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With a Grain of Salt: The Role of Advisors in Entrepreneurial Ventures

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You are only as good as the people you surround yourself with.  It’s true and extremely important if you are starting a business. As an entrepreneur you can be sure that you will have to make difficult decisions, often times with millions of dollars at stake. In making those big decisions taking advise from the wrong person can be disastrous.  Experts and advisors come in many forms: coaches, advisors, news articles, youtube stars, your mom…but it’s important to remember that all advice is not necessarily good advice.  The following post aims to give you some guidelines in choosing the best advisor during your path to entrepreneurship.

 

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1. Incentives

One of the first questions you should be asking yourself about someone you’ve targeted as an advisor is “Is this person incentivized in a way that works in my favor?” Incentives change everything. Many entrepreneurs seek VC’s for funding but perhaps just as importantly for expertise in a given field.  Once a VC invests it is easy to fall into the trap of believing that they are part of your team and that incentives will be aligned.  False! VC’s want to maximize returns at exit. Period.  As a result, any advice given should be received with that incentive in mind.

This not only applies to live feedback but also to any advice received from reading.  Ask yourself  “Why is this person writing on this topic? Are they promoting something? Are they targeting me for their sales funnel?” While none of these incentives are bad in themselves, they may cause the author to give less than objective feedback on the topic at hand.

2. Ideology 

We all have a base set of assumptions that affect how we approach the world.  When evaluating an expert be sure that her ideologies will align with the business you are pursuing. If you are interested in starting a fur company, soliciting advice from a PETA representative probably isn’t the way to go.  It is important to explore fundamental beliefs and/or assumptions about the world and your industry before attributing much weight to advice from an expert.

3. Tough Love

Your advisor should have superior coaching abilities.  This involves knowing how to have difficult conversations and helping you to solve your own issues with the right guidance.  An advisor to your business should engage you in conversations that will train you to think outside the box through probing questions and new perspective. Seeking advice from a “yes man” is the worst thing you can do. You want someone that will deliver candid and relevant feedback no matter the situation.

All in all having the right advisor as an entrepreneur is invaluable in making key decisions and in obtaining resources to move your business to the next level.  With that said it is also important to trust yourself. Having a team of advisors is about collecting data, ideas and perspectives.  Lean on others for support and new knowledge but never forget your core!

 

 

 

1 thought on “With a Grain of Salt: The Role of Advisors in Entrepreneurial Ventures

  1. Unicorn4, thank you so much for your insights! I really enjoyed reading your posts and think you’ve developed a helpful framework for dissecting advice. Advice is not only dependent on who is giving it but also on who is asking for it. Often we ask for advice when we are confused or desperate, which are not times when we make our best decisions. Having such a framework will allow us to better decide how to absorb and apply advice, regardless of our emotional state.

    I want to dig a little deeper into this topic looking at the investor as an advisor. I fully agree with your point that entrepreneurs (should) look to VCs for expertise as much as they do financing—the idea of “smart money” is never lost on me. However, I struggle with the idea that VCs are guiding you only with the exit in mind.

    I know that the potential for a big, fat exit is a major driver of both the VC’s investment and their guidance, but I think it is up to us to make sure that the VCs we choose are invested in our success in the lead-up as well. And if it turns out that they are only driving toward profit and not the mission we believed we were aligned on, then we should take the onus on ourselves for not choosing the right investors.

    Now, I recognize that in times when we are burning through cash not all investors are created equal—and it is likely that the one who gives us the most money, fastest, with the best terms will be our shining star. But if/when we have the luxury of choice, I believe we should do our due diligence on the VC funds to make sure that their money is with our vision, not just the exit. Then perhaps we won’t have to waste as much time and emotional energy second-guessing their advice.

    Again, all easier said than done, but aren’t most things in this space?

    Thanks again, looking forward to reading more!

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