Recruiting Advisors and Building an Advisory Board
Non-Executive and Advisory Boards offer the ideal opportunity to tap into the experience and opinions of a group of successful and knowledgeable professionals on a regular basis without the financial cost of full time salaries. It gets their perspective on the strategy, performance and opportunities for your company and can provide a valuable sounding board for business leaders. Here we look at the key benefits and tips on how to go about it.
Firstly, just for clarity, here are the key differences between Non-Executive and Advisory Boards but the principles of getting advice, guidance and the benefit of others’ experience are the same.
“Advisory Boards have no formal powers and authority and their members have no fiduciary responsibility and are not company directors. They are not subject to the Companies Act 2006 and are not exposed to legal liabilities”. Instead they are a little more flexible and consultative for an owner-managed business as “Advisory Boards are there for advice, not governance. They do not approve key decisions of the company and none of their decisions are binding.” NEDonBOARD
Here are the 3 key ways both Advisory and Non-Executive Boards can really make a difference….
- Establishing credibility of a young brand
When trying to establish a new business, you don’t have a stellar customer list to share, thousands of happy customers and floods of testimonials speaking effervescently about your amazing product/service. But, without this, you are trying to create a solid reputation, gain trust and confidence in your ability to deliver successfully.
Advisors can help you by developing Team Credibility. Building a highly regarded and relevant Advisory Board is one way of helping instil trust in your business and confidence in its offering.
Chris Forbes, award-winning entrepreneur, co-founder and Director of The Cheeky Panda did just that. And in 3 short years, from founding the brand in 2016, has expanded to 15 countries and built sale revenues to over £4m. He told me “I set up a non-Exec Board at the beginning of Cheeky Panda – it helped bring experience and credibility to a very young brand and was also a way of getting experienced corporate executives to advise without the financial drain of full time salaries. I’d recommend companies with high growth plans to adopt a non-executive board of industry experts as soon as possible.’
- De-risking the process and increasing accountability
Chris Griffiths has over 28 years’ experience in setting up and leading successful businesses that have ranked in the ‘Deloitte European Fast 50’ and ‘The Sunday Times Fast-Track 100’ and sold his first company at the age of 26. He told me “I found adding Non-Executives to the leadership team early on in my start-up journey incredibly useful providing me with a valuable source of advice and an increased level of accountability”
David Myers - Founder, CEO and NED - continues that theme talking with how having Advisors or Non-Executives is “absolutely fundamental to de-risk the whole process”. David confirms that setting up a business is “hugely risky especially in the first 1-3 years but having strong Advisors to provide checks and balances on what you do and the decisions you are making is invaluable”.
David said “what you don’t want is a bureaucratic process that stifles decision-making” but said the Advisors “can help prevent potentially maverick, overly-bold decision-making, reining us in and holding our decision making up to the light making us accountable”
- Objectively evaluating your value proposition and acting as a sounding board
As a founder and entrepreneur you are likely passionate, perhaps a bit lonely, have invested significant time and energy (as well as capital) and be emotionally attached to your business. But what an Advisor can do is help you crystallise what exactly is the value proposition of your business.
Sometimes as business owners what we see as the value of our products and services is not always what our target audience values most. What if you are missing a trick and how can you unlock it?
Carol Spiers-Thompson, Advisor and NED who uses an un-biased approach to assessing business value and uncovering core strengths, talks of a now-tech business she worked with recently who viewed themselves as an electricity distribution kit manufacturer. By uncovering their strengths and assessing potential opportunities, they are now an extremely strong data business facilitating and sharing data across a tech-enabled platform.
Carol’s un-conventional approach as an Advisor includes challenging business owners to ‘tell me what your business isn’t.’ She says this reveals how our brains may have been systematically shutting down opportunities and this thereafter enables the exploration of possibilities not currently within your sphere of consideration. Her key message is “Bring in those around you with open, opportunistic and curious minds who aren’t afraid to explore with you”. She also advises “Really listening carefully to what your customers and potential customers say and exploring fully how you can meet their most critical needs.”
Tips for selecting Advisors/NEDs or putting together a Board
Aim High –You’re trying to build team credibility and get great experience and advice, so aim high. You’ll probably need help (from an established and well connected search firm) approaching key business names, so an appropriate starting point is to write a proposal document outlining your business, why it’s so great and why someone should join you as one of your Advisers/NEDs. The recruitment firm can also help you draft a Letter of Agreement and an Advisory Board Agreement.
Pay them and say thank you – Although in the early stages, possibly for 6-12 months, you might get away with not paying a highly altruistic Adviser/NED, but once you’re making money you should pay them or perhaps award them an amount of equity which is earned over time and vests in stages to incentivise their continued participation. You might be paying £1000 per full day for a once or twice a month conversation – but given the impact that could have to the success of otherwise of your business that’s £12,000-£24,000 that’s probably very well spent.
Always have something in mind but be flexible – Be prepared to be completely honest and transparent with your Advisers, know why you want them and tell them clearly what you’d like them to add. Their responses may surprise you or be quite different to what you expect – always be flexible.
Choose open-minded, curious individuals – Yes, you want experience, know-how and advice but you don’t want to be told how it was done before, maybe 10 years ago or more. Assess potential Advisors and NEDs by their behaviour and appetite as well as skill set and previous experience.
Tindall Perry Partnership
Tindall Perry recruits Non-Executive, Executive and Senior Finance roles within entrepreneurial, owner managed and private equity backed businesses as well as PLCs.
They are experienced at finding high calibre Chairs, Non-Executives and Advisors for businesses at all stages of their growth journey from early start-up to critical pre-IPO appointments and beyond. Tindall Perry can build whole Boards or search for individual candidates to complete an existing team.
Please contact us for an initial exploratory conversation about how we might be able to assist you.