people, and inviting the best ones to join your Board.
Dave Lavinsky is the President of Growthink, a consulting firm that, since 1999, has helped over 500,000 entrepreneurs develop business plans, raise funding and grow their businesses. Follow him on Twitter @davelavinsky.