Mastering the Art of External Support and Building an Advisory Board
There are many different forms of external support, depending on the nature of your business’s specific need, as well as its size, maturity, areas of operation and budget.
Unfortunately, this also means that businesses looking for a little (or a lot) of external support often struggle to find appropriate help. Without a centralised place to look or a strong understanding of how to structure the relationship, you can end up missing out.
In this article, we’ll give you the basics of accessing and managing external support to help scale your business. This will enable you to form an advisory strategy, plan how you can best use external support and effectively utilise their expertise to help you scale quicker.
The article is based on a masterclass we recently gave on the same subject, and if you are interested in more content like this you should check out our events page for more.
There are a few main forms of support you might find yourself using (though this list is by no means exhaustive)
- Business advisors
- Non-executive directors (NEDs)
- Interim C-suite executives
- Personal mentors
These vary in particulars, but are at their heart simply a way of hiring-in expertise in certain areas, without actually having to permanently hire a team member. This allows you to access this knowledge and expertise on a flexible basis to fit your business needs – rather than having to hire full-time resources.
This means that whether you have a specific problem you need to address (for example getting your finances in order in preparation for a raise) or are looking for a sounding board to help your company navigate future pitfalls and devise business strategies, you can access the expertise you need to get where you are going.
What is an advisor and when is the best time to utilise one?
External support, and particularly business advisors can provide
- Experience in running and scaling businesses in growth & crisis times
- Knowledge of common pitfalls
- Lessons learned from across different businesses
- Structure and the ability to guide teams
- Access to personal and commercial networks
- Assistance formulating and executing business strategies and processes, from fundraising and exit planning to product development
- Credibility for the leadership team
- Fresh and unbiased strategic advice
Some of the very best business leaders have utilised advisors, mentors and the like to get ahead. You’ll see from the image below, that some of our greatest achievers surrounded themselves with others who were able to help them accelerate forward.
If you are considering hiring an advisor, one big question should be is this the right time?
For a productive relationship with a business advisor you need a very clear idea of what you need help with. This aids not just in finding an advisor with the right specialisation, but in asking for help. In our experience (after working closely with over 100 CEOs and management teams across the scaleup ecosystem) this level of maturity tends to come with series A funding. After this injection of capital, businesses have more headspace and resources to invest in targeted areas for scaling.
But we do often support earlier stage serial entrepreneurs, as they understand the value of getting the best people in early, even if it is on a flexible basis. Its serial entrepreneurship’s best kept secret.
Even if you are at too early a stage to know what you’d want from a business advisor, there are still some forms of help which may be cheaper and more appropriate to your position. For example, many entrepreneurs find personal mentors to support their personal and business growth.
Setting an advisory strategy
If you do decide to find that external support, how should you go about it? It’s often helpful to outline answers to the following questions to help you formulate your advisory strategy and why you might need external support in your business.
How do you go about finding support and building an advisory group?
So how do I find advisors, NEDs or other forms of external support?
There are a variety of ways businesses tend to find this help, but most of these boil down to networking. For example, there are some networking events designed to help scaleups find advisors, and you will sometimes find advisors advertising on LinkedIn. However these searching techniques are time-intensive and not guaranteed to provide you with what you are looking for. Most people end up relying on their personal networks, but these are often limited and lacking in diversity.
We do also sometimes see job posts requesting the help of an advisor, but most businesses struggle to get their posts in front of the right people, giving this technique disappointing returns.
If you need some help finding suitable advisors quickly and painlessly, Invigorate can help you find the support you need. Our wide network of advisors, investors and founders mean we can help you find the help you are looking for, without weeks spent scrolling through LinkedIn profiles. After all, picking a trusted advisor is like picking a co-founder or life partner, it needs to work for your sector and stage, but also for you on a personal level.
We recommend that you use the following framework, outlined in the image below to judge whether the advisor you’re bringing into your business has the right combination of skills and experience (in blue) and softer qualities (in green).
