Startup Advising: Building Trust
A startup founder needs a trusted adviser to help them strategize, make important decisions and organize their thoughts. But how does somebody become a “trusted” adviser? And how does an effective adviser build trust with a founder?
Merriam-Webster defines “trust” as the “belief that someone is reliable, good, honest or effective.” Not only does the founder have to trust the adviser to provide informed and effective advice, the adviser must trust the founder’s judgment and demeanor when faced with difficult questions. In effect, a founder often looks for a trusted confidant in their advisers, and there are several ways to build trust to become a trusted resource.
Understand The Business
An effective adviser will be well-informed about the founder’s business, general market and other relevant factors; sometimes even better than the founder. Demonstrating knowledge about the founder’s business and the broader market instantly distinguishes an adviser as trustworthy.
An adviser should build their knowledge of the business idea and the market/industry the business will compete in. Whether a founder’s business is in general consumables or a niche service industry, an effective adviser will come to the first meeting well-informed and poised with questions. How does your product compete against this other entrenched product? Have you researched the regulations applicable to your industry? This background knowledge and preemptive expertise establishes the adviser’s role as a trusted source of information and advice.
Become a Go-To Contact
A founder should learn to trust an adviser’s opinion and judgement, but it takes time to build a rapport. When a founder needs a second opinion, the adviser needs to step up immediately. Understanding the business idea, product and industry helps, but an effective adviser also keeps up with developments so that they are always prepared and up-to-date. Consistently being ready and informed will place an adviser at the top of a founder’s call list.
Alleviate Stress and Frustration
Founders are high-energy, stressed-out individuals and are often planning the next big idea or learning how to manage a team of employees. An adviser may often receive the bulk of a founder’s frustration and stress. Remember that founders are contacting an adviser for their expertise and advice, and sometimes the best way to advise is to provide an open venue to vent frustrations cool off.
An effective adviser acts as a sounding board for founders to discuss their ideas and help them make important decisions. Helping to maintain their composure and re-center their thoughts is a valuable contribution by a trusted adviser.
Help Deconstruct Issues
Founders often struggle to deconstruct major dilemmas and tough decisions because they are occupied with organizing their idea or running a business in its infancy. It isn’t easy for a founder to take a step back from a situation and evaluate the various options. A trusted adviser should help a founder tackle issues by simplifying the dilemma to make a calculated decision.
For example, a new pending regulation may cause some founders to call their adviser exasperated that the regulation will decimate profit margins. An effective adviser would deconstruct the issue by first noting the regulation is not final (and many regulations are heavily revised before enforcement anyhow), the business could identify loopholes or other exemptions, or the founder could pivot the business model towards other products that are not threatened. The adviser should demonstrate their expertise in the product and industry as well as the ability to understand the issue, simplify the dilemma and offer alternatives to address the founder’s concerns.
About this Series — Advising Startups
This article continues my mini-series Entrepreneurship: Advising Startups. In this series I draw on my experience as an adviser to several startups and explain how to become an effective adviser. to get in contact with me with questions or comments, reply to this story or send me an email at jarcari@law.fordham.edu.
About the Author
Jared Arcari is a third year law student at Fordham University School of Law. Jared currently serves as the president of two student organizations, the Fordham Business & Law Association and the Entrepreneur Law Society. He is also a Notes & Articles Editor at the Fordham Journal of Corporate and Financial Law. When he isn’t writing about blockchain-related legal issues or startups, Jared enjoys serving as a research assistant to prof. Bernice Grant researching entrepreneurial topics including non-compete alternatives and improving access to capital. To contact the author, please email jarcari@law.fordham.edu.
