Right Advisor @ Right Time
Choosing an advisor is a crucial decision for any growing company. The right advisor can significantly help with the development of the company, in as much as right employee for the company.
Due to the dynamic nature of young companies, a good advisor is someone who has strong industry expertise; can support your business on multiple fronts; and most importantly is genuinely interested in helping the company.
Having seen many companies make the wrong selection. here are some questions/pointers that can help guard against some of the most common mistakes companies make while seeking an advisor:
Reason and timing related queries are the first and most important set of questions that a young company should ask themselves when starting to look for an advisor. DON’T bring an advisor:
- if the company is unable to identify several immediate areas where the advisor can support immediately
- if the company is only bringing an advisor for his/her reputation
- if the business is not prepared organizationally or mentally to follow through the support from an advisor
- if the business has only short term needs for an advisor?
Once a company has decided to sign-up an advisor, the on-boarding process is crucial in making sure a strong base is set-up that is important for building a long-term relationship; in addition to making sure that the advisor has vested interest in the business. Companies need to MAKE sure they:
- define and agree on key KPIs or goals that you want both parties to achieve
- agree on the compensation (equity and/or pay). Equity should include typical vesting over a certain period of time.
- have a formal advisory agreement in place — here is a resource that can help:http://techcrunch.com/2011/09/22/free-startup-docs-how-much-equity-should-advisors-get/
- agree on a mutual way of working together that is followed by both parties rigorously
Lastly, it is important for both parties to review the relationship on a regular basis to make sure that both parties are committed to the goals of the company. Some SIGNS that should cause some concern — when the advisor:
- regularly not available when you need him/her
- doesn´t take his own initiative to support the company
- not willing to use his network for the benefit of the company
- doesn´t show enthusiasm when “selling” the product or service of the company
Bringing an advisor at the wrong time and for the wrong reason can cost a lot of wasted effort and resource for both parties.
Companies sometimes concede to bringing in the wrong advisor especially when the company is experiencing slower progress — it is difficult but it is important to be patient until you have found the right match.