Building your team
A common challenge facing startups is building a team with sufficient depth and breadth to compete and survive in today's markets. Lack of money, the difficulty in attracting seasoned talent to a high-risk venture and limited contacts all contribute to the "talent holes" in emerging companies. Add to these challenges the fact that it is simply impossible to have five or six key employees with different talents in a three-person firm.
Many owners choose to ignore the need for required expertise and move forward at an ever-faster pace to the inevitable cliff that awaits their firm. The market will sometimes provide self-administered road blocks to this self-destructive behavior in the form of investors who refuse to invest until the team is in place, or customers who require vendors to contractually agree to secure the human resource talent as a term to the agreement.
An ideal solution to these problems is the creation of a board of advisers. Advisory boards are formed to fill in the gaps in management, marketing, product or industry expertise. Whenever the company faces key decisions, advisers are available to assist owners in making the best decisions possible.
I sit on several advisory boards and appreciate the opportunity to assist these companies in solving strategic problems. Recently I was asked to stop by one of these companies to discuss terms of a difficult distribution agreement. As it turned out, the third party was a company that I had dealt with on several occasions. After an hour with the management team, we developed several alternatives for future negotiations.
Many owners are reluctant to bring in outsiders, as they don't wish to relinquish control of the firm. But unlike a board of directors, advisers do not act in a legal capacity in such activities as selecting management or authorizing shares. Advisers typically have no binding authority, and therefore do not represent the company as an agent with customers, owners or employees.
Following are a few ideas in creating your own advisory board.
Select only those individuals who have the specific talent that you need. Avoid family and friends. Decide what you want in an adviser ahead of time, interview them just like you would a new key employee, and don't be afraid to say, "No thank you."
Make sure that they have time to work with you. Recruiting a successful businessperson who has no time will not solve any of your problems.
Hold regular meetings. Distribute materials several days prior to the meeting and ask advisers to be prepared to comment on key issues. Manage the meeting to extract as much information as possible. Too often, management expends too much time in presentation, leaving little time for the advisers to strategize on the issues.
Use your advisers between regular meetings. The more that you are able to involve them in your business, the better they will understand the issues and the greater the benefit to the firm.
Motivate advisers with stock options. You typically do not need to compensate them with a cash payment. Give them incentive to help you build the long-term value of the company.
Rotate the advisory board. Establish a term of appointment. You can always renew the term for a valuable adviser, but you need a method to remove advisers who do not perform.
The effective use of an advisory board will allow you to leverage a wider range of expertise in your firm. Sometimes the difference between a home run and a single is just a minor adjustment in the direction and force of the swing.