Use this Sample Letter to Build Your Board of Advisors
Having a Board of Advisors working with you can do wonders for solving problems, avoiding stupid mistakes, and attracting capital. Advisors are generally successful or retired executives, business owners, consultants, professors, or others who could help your business.
You don’t need to pay them with cash, but customarily they will work for stock options as their incentive to help you. A Board of Advisors is different from a Board of Directors, mainly because advisors have no fiduciary responsibility to the company. Advisors don’t vote nor do they make decisions. They advise.
Getting Advisors is not a requirement for raising money, but they have multiple benefits:
- Credibility: Having quality advisors gives your company instant credibility with lenders and investors. For example, if you started a new software company, having me as an advisor would certainly give you great credibility (and connections). Having lesser known advisors, but with good backgrounds and experience gives investors & lenders a warm fuzzy feeling that you have people on tap to steer you around obstacles and pot holes.
- Business Sense – Having a board of Advisors demonstrates to investors and lenders that you have the wisdom to mitigate weaknesses, shrewdness to trade stock for expertise, and that you acknowledge business realities by bringing in outside expertise.
- Refinement – When you successfully attract an advisor to join your business, you’ll naturally refine your investment pitch in the process. It’s been my experience that advisors will often take it upon themselves to help you improve your presentation as well as unearth glitches that must be addressed before pitching for capital!
- Capital Connections – Some advisors will have the ability and interest to invest directly in your company. Besides, they often are connected with high-quality, potential investors they can introduce to you. Also, they will likely have contacts for all kinds of supporting services to make sure you get the jobs for the right prices.
- Adult Supervision – Having Advisors with whom you can discuss any kind of business matter as your business grows will help you make good decisions, especially when the advisor has been there and done that before and you haven’t. Finance, production, distribution and hiring seem to be key areas where some gray hair can be invaluable.
How do you build your Board of Advisors?
The thought process is relatively painless… In which areas of your business might you need ongoing expertise? How might your business be attractive and/or interesting to an Advisor? Are there people you know right now who would be great to have around?
There really is no limit to the number of Advisors you can have.
The steps are fairly simple:
- Create a list of the people you’d like to have as advisors
- Contact and/or meet with them
- Send them a written invitation outlining your expectations and offer of stock options. (Need a Stock Options Plan? <– Here’s a template for that too)
- >When they sign and return, voila!, you have an advisor!
To start building your Board of Advisors, I’ve developed a letter template you can use to invite them to join you:
Template: “Invite to Board of Advisors” <– Click here to download. (It’s in .rtf format so any word-processor can use it.)
Add their pic and bio to your website, write a press release, take them to lunch… get them involved.
