Arlene Dickinson has put heart and soul into her ventures, but that alone has not guaranteed success. She knows first hand that new businesses cannot prosper without sound judgment and solid advice.
Mentoring has played a big part in Dickinson’s career, and one of her most recent startups, YouInc.com, is a social media site offering information and guidance to entrepreneurs.
Most Canadians know Dickinson for the dose of humanity she brings to the Dragon’s Den, the CBC’s business reality TV show that feeds on the unsentimental core of capitalism.
But in addition to being an entrepreneur and television personality, Dickinson is also an author and a venture capitalist, who has poured her own money into many fledging businesses.
Her counsel to company founders considering establishing a board of advisors is straightforward: “Advisory boards can be useful at any stage of a business, but you have to be ready, and many entrepreneurs aren’t.”
The notion of a board can sound romantic, but the reality is that it requires a lot of discipline.
Most founders begin by building their companies in a random, scrambling sort of way, pulling together the pieces they need with a mixture of street smarts and dogged determination. It can be a challenge for them to shift to the mindset of a company with a board. Suddenly, as information must be shared more broadly, a level of transparency and organization is required.
“You have to be able to get there pretty quickly, otherwise you’re not going to get any information back,” Dickinson says. “The notion of a board can sound romantic, but the reality is that it requires a lot of discipline.”
To be ready to benefit from an advisory board, these individuals “have to be structured in terms of their agenda. They have to have management-type information to share, so people can be brought up to speed quickly. When you are in the early stage of a business, that is not always the forte of entrepreneurs,” Dickinson says.
When an entrepreneur sits down with advisory board members, “it can’t just be a loose conversation,” she adds.
Dickinson’s own story is well known. She joined Venture Communications in 1988. While raising a family on her own, she became sole owner of the firm in 1998 and gradually turned it into one of Canada’s largest independent marketing and communications players. Today, blue chip clients include Toyota, Cenovus Energy, Mayo Clinic and Brookfield Residential.
The 57 year-old’s skills include both building businesses and overseeing them. She urges entrepreneurs assembling an advisory board to reach beyond their existing network and to look for people whose proven skills and experience compensate for their own blind spots.
“I think you are looking for somebody who has the heart for an entrepreneurial business, and that is generally someone who has either retired out of one, or someone who is now thinking how can they leave a legacy back to one,” Dickinson says.
Choosing the right people is essential. A poorly composed board can become a set of handcuffs on an entrepreneur. Dickinson advises that company founders use a skills matrix similar to that which governance boards use. Done correctly, it will show a young company where it is exposed from a lack of experience and knowledge.
You can’t tell the entrepreneur what to do. But you have to give strong direction in terms of telling them what you require in order to be an effective board member.
It is imperative to appoint people who understand the startup’s industry well enough that they are able to offer sold advice. That is different criteria than for a governance board, where governance issues and a large volume of information require a more diversified group composed of senior individuals.
In cases where the wrong person has been selected as an advisor, it’s important that the entrepreneurs use the same care they took in structuring the board to dismantle and rebuild it, Dickinson says.
“It’s really important you are changing a board for the right reasons,” she says. “You might have personality conflicts or disagree with what they are telling you. But if they are offering you valuable advice that is giving you a good second view on what you are doing, then be prepared to weather that. If you just want yes men, then why are you having a board.”
Generally, there are two sorts of advisors. Some are paid while others volunteer their time and expertise because they have connected with the entrepreneur, believe in that person and like what he or she is doing.
For those experienced entrepreneurs who have made it and are ready to give back through an advisory board, Dickinson has another set of advice. It is the role of the board members to bring discipline to a startup, she says.
“You can’t tell the entrepreneur what to do. But you have to give strong direction in terms of telling them what you require in order to be an effective board member.”
She urges direct conversation between the founder and the board members that gives members the information they need to oversee the company.
“[The goal is] the type of feedback that allows an entrepreneur to still be in control but feel accountable to the board,” she says.
Republished from Director Journal Magazine, print edition, July/August 2014 issue.