Advisory boards · Executive Compensation

How to compensate Advisory Board members as a pre-revenue Sole Proprietor LLC?

Kevin White Founder, Social Entrepreneur

April 26th, 2019

I am a late stage idea company (LLC) with just me. I am looking to develop an advisory board and compensate them for their support and advise and help. I am pre-revenue and honestly, dont think I will be looking for anything more than an angel investor, if that. There might be an opportunity for a large exit if I can build up my clientele to what I think we can, but I am uncertain about compensation structure. I see this .2% - 1%. But if I dont issue shares really... (I am illiterate when it comes to this stuff, so I might not be even saying it correctly)... but hopefully will have revenue soon. Is 1% of revenue a problem or is it always 1% of shares? please help me understand. Thanks!

Paul Garcia marketing exec & business advisor

April 26th, 2019

Many advisory boards receive no compensation at all. It really depends on what you're asking people to contribute, and whether they are satisfied with some other exchange of value besides cash. There's no standard formula for what board members receive. And it may be different for each board member. Sole Prioritor LLCs don't have shares. And giving away equity before you know what your advisors will actually deliver is likely an unnecessary risk.

The first things to handle are determining which of the six business skills you're looking to be supported in (marketing, sales, organization, efficiency, people, leadership). In your career you will only ever master two at most, so you will always need employees, partners, or other assistance to fill in the skill gaps. What do you want advisors to actually do functionally? Is that something advisors do? Or is it something that only paid consultants or employees do? Other than knowing a solopreneur always needs a support network, what makes you believe that an advisory board is the answer?

Consider what else you can offer besides financial compensation. What motivates the colleagues you are seeking? What else is important to them in their lives besides holding an interest in your company?

You say "...we will have revenue soon," but it isn't clear that you have any employees, in which case it's not really we. In my experience, it's quite uncommon to have a solopreneur with an advisory board. There's just not enough of an engine to warrant it. You may have people to whom you turn to for advice, but a board is a rather formal thing, and managing one is a task in and of itself. Can you get by with just being friends with some smart people and using them as a sounding board, rather than a structured advisory board? There are many peer groups that offer such opportunities to have that kind of a "network."

Marilyn Crawford As a founder and entrepreneur who is dependable and easy to work with.

May 4th, 2019

I am looking here as well. This is a beverage company.

Ricardo Polycarpe ''Looking for co-founder having already successful Startup in the 'Food or Health digital niches

April 26th, 2019

This youtube video will answer your question :