Going it alone while starting a business can feel intimidating, overwhelming, and downright terrifying. There will be aspects of starting the firm that isn’t a good fit for you.
In this article, we’ve included all the information you could possibly need to know about startup advisers.
A startup advisor is what?
An industry expert and startup counselor can help fledgling firms get started on the path to success.
Entrepreneurs who have already sold their successful firms frequently serve as startup consultants. They may also be investors and have years of experience dealing with companies.
They impart their business expertise, contacts in the industry, potential investors, and talents so startup entrepreneurs can create their companies with fewer errors.
What Exactly Do Startup Advisors Do?
A startup adviser offers guidance on business matters, shares their knowledge, and makes suggestions to help the startup. Additionally, they may expose you to their network, which is great if you’re looking for talent or need assistance attracting financing.
Almost any area of skill may be found in a startup advisor, but the most popular ones are growth, marketing, and product. Because it’s uncommon to find an advisor who has the range of skills you want, early-stage firms frequently assemble a board of advisors.
Some people will also mentor you and provide advice regarding the technical aspects of your product. Your adviser serves as a sounding board for ideas and a resource for problem-solving.
You decide how much your advisor will be involved in your business. Some will merely offer high-level counsel, but others will go more deeply into the details. A more involved advisor will act more as a mentor if you choose them.
Why Are Advisors Motivated To Support Founders?
The majority of advisors are experts in everything related to startups; they have spent years or decades working in this industry.
Despite their status, many advisers give their opinions because they want other firms to thrive. They aim to prevent business owners from making the same errors they did when they first started out.
Advisors might be seeking to invest in cutting-edge concepts, and as part of the investment, they provide their guidance. Some consultants expect stock options or ownership as payment for their time and knowledge.
A “Board of Advisors” title may be awarded to startup advisors, as Hannah did in the screenshot below. The involvement of industry professionals, not only gives the startup legitimacy but also enhances the advisor’s reputation.
What Qualities Should A Startup Advisor Have?
Depending on what stage your firm is in, your startup counselor will have different characteristics. Perhaps you require assistance with a specific problem, or perhaps you only require input on a concept.
Small business founders could be looking for assistance in locating their initial clients. In this situation, you should look for a business advisor who is more of a mentor and wants to get engaged with your finances to help you get started. You’ll probably find the right skill set for this with someone who has previously built a successful startup from scratch.
If your tech startup is bigger and expanding, you might want to hire someone to provide you with advice on obtaining funding and establishing relationships and alliances. In this situation, you should seek out a business professional with connections.
Selecting the ideal startup counsel for your company is crucial. They must comprehend and share your vision if you want to get the best performance out of them. You want to find a reliable advisor who you can trust to provide you with sound counsel.
Additionally, you should look for a startup advisor you can trust and be upfront about how much time you expect them to devote to you.
Each person brings their own set of values to the table, however, there are certain general good and undesirable qualities you should watch out for:
Qualities Of Successful Startup Advisers:
Here are five qualities startup advisors want to possess:
1. Extensive Industry Expertise
Any topic will be covered by a good startup advisor who is an expert in their field and can provide you with priceless insights, in-depth information, and examples from real-world applications.
2. A Solid Reputation In Their Field Of Specialization
When hiring advisors, look into their recommendations. Have they provided assistance to others with the discipline for which you are looking? Do they contribute thought leadership articles with their knowledge? Which additional businesses do they recommend?
3. Excellent Networker And Communicator
Advisors for startups should be well-connected and possess excellent communication abilities. When you talk to them about a potential advising post, evaluate their communication skills. Before hiring them, learn about their relationships because you want them to open doors for you.
4. Have A Passion For Startups
When choosing an advisor, you should consider more than simply their subject-matter knowledge and industry expertise. The ideal candidate must be passionate about assisting young startups, small enterprises, or local establishments. Great advisors will be aware of the difficulties high-growth firms encounter as well as the problems that cause so many startups to fail.
5. Excellent Problem-Solving Skills
On your team, you need advisers who are focused on finding solutions, people who have the ability to recognize problems coming and know how to fix them.
The Shortcomings Of Startup Advisors
The following four qualities shouldn’t be present in startup advisors:
1. Insufficient To No Experience
Your startup advisor should have previous expertise managing or work with startups. They can have trouble giving you the counsel you need if they lack startup-specific knowledge. A candidate for your company who makes lofty promises about being a startup advisor but has the credentials to back them up is not a good fit.
2. Lack Of Communication Abilities
You ought to pick a consultant who can explain well. Even if they have the training and experience you need, they won’t make a good advisor if they can’t demonstrate how their knowledge will benefit your company.
