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Expert help for a startup
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April 24, 2000: 7:59 a.m. ET
Advisory board can guide entrepreneurs navigating unfamiliar waters
By Staff Writer Hope Hamashige
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NEW YORK (CNNfn) - Navigating the unfamiliar waters of starting a small business -- incorporation papers, financing, hiring, marketing -- is something many entrepreneurs choose to do alone. But putting together a good board of advisers can make a huge difference when trying to create a successful -- and lasting -- business.
Like so many tasks entrepreneurs tackle, creating a team of counselors is a mysterious process. There is no tried-and-true method to creating a board of advisers, which differs from a board of directors because its members don't have voting rights. Getting one together requires that you capitalize on the contacts you already have and find creative ways to make the contacts you lack.
Putting together the right mix of advisers depends on how clear your vision is for your company and how well you know yourself. Pick people whose expertise complements your own and whose business experience will help you meet your goals.
Make the most of your contacts
Donna Jensen, the founder of Startups.com, had a wide bill to fit when she set out to assemble a board of advisers for her startup company. Her company specializes in helping other startups find office space, create benefits programs, obtain insurance, hire bookkeepers, and devise a marketing plan. As such, she needed to tap into a wide array of experts.
 Fortunately, Jensen had made a number of key Silicon Valley contacts through her previous job, at VentureOne Corp. in San Francisco. She used those contacts to her advantage, picking the handful of people whose skills matched her needs.
Jensen knows, for example, she wants to expand to Israel some day, so one of her advisers has expertise working with startups in Israel. She chose another adviser because she has an extensive background in public relations for high-tech companies.
"My board has given me credibility and they also helped guide my strategy from the start," said Jensen. "Their advice has been critical from the beginning."
Jensen attributes her success in raising funds to their good advice. In less than a year of fund raising, she is about to close on a second round of venture financing.
Be creative about finding sources of advice
Cindy Palusamy is still in the process of putting together the board of advisers for the Internet company she is launching in June. The 26-year-old New York University graduate student has little business experience and only a few contacts in the working world.
In the months since Palusamy started dreaming up glow365.com, a spa and salon Web site, she has become expert at creating ways to meet people she may want to put on her advisory board. She searched for NYU alumni who now work in investment banks and in the beauty field. She contacted them by e-mail, mentioning up front their common connection to NYU, and several have agreed to meet with her.
"Business school is great way to meet people. You can put together a panel discussion and invite four people you really want to meet to be the speakers," she said.
Big names can be a bonus ... but not always
Getting a big name on your board of advisers can be a real bonus by giving your fledgling enterprise credibility. Having a recognizable business figure on the board can make getting the venture off the ground a whole lot easier.
At times, however, it is more important to have people on board who are going to have time to spend to give you thoughtful advice. Palusamy said a number of people she is courting to be on her board are considered rising stars in their industry. She chose them because they can be more generous with their time than are their more established counterparts.
"They realize by helping you their name is going to get bigger as well. I think they recognize how it benefits them," said Palusamy.
Keep them involved
Most business owners compensate their advisers with shares of stock or cash payments for their involvement with the company. But that shouldn't be the primary reason they come on board. Pick people who are genuinely enthusiastic about the company.
Once they are on board, keep them excited about the business by giving them updates at times when you aren't soliciting their advice.
"Remember that these people are evangelists for the company," said Jensen. 
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