There are lot of benefits of setting up an advisory board. This is one strategy that creates value for your business. You save your time and money. After seeing this video you will e able to set up an advisory board for your company and grow your company fast. # What is an Advisory Board? Advisory Board is an informal group of professionals who come into your company and advise you. Remember Board of Directors and Advisory Board is different positions. Board of Directors are completely their on your board and have stake in your company whatever share you might have offered them. They have complete rights in your company to vote and take decisions. They are the part of your AGM (Annual General Meeting). Advisory Board is an informal board. It is not necessary that they should have a board seat or are shareholder of your company. When you start an organisation, you need many support systems like legal, marketing, finance, operations, HR, etc. These are the supporting functions due to which a business stands. You might be a young entrepreneur but cannot be champion for everything and may not know about these things. You can definitely hire someone by paying less cost and you get the best top quality experience. If top quality experienced people of industry give you advise, then they will not make you repeat the same mistakes that they might have done in their career. >Your time and money will be spent in creating value rather than on mistakes. The biggest difference in Advisory board and Board of Directors is that you have freedom to run advisory board as per your requirements because there is no person in this board who is taking decision in your company or having voting rights. If you are CEO or MD of any company then in a way you are hiring them. They are great industry experts with much experience. >Understanding this in short and in a mathematical number way – Suppose you hire 5 persons in your advisory board. On an average every person will have 15 years of experience. Now mathematically you are getting 75 years of experience by merely spending 5-10 Lacs. In fact 5-10 Lacs is also more, once you know how to make an advisory board you can create it at minimum cost investment. # Benefits of Advisory Board after its creation The business owners are not capable and expert in all works. It’s not necessary that you know legal,  marketing, finance, operations, HR, etc. So there are 2 ways Either you will hire people like, HOD for HR, HOD for Marketing, etc. to run different departments. But if you want some good experts for above HOD HR ,HOD Marketing, etc. who can direct them and help your team to work in right direction then advisory Board of Members will play this role of directing your team. Any company requires 6 people in their advisory board 1. Legal 2. Finance 3. Marketing 4. Human Resource 5. Accounts 6. Product You will require above 6 persons to come and invest time in your company, give you clear direction and advice so that you don’t  do mistakes and waste your money and time. Thus you save money, time and learn from others mistakes by creating this advisory Board. # Framework of Advisory Board - Following are the six steps of Framework of Advisory Board ## **1. Mandate** It means that what is the larger vision and mission of company in creating this advisory board. Do you want to - Increase sales fast in shorter span of time - Want to hire best people - Want to improve your marketing - Want to raise Funds - Bring IPO of your company - Legal might be weak and insecure Based on above few pointers, mandate is decided. Keep a clear mandate for advisory board and it is not necessary that there will be only 1mandate; it can be more than this. Mandate decides, whom you will bring and create your advisory board. Its not necessary you need all six of the mentioned above, you might only require 2 or 3 or4, based on mandate. ## **2. Focus** Suppose after deciding your mandate you bring 6 people in your advisory board. Now comes setting of Focus. Focus will not be set by advisory board. Focus will be set byby companies CEO or Managing Director. This is the KRA and KPI of CEO or Managing Director that advisory board focus should be very clear. If you don’t have focus then you cannot create results even after making best Advisory Board. Focus means that after becoming advisory board you have to decide your achievables every month till the coming one year.  You have to set this focus by making clear and right mandates and bringing right advisors. ## **3. Sizes** What should be the size of advisory board? We discussed about 6 critical roles above. It can be 7,8or more based on your fundamental business problems. Otherwise the above 6 roles encompasses everything. Every person in your company can come around these 6 fundamental roles. You have to keep in mind that size of Board matters. Sometimes ego tussles, if their will be many people on board who all are great industry experts with good experience. Advisors say that what he says is right and he is not being heard on the advice he is giving. Sometimes when there are 4-5 people sitting round the table then one person start advising the other one ,one person may contradict other persons point. Thus ego clashes and tussles start among the advisors. Ensure that this doesn’t happen. For this we told you above 2 steps: 1. Clear Mandate 2. Focus Size does matters. It will be easier to drive a group with lesser people. Even if there are 6 people, you have to keep in mind that all people in advisory board are of complementary nature. There should be balance of nature in the group. For example if you bring a legal advisor who has strong thoughts and have opinion that what he says is right, product advisor have opinion that what he says on product front is right. If you bring an HR advisor then it might be that he is soft and keeps his points subtlety. So sometimes might be HR advisors point you think is of less value. Also because all are experienced personnels, so they might give their view points on other advisors opinion. So you have to decide what will be the size of advisory board and what will be the focus of each advisor. Their should be no overlapping