It’s a common mistake entrepreneurs tend to make. In a bid to taste quick success, they end up taking the advice of someone ‘experienced’. Only, they fail to ascertain whether the individual is qualified or at least experienced enough to offer them the right advice. The result? They start following plenty of incorrect decisions blindly and end up making mistakes that cost them dearly in the long term.
The importance of choosing a contender rather than a pretender
It is really important that you choose a well-qualified and experienced individual to help lead the way in the form of advice, positive feedback and reinforcements. Sadly, the demand for such individuals is so high these days that you may probably jump at the chance of taking on board the first person who shows interest in your business. This is ideally not the best choice and it is better that you wait for some time to get the right person.
Tips for choosing the best contender
One way to identify contenders from pretenders is to ask interested individuals a series of questions that will help you find out the right advisors, investors and board members for your business. Here are some questions you can start with.
- What kind of corporation needs to be formed?
Ideally, you will be looking for an answer ‘C Corporation’. This means the individual is more interested in taking your business to the level of larger companies rather than just deserting you midway with some short term advices.
- Should all investors in the business be accredited?
The ideal answer for this question should be ‘Yes’. When starting a business, you will need to take legitimate investors on board rather than those without any credit to their names or businesses. Chances are if your advisor mentions ‘No’ as an answer, you may get into trouble with investors who will present you with a series of legal problems.
- Will you be able to recommend other credible advisors we can take on board?
An ideal advisor is one who will provide you with a list of other individuals to seek advice from without any hesitation. Any advisor who says there is no need to ask anybody else is definitely pretending to be a know it all who may land you and your business in trouble somewhere down the line.
- How long should we devise our business plan for?
The ideal answer for this question should involve asking you to focus on getting customers initially instead of focusing on your business plan. As a new business that has just entered the market, your first job will be to acquire the target market for your company and then devise an appropriate business plan rather than otherwise.
- Should the founders split the company within themselves?
A pretender will always answer yes to this question. A contender on the other hand, will ask for something like allocating at least 25% of the shares to future employees, 35% for the initial investments and then the remaining 40% for the founders.
- Should consultants be given stock options in the company?
A contender will definitely say no to this question. Stock options need to be reserved only for long term employees and not short term consultants. If the budget does not suffice for a consultant, the contender will recommend you do the work yourself.
- Is a headhunter needed to recruit people?
At the initial stage of your business, you will have to invest your money on important things that a headhunter who will recruit people for you. While a pretender will not know this and readily agree to this point, a contender will ask you to save the money spent on headhunting fees for something else.
When getting on board an advisor for your business, you will need to identify the contenders whose help will be invaluable in taking your company forward. These questions will be the ultimate test in differentiating the contenders from the pretenders.