2 min read Many startups collaborate with an advisor at some point in the process of their development. Advisors can aid startups in many ways, yet always come at a cost. In this article, we discuss how to know if your startup is in need of an advisor, what roles an advisor can play, and how to select the right one for you and your team.
Do You Need an Advisor?
Advisors can be helpful to your startup. Here are some key points to consider when determining if you need one:
- If you haven’t run a startup before you’ll most likely need an advisor.
- You plan to raise funding, you’ll find advisors add gravitas to the team as well as potential contacts.
- If you have holes in your team, then advisors can help you close them.
- You are in a domain you have not worked in before, then an advisor can be helpful.
- If the business technology has changed dramatically, then an advisor can be useful to guide in the implementation of the latest tech.
- You find yourself asking anyone and everyone questions about your business decisions, then an advisor may be the answer.
- If you have a team that always agrees with you, then you may benefit from an advisor who will be more honest with you.
- If you need help for your own growth, then look for a mentor.
Remember that mentors are different from advisors. Mentors typically help the individual grow, while advisors help grow the business.
In addition to there being many types of advisors, advisors also take many roles in their work with startups. For example, some advisors’ role is simply to fill gaps in the early stage of the startup.
Advisors can be signed on as formal advisors, or some may provide support as informal advisors. In this scenario, there are no set goals, meetings, or formal advisor agreements. This is the most common way startups work with advisors.
Some advisors take the role of a mentor in providing guidance. These mentors tend to focus their efforts on the founder. Some advisors take the role of consultant in performing very specific tasks for the company while others take on general responsibilities.
Others may take on the role of a board of directors. This can be helpful in early-stage companies that are not yet ready to form a board of their own. Advisors here can provide oversight to the company and help the founder keep the broader picture in mind. Regardless of the role, you choose to fill, as an advisor, you will aim to bring experience, contacts, and networking to the startups you work with.
Advisors can help startups achieve higher growth, avoid problems along the way, and give the founder confidence.
Here are some key points in choosing an advisor for your startup:
- Avoid the dabbler: These advisors want to dabble with startups but don’t have any substantial experience to share.
- Avoid “Yes” men.: These advisors confirm everything you say because they don’t want to go through the heavy lifting of explaining better ways of doing things.
- Stay clear of generalists: Generalists have general business experience but know very little about your specific industry or growth strategy.
- Look for advisors who know your industry and space very well.
- Seek advisors who are well connected.
- Look for advisors who challenge you and remind you of the goals you have set.
- You may want to recruit a group of advisors and have them meet both individually and as a group to discuss key issues.
- Remember the time commitment that comes with advisors and set aside time for it.
Read more on the TEN Capital Network eGuide: Startup Advising: Best Practices
Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: firstname.lastname@example.org