When Do you Create a Board of Advisors

There comes a time when assembling a group of experts to help grow your business is considered smart leadership and a business best practice. When you reach a stage in your business where you have exhausted the collective internal experience, knowledge and skill to achieve your next phase of growth — create a Board of Advisors.

Every purpose of creating a board will differ for each organization. A business owner may be faced with great opportunity for rapid growth or significant challenges from conquering the next ascent in revenue, market or product expansion. The appropriate time to consider assembling a board is when the business path forward is less clear or cluttered with obstacles that could derail you from achieving your business goals. You have reached that period in your business when their is more “unknown” and you fear what you don’t know.

A Board of Advisors is different from local peer groups, leadership councils, service providers and executive mentors. Your board is a committed team of individuals working on your business. Advisors should have congruent skills that compliment your leadership. As an example, you may find that by adding a distinguished industry expert or technical guru best serves the next phase of your business  Adding market or sales expertise can open new doors, while a finance or legal expert can provide insight to reduce risk.

Experienced executives want to help entrepreneurs, startups and leaders that seek advice to grow their business.  It validates their business “wear and tear”, while providing meaning and value to their experience. The board should round out your executive court, as these advisors are typically not available to hire as full-time employees and can be “unaffordable” for smaller businesses. They also may be those exclusive experts that will always be in a role of advising and never work for a single entity.

The reason you bring experts together as board members is to increase effectiveness and efficiency in decision-making and strategic planning. A board will perform best when there is an exchange of ideas in an organized environment, centered around a single business issue. The board format is designed to solve problems. Each board member brings a different set of experiences, viewpoints and resources. Having a board working together with you to assess challenges and discuss opportunities, gives you invaluable advise that can save you significant time and money versus the “learn as you go” approach.

Board of Advisors are not in a role of governance. They do not have fiduciary responsibility to protect shareholders or investors, though they should be very responsible in providing any guidance related to financials or spending company money. Only an elected Board of Directors for a public corporation or non-profit have governance over a company. The Board of Advisors is a non-binding group of mentors and experts that work collectively with company leadership to achieve your business goals.

Advisors should be completely aligned with your goal and mission and also be able to challenge you by providing recommendations and views that will differ from your own. You do not want a board that agrees with all your ideas or thinks as one. Why waste your time.  They should differ in expertise and have the ability to assess short-term and long-term strategies, out load in a group discussion, without fear of reprisal.

A board is typically five to six members, excluding the CEO or business owner.  A Board of Advisors should consist of experienced and skilled individuals in varied areas where your business is lacking in comparable talent. In the early stage of a business, Board of Advisors are typically unpaid and may or may not have a long-term financial commitment through future equity.  As a business leader, be cautious of giving away ownership in your company early, this could be a note of contention with future financing.

The commitment of an advisor should be a minimum of two years.  It is valuable to set a term limit in reviewing board members, as you company is expected to grow and you need to be able to add new board members with different skills during later stages of your business.  Board members must also be committed to attend meetings.  A small business will typically meet with the entire board every 8-12 weeks.  If a board member misses more than two meetings a year, consider replacing the advisor.

Board members should not be family members, employees, contractors or service providers you pay for other functions in your business. It creates conflict of interests. Though a board of advisors are not employees, you should treat your advisors as accountable members of your C-suite. Set expectations, ask for help and use your board to help you achieve your goals.  If you simply assemble your Board and provide an update report on the business, you are wasting valuable resources and time.

Board of Advisors are trusted members of your inner circle. You can share with them confidential information and discuss highly sensitive matters that are not open for discussion with anyone else in your company. Your board should consist of credible experts that will provide insights you can not gain from any other resource. They should open doors, help you gain new customers or strategic partners and provide actionable ideas to help you achieve success. If you want to grow, create a Board of Advisors.

“You sit at the board and suddenly your heart leaps. Your hand trembles to pick up the piece and move it. But what chess teaches you is that you must sit there calmly and think about whether it’s really a good idea and whether there are other, better ideas.” - Stanley Kubrick

Jamie Glass, President and CMO at Artful Thinkers @jglass8

Innovation Arizona Summit 2013 on June 11, 2013 at the Tempe Center of the Arts

Join us for Innovation Arizona Summit 2013 on June 11, 2013 at the Tempe Center of the Arts 

You will be networking with hundreds of your peers while meeting up with incubators, accelerators, funders and investors, entrepreneur program groups, education and supporting growth organizations. All this and you can enjoy a little noshing and rocking out with a Grammy award-winning artist and his band. Don’t miss it.