Once you’ve found an advisor you like and that has the right qualities for your business challenge, you’ll need to pitch to them. This means explaining your business, as well as any challenges and strategic priorities you would need them to help you with. You want any new stakeholders to be interested in and committed to the business, and for an advisor to do their job properly (or even to be able to tell you whether they are right for the job) they need to understand what you need.
Make sure your pitch includes the following to make sure the proposal you receive is spot on
- a description of your organisation – its purpose and values, what it does, its size and structure
- what you are trying to achieve and why you need help
- skills and experience you are looking for
- specific goals you expect the advisor to achieve and the timeframes for doing this. For example:
- A few hours or days a month for strategic advice, helpful and challenging questions
- A few days a week – typically used for on-going supportive relationships, such as helping set departments up for scaling success
- On a project basis – if there is a specific outcome that needs to delivered and your business needs hands on support, you might want nearly full-time support for a period of weeks or months (for example a fundraise or product launch)
If after this, you both agree that the advisor is a good fit for the role and that they have the right experience – and vitally that they are excited by the business and are somebody you’d really like to work with – then it’s time to formalise the relationship.
While this step isn’t necessary for informal business support relationships like personal mentors, if you are paying for more specialised advice you need to make sure you have ironed out the specifics.
For example, if you are hiring a new advisor to help you review and improve the efficiency of one of your teams, you can clarify how you would like their findings – from a presentation laying out key findings to a report detailing a new strategy.
By formalising your expectations upfront, you can clarify your goals and ensure that you will get the value you envisioned from the relationship. Advisors might be taking on some of the strategic load of running the business, but in most cases they will need you to provide the structure for this – in much the same way you would ask a new team member to help you achieve a few specific goals, rather than to analyse and improve the whole company.
You should also make sure you have legal agreements ironing out proposed outcomes, time-frames, data-handling, confidentiality requirements, payment terms, and liability. This is necessary whether you are finding a single advisor at an early stage, or onboarding a NED, and worth getting right. The worst time to discover that you haven’t made the right legal agreements is when a problem arises.
Making the jump to a board
Having a board becomes a requirement of scaleups as you get larger and run through funding rounds. Your advisors can form the basis for this board along with investors and co-founders. It’s very difficult to go from zero to a fully-functioning board, so if you are scaling effectively you ought to be setting up some of these structures and relationships from an early stage to make the process more intuitive and valuable. This means seeking out and nurturing relationships with advisors, so that by the time they have become a regulatory requirement, you have valuable business relationships you can use to start hiring NEDs.
In addition to a traditional board, many scaleups also keep separate advisory boards. While both a general board and an advisory board provide strategic advice to the business, unlike a board of directors the advice of an advisory board is non-binding. It is also a more flexible structure which, because it doesn’t have the same governance duties, you can take advantage of to fast-track projects and tackle problems.
Whether you are just getting started on the foundations for your board of directors, or considering an advisory board to help you navigate product development or tricky regulatory waters, you should make sure that these boards are diverse.
Boards with a diverse mix of genders, cultures, socio-economic backgrounds and more, have been revealed to be important for more than just ethical considerations. Businesses with diverse leadership teams outperform their peers by up to 36% and this applies to boards as well. The wider range of perspectives and life experiences measurably increases the value of strategic advice, and can prove vital when troubleshooting new ideas. It’s a big topic, but if you are interested in the research you should check out the report we wrote on Harnessing the Power of Diversity and Inclusion.
In addition, it is important that your boards are diverse in terms of experience. To give your business the best chance, you’ll want your board to take in a range of specialisms and experience, with people from different industries and expertise relevant to your product and market. After all, it won’t be any good having an advisory board exclusively composed of a particular industry’s veterans when trying to innovate or adopt new marketing techniques. And likewise if you are an B2B SaaS company that’s considering branching out with a product aimed at consumers, you’ll appreciate the experience of a board member with a D2C background.
It’s a lot to get right, but getting in the right external support is vital to your business’s growth!
If you’d like help finding the right support for your business, or just a bit of advice on how to ensure productive relationships and maximise your value, contact us here. Alternately, come to one of our events for more information about finding the right external support, or check out our resources page for more articles breaking down the process and other industry-leading resources.