of roles in advisory board. ## **4. Meeting Frequency** Once advisory board is formed and goals are set , then comes the point that how many time will they meet. Their is one important aspect that Post Corona  or Lockdown it might not be possible to meet every time physically. Might be any advisor says that he cannot meet physically , he will do video meeting. Here you have to moderate the group and explain the each one in advisory board that everyone should come for video meeting. But remember as a principle or process at least the entire advisory board should meet minimum once a month for at least 2 hours. Do this 2 hours advisory board meeting every month. By these meeting a bonding creates as all are seniors and experienced. The meeting should be done with sharp focus. Your pointers should be clear before meeting that what you want to achieve and after meeting you should know clearly if that has been achieved or not. Don’t do meetings with thoughts and knowledge. Have you achieved Milestone 1 and have set Milestone 2 or not for next meeting. Remember Advisory Board is also your team that you have hired so keep at least one meeting of minimum 2 hours in a month. ## **5. Terms** Terms means that on what conditions you have hired these advisors. What Contract have you signed with them? There is no standard template for this contract , you can make it on your own  but what terms and conditions you mention in that contract matters and we will discuss it below : It should be clear that - Every advisor will work with founder of the company means he/she will reports to him. - Every month the advisor has to schedule minimum 2 hours of time in his calendar for your company. - Every advisor has to guarantee that they will open their network for the company. They cannot deny for this. - You will sign a NDA (Non Disclosure Agreement)with each advisor. While working, advisor will get to know many things about the company, thus they should not disclose to any third party who is your competitor. - For next 3 years the advisor cannot work with any company similar to yours, direct or indirect competitor. He cannot share business secrets of company to anyone. Also you have to put a legal amender that if by knowingly or unknowingly they share any of your business secrets than what action will be taken. This has to be taken great care as in future because companies that makes advisory boards, matures after sometime and may raise funds or go for IPO. The more you mature the more critical are the business secrets. All these information goes to Advisors. They meet customers and many things are open for them.  Since they are plugged out and don’t report to you every day , there may be chance that they reveal your secret. So take care that this doesn’t happen. ## **6. Compensation** Advisors ask for the value of their time. We are leveraging their great experience but what value do he gets in return. Now many companies very clearly mentions that they will pay cash i.e. some fixed amount to them every month. This payment is an honorary commitment to you and as the company grows or become IP then they might get preferential shares. Companies which are very small and who don’t have enough cash or revenue reserve give stock options. Now Advisors normally want mixture of both cash and stock. Largely when an advisor is on board he will ask about both what  cash and stock component will he receive. The wealth only creates for advisors when they get stock options or ESOPS. There is a different type of  pool of ESOPS for advisors which is not from  employees pool of ESOPS. Suppose funder has 100%  share. Generally a company creates a pool of 10% share aside for their top employees meaning 90% ownership is of company and 10% is of top employees.out of this 10%, keep some part for advisory pool so that when this advisory is on board you can grow more fast. Now remember a very important point and very critical that advisors are not only for sharing their experience but also for opening their network. It depends on you how good you can leverage their network. So you have to push, force, and inspire them to recruit right senior employees for you. They take you to right networks like investors network. For example if you have to raise the fund of 100 crores and the finance advisor has raised 5,10, or 50 million dollars in his career life, then this advisor will give you right advise and will make you meet right people which he should do also. So remember focus that you are setting for advisors should create the value for you. By making advisory board value doesn’t create but setting right focus in advisory board will create fundamental value. So till now we have heard what is advisory board, what is its value. But where does these advisory board fails. Even after making advisory board company doesn’t grow at the fast pace as expected. An advisory board fails when you don’t track progress from one meeting to next meeting and so on. This depends on founder or CEO or Managing Director of company that how much valuable will be advisory board for them. So in every meeting discuss previous milestones that means what goals have been set for this meeting. Then you will see that whether that goal has been achieved in that meeting or not. After that you will decide the milestone for next meeting that means what should be achieved by the company till the next month meeting. You will write each advisors role and focus that what advisors will do for you. If you will not do this , its guarantee the advisory board will fail. There are many start ups coming these days and growing fundamentally very fast. How do they grow fast. The actual reason behind their fast growth is strong advisory board. Whenever you go on accelarator, incubator or any investor invest in you, then investor investing in you becomes your advisory board.They open network for you, create access for you, bring customers for you. Now its your responsibility that you should also take care of your advisory board whether they are in cash options or stock options. Ensure that when you make an advisory board, you extract value out if it through clarity so that it helps you to grow fast.