3. Insufficient Time
It’s important to find someone who will take the time to encourage you. Not someone who can just give you 20 minutes every three months, but someone who is willing to spend time with you and be there when you need to solve an issue.
4. Lack Of Interest In Your Company’s Activities
The folks that sincerely support your goals and mission are the ones who can help you the most. If they take on the advising role solely for the prestige or equity stake, they won’t make an effective advisor.
Early-Stage Company Funding From Incubators, Accelerators, And Venture Capital Firms
You are given a startup mentor when you complete a prestigious startup accelerator program like YCombinator or Techstars. Remember that only approximately 1% of candidates are admitted into these programs, thus in 99% of cases, this isn’t a good alternative for finding advisers!
While you’re enrolled in the program, your mentor will provide coaching; however, after it’s finished, they could no longer be available to aid in your development. They are given out by the investors and will receive equity, but they might not be very motivated to assist you in overcoming your difficulties.
Finding a startup advisor who genuinely cares about what you do, who can offer you specialized guidance, and who can act as a sounding board for your ideas is more efficient.
When To Use Startup Mentors
Compared to advisers, mentors frequently have distinct goals in mind. They provide mentoring in a selfless manner. They care more about your success and the success of your business than they do about financial rewards. Coaching from mentors usually takes a more casual approach.
Pre-series A or seed round startups who don’t want to give up a lot of equity or be locked into a large monthly fee should turn to mentoring. If you want to discuss some ideas with others and receive some useful advice, finding a mentor is a great alternative.
When To Use Startup Advisors
You can anticipate more from an advisor given the financial commitment. They are more willing to share their network and provide ongoing, practical assistance when required. Hiring an adviser is your greatest option if you want a constant, dependable, and knowledgeable ally.
If your business is still developing and you want someone who is deeply committed in what you’re building, one formal advisor is the ideal option.
How Do I Give A Startup Advisor Their Dues?
When it comes to paying your startup advisor, you have two choices. You can either give them equity or a fixed rate each month for their participation in your business.
Depending on how developed your firm is, there will be a variety of payment choices. The option of paying monthly fees may be right for you if you’re still not sure that you need a full-time advisor.
Transferring Equity To A Startup Advisor
Remember that the stake is typically between.25% and 1% if you decide to compensate your startup with stock.
Let’s look at how you and your startup advisor can create an equity agreement.
Using A Monthly Retainer To Pay A Startup Advisor
A startup advisor’s monthly retainer should be roughly $2,000 on average.
You have some freedom if you have monthly retainers. You are not bound by a compensation agreement if you decide you no longer require an advisor or wish to transfer advisors.
Offering equity may bind you to a person you may outgrow or who you may no longer need for assistance.
Maximizing The Effectiveness Of Your Startup Adviser
Here are some tips on maximizing your advising connection now that you are aware of where to find one and how to pay them.
The key is preparation.
Get ready for the meetings. Know exactly what you require assistance with, and prepare a list of questions you want to ask.
Explain to your adviser what you hope to receive out of the meeting, whether it’s learning how to solve a problem, assistance with strategy, or sales, an introduction to other advisors, or a meeting with an angel investor.
Make sure you are familiar with any specific information about your company that your advisor requests. Inform your advisor honestly if your figures for that month are concerning. They are available to assist you in resolving issues. Nobody will benefit from you hiding your head in the sand.
Don’t discount setbacks
Startup existence involves a lot of failures, and you need to learn from those mistakes. Startup advisors frequently dislike it when the founders of their companies ignore mistakes and carry on as usual. Make sure to learn from your errors and use them to advance.
Do what you promise.
Your advisor may serve as a sounding board, but they don’t anticipate that their suggestions would be ignored. Recognize their wisdom and heed it.
Additionally, if you inform your advisor that you intend to do anything, follow through and carry it out. By providing updates, you’ll make it easier for your adviser to help you at your next meeting.
Make a meeting simple
Make scheduling a meeting with your startup advisor simple to get the most from them and their greatest perspectives on your company. Send precise hours and dates when suggesting a meeting time. Be conversational and specific about the meeting’s format. Your partnership will run more smoothly and you’ll benefit more from it.
Never be reluctant to seek assistance.
It’s possible that something major in your company has gone wrong, and you’re feeling a little humiliated about it. Do not be reluctant to discuss the matter with your advisor.
They are there to help you and offer guidance because that is what their job entails. Your advisor won’t be impressed if they learn afterward that something went wrong and you failed to inform them about it.
You must be up forward and honest about the problem in order to gain the maximum value from any business advisor.