Visit www.mitefphoenix.org today for details and to get your ticket to the biggest entrepreneur event of the year! 

Registration is only $25 for the BIG exhibition and main presentations! We have additional breakout sessions with experts for only $20 to get fresh ideas, hands-on-tools and insights on specific business topics that matter to you the most or go to seven special sessions for only $75! 

It all starts at 3PM on Tuesday, June 11. RSVP Now!

Investing in Co-Selling Partnerships to Grow

Small businesses and entrepreneurs can greatly benefit by selecting co-selling partners to drive revenues. Utilizing another company’s sales and marketing resources may be a great channel to aggressively extend reach and acquire new customers.

Co-selling partnerships with businesses selling complimentary products and services to your target customer can be smart business. These partnerships can cut existing sales costs and even accelerate growth in market share. The best sales partners create a synergy between respective offerings. There should be a “natural fit” of how the products and services add value for the customer. The buyer should inherently understand why you would partner, not question as to why you did or if there is any benefit in buying from a single vendor.

Co-selling partnerships can reduce sales costs. There is a required investment in sales and marketing to grow a business. The costs of a sales team can be crippling for a new venture or small business.The overhead expenses that enable a sales person to be trained, productive, and armed with the right marketing tools, technology and product support can be onerous in the earlier stages of an organization.  Lack of initial investment often produces lack luster results and can actually cost the business even more with unexpected turnover or lengthy sales cycles. Businesses need a specific budget and defined cost of sales to properly staff, train and equip a sales organization to get results.

Time-to-market and time-to-close can be reduced through co-selling partnerships. A new sales hire ramp-up time can be 3-12 months, depending on price of goods to be sold and anticipated sales cycles. Ramp-up requires an “blind faith” investment of time and resources. A business has to invest in sales with nothing more than the anticipation and belief that something is going to be sold. It is a huge price to pay and has great risk. Utilizing a trained and experienced sales team through a co-selling partnership can help you bring revenues in while you invest in building your own sales team.

Co-selling is not free. There are costs of co-selling partnerships. A strong partnership requires investment in training and account management resources to keep top-of-mind awareness with your co-oped sales team. You also need to provide sales and marketing tools to properly equip the team to sell your goods and services. You need to be available when they have questions and to support them throughout the entire sales process.

You also need to create an incentive as to why a sales person in another organization should throw your offering into the mix. Higher commissions, faster time-to-close and value-add to the customer, are all good reasons; however, remember — sales people need to be sold too. If you extend the deal time or complicate the sales process, it will never work. Make it easy and valuable for the sales team through your co-selling partnership.

Incentives matter in co-selling. If the paired companies benefit but not the people selling, the partnership will fail. You need to set up a partner agreement for commissions and shared revenues.  A typical commission in a co-selling relationship starts at 10% of net revenue on the deal for a qualified lead pass. This type of agreement puts the burden back on you to close the deal. You are basically paying for marketing and an introduction. If the partner does all the work, including closing the deal, you may provide an incentive of 20% or more just to get that customer on your books. The structure of the agreement and commission rates should be based on your financial projections and cost of goods and associated expenses in managing the customer post-sale. 

What doesn’t work? Relying on commission-only sales teams and partnerships that are by name only. There are business owners that believe they can get a motivated, committed sales person to work for free. The odds of making this type of relationship work are close to nil. The relationship between a company and it’s sales team, whether a direct hire or partner, is measured by the commitment from both sides. Small businesses may have to tier commission levels based on the ramp-up of sales or find ways to create early non-cash incentives; however, no one should be expected to go out and sell without a financial commitment. The words “you get what you pay for” should ring loudly if you are thinking about commission-only or finding people to sell for you because they like you.  Sales people that are really good at closing deals are expensive because they have a huge ROI.

Attributes of great co-selling partners to consider are the size of the partner’s sales team, market reach, relationships with your customer and available support the sales team receives in training for new products. The partner must have the means, connections and existing relationships to introduce your products to market. Co-selling means they will take an active role in selling. Again, partners by name only often produce little value.

If you choose to use co-selling partnerships, embrace the model and build support for the partnership. Show your loyalty through your commitment to make the partnership last and benefit everyone including the customer, the sales person and the partners. Create value by talking about the partnership and promoting the relationship. The results you get from this co-selling will be directly tied to the amount of time and resources invested in the partnership. You have to give to make it work and really pay off.

“In reality, the only way a relationship will last is if you see your relationship as a place that you go to give, and not a place that you go to take.” – Anthony Robbins

Jamie Glass, President and CMO at Artful Thinkers @jglass8