Advisory Boards for Entrepreneurs, Who to Not Invite, When to Shut Up

It’s lonely at the top. Just ask John Warrillow. He’s built and sold four businesses. An advisory board can provide support in a number of ways.

In a previous article about building a sellable business I mentioned Warrillow’s book Built to Sell and that I had an upcoming conference call with him. I said I would report back and below is a transcript of his answer to my question about advisory boards.

You’ll learn:

• Who to invite
• Who not to invite
• How much you should talk
• How to get the most out of an advisory board meeting

John Warrillow:

That’s interesting. You know I set up an advisory board for my last company, and I’m glad I did. I think they are enormously beneficial for an entrepreneur. When you’re on your own as an entrepreneur I think it can be enormously lonely. Because of course you can’t confide in your employees. You shouldn’t confide in your employees. You can’t really talk to your customers about what’s going on in your business, if you want them to stay customers. So it can be very lonely. I can’t think of a better word for it.

So, often times an advisory board can offer tremendous support. Both intellectual, but also sort of spiritual, and help for you as business owners. I think it’s great that you are thinking about doing an advisory board.

A couple things that I learned along the way with my advisory board are that I think you want entrepreneurs on your advisory board who have done what you are trying to do. So if you’re trying to scale up to be a $10 million business, with 30 employees, and potentially sell that company. Then I think you want to invite entrepreneurs that have achieved that level in their business. So they’ve kind of gotten to that revenue level, the number of employees, or actually sold a business.

If your goal is to have a really strong guru practice where you have maybe yourself and one or two other employees, I’m talking about a guru, but maybe a Tim Ferriss, or an individual with a big prominent name, then of course you want people like that on your advisory board.

I don’t think you should invite professionals to your advisory board. I think people like lawyers, accountants, insurance people, they offer a tremendous service, but I don’t think you actually want them on your advisory board. Because it’s the awkward thing where, you know, “I’m charging for my time so what do I charge for this advisory board time. Am I doing it as sort of a business development thing…” And it gets into this awkward space where you want to avoid. And of course most of the accountants and lawyers that you might have on your advisory board probably have not done what you are aspiring to do, right? They run a practice and offer a service, but they probably haven‘t actually done what you’re trying to do. So, my sense is to find entrepreneurs and pay your lawyer and accountant separately.

A couple other little tidbits I’ve learned about advisory boards along the way: I think when you’re meeting I would assign someone else as your chairperson. Again it’s your business so you might be tempted to chair the meetings yourself, but my suggestion is to assign somebody else because it allows you as the owner to really sit back and listen to this feedback you’re getting as opposed to thinking about the next question and how to keep the conversation flowing and so forth. It really allows you to sit back and take it in.

And that leads me to my next point and that is as the entrepreneur you’re bringing these people together for their feedback. I think you should really just sit there and listen. Certainly if you get a direct question, by all means answer it, but this is not the time or place to prove how smart you are, or grandstand, or really lead the conversation. That will frustrate your advisors quickly because, again, their time is valuable and if they think they are not being heard, or not being given an opportunity to be heard then of course they are not going to participate. So I would set a goal for myself of talking no more than 10% of the time and having your advisors talking 90% of the time.

So those are a couple thoughts related to advisory boards, but in general I think it’s a tremendous idea and smart for you to think about.