Relationships

The How and Why of Creating

Purposeful and Enduring Business

Relationships

Relationships:The Asset that Doesn’t Appear

on the Balance Sheet

Make Relationships a

Deliberate Priority

Relationship Building is an important element of every business plan.

Building Purposeful relationships takes time and focus.

Networks- formal and informal- help CEOs and senior management create and grow businesses.

The basic fact of all human networks is that two

people who feel connected have something in

common

Why Relationships Matter

A Networking Mindset is Based on

These Beliefs

I need help: without it my company can’t succeed.

My resources are limited.

I don’t know everything I need to.

There are people who know what I dont know.

Many of these people are happy to help.

I can reach them through relationships that provide

benefit to all parties invovled

Steps to Efficiently Expand Resources

Through Networking

1. Build on connections that already existsOrganized support networks are networking points –Entrepreneurial centers, Chamber of Commerce, incubators, economic development organizations, web sites

2. Get to know regional angels and VCs as experts and mentors3. Engage contacts/associates at university and research institutions.4. Seek advice from other successful entrepreneurs.5. Associations and industry groups provide connections and

leadership opportunities6. Community leaders are looking for up and coming business people7. Media relationships – attract attention without a large budget

Local media look for local stories – volunteer an articleGet to know local reporters, local publications, industry blogs

Human Networkingleads to

Mentoring

The first thing an entrepreneur needs is

mentoring, not money

Mentors help add core disciplines to your

personal expertise

Be targeted and specific when asking for

advice

Match Mentoring to Stage of Business

Match Mentoring to Stage of Business(cont.)

“Mentors provide advice and counsel based on our experience. We expect entrepreneurs to listen to our advice, to be coachable, but not to act on every piece of advice. We provide the entrepreneur with information to make their own decisions about the direction of the company. It’s the entrepreneur’s company. It’s going to be successful based on what he or she does, not necessarily on what we mentors say.”

Bill Payne

serial entrepreneur,

founder of four angel groups

When It Comes to Mentoring,

Ask, Listen, Decide

Build a Board of Advisors First

Supplement skills/talents of current team with volunteers

3 to 5 people you know and trust- talent, not bulk

Industry/functional experts with interest and willingness to prioritize

advising your company for a specified period

Set a timeline for building an advisory boar, but don’t rush

Be clear about your needs and expectations

Seek a mix of tactical and strategic talent

Draw on your pool of mentors for suggestions and possible

participation

Advisors have no fiduciary responsibility

Friends and family have their place, but not on your advisory board

Board of Advisors-

Operating Principles

Be specific about requests- do you need a contact, a

referral, a sounding board

Meet with entire advisory board every quarter or so, in

person or via Skype

Follow an agenda/Keep advisory board notes

Update advisors with periodic email communications

Consider appropriate compensation

-pay all expenses

-further compensation can evolve as company evolves

Considerations for Selecting Board

of Directors

External Capital creates rqmt. for BoD.

Advisory Board experience gives an entrepreneur a head

start

Investors typically take 1-2 seats

Ensure that goals of investors, founded company officers are

aligned

Be proactive with BoD selection

Considerations for Selecting Board

of Directors (cont.)

Be proactive with BoD selection

Use the relationships you’ve built up for ideas,

recommendations, and referrals

Board members with industry or customer contacts are

extra valuable

Choose 5-7 board members

Be wary of egos, especially your own.

Remain coachable

BoD Roles and Responsibilities are

specific and prescribed by law

The Board is in place to serve the company

Duties of Care and Loyalty

Boards are not authorized to sign contracts

Boards elect corporate officers

Boards hire/fire CEOs

Define which CEO decision require Board approval

Define term limits/process for electing Chair

Board Meetings

CEO sets the date, tone, and tempo

Monthly meetings are common

Face-to-face meetings are best

Prepare for meetings

-CEO/ Chair jointly develop agenda

-Cover all topics with Board members in advance

-Send Board materials at least 2 days ahead,

including detailed financial info for offline review

-Standardize the format of communications/slides

Board Meetings

(cont.)

Use Board meetings to talk about challenges

Include senior managers in Board meetings

Discuss personnel/HR in closed management session

Board minutes are important

Board Compensation

-Usually options that vest over time

-pay all director expenses and BoD

insurance

“As you build advisory and board relationships: Have people with relevant experience, have people who can ask the questions that you haven’t heard of or thought of, and bucketize so there is no question around the table who is primarily responsible for providing each essential business skill.”

John O. Huston

founder/manager, Ohio TechAngels Fund

Angles Capital Association Chairman Emeritus

Setting Up Boards of Directors and

Advisors

Attitudes/Behaviors to Build

Effective Relationships

Operate with complete integrity

Follow the intent AND letter of the law

Respect others

Keep your commitments

Be willing to change your mind, say you were wrong, stand your

ground

Remain Coachable

Reciprocate...Give back to the relationship

Do what for new entrepreneurs that others have done for you

“There is a great pool of talent available for entrepreneurs to use as sounding boards, particularly when the company is small and early stage. Go ahead and dream big, but get some help. Don’t diminish the vision and the dream, but to keep it going, get some help to implement and stay focused on your mission.”

Bill Botts

serial entrepreneur and investor