Can you remember your first bike? Can you recall the mix of excitement and fear you felt when your foot pressed against that pedal for the first time. You overcame the fear because a brother, sister, father or mother put a calming hand on your shoulder and said, "Relax, don't worry. Just keep pedaling." Those words gave you the courage to chase an adventure that you have been enjoying since that day. Mentors have the power to encourage you to take leaps of faith because they have the bruises, and they lived to tell their story. If only we could convince entrepreneurs and startups to seek and trust the advise of mentors.
According to the Small Business Association ("SBA"), 55 percent of all small businesses with employees fail within five years of launch. Additionally, a Harvard Business School study by Shikhar Gosh found that "75 percent of ventured-backed startups fail." Despite these dismal facts, there is a path forward. Sheila Eugenio of Entreprenuer.com stated that "70 percent of mentored businesses survive longer than 5 years." The adage "learn from other's mistakes" rings loud in this data. When selected and used properly, mentors improve management teams' IQs by distilling and infusing years of executive bumps and bruises into relevant tactical advice. Knowing how valuable mentors are to the success of a startup, I am going to share the seven mentor profile types that you should consider when building your board of advisors.
1. Look for a Mentor who has seen failure first hand.
Many experts have claimed that the best natural athletes make the worse coaches. Instead, they argue that athletes who struggled to succeed can identify with players and can offer more reasonable feedback. I have found that the same holds true in business.
In 1965, Warren Buffett, through his investment partnership, purchased and took over management of Berkshire Hathaway, a failing New England textile maker. Buffett explained in a 2010 CNBC interview that he took control of Berkshire Hathaway because the CEO tried to chisel him out of a point on a tender deal. Buffett invested millions trying to run the mill before eventually diversifying into other businesses. Buffett estimates that his company would have been worth $200 Billion more if he had not made that investment.
Buffet's failure in that transaction helped him to form an investment framework that eventually made him the second richest man in the world.
2. Search Through The Annual Reports of Your Largest Publicly Traded Competitors.
Your largest competitor may not know you exist, but that can work to your advantage when seeking out potential mentors. Annual reports typically showcase a company's leadership team including a picture of their Board of Directors. In addition to their fiduciary duties, the Board of Directors serves as mentors for the company's executives. If your largest competitor thought enough of their Board Members' business skills to pay them to help guide their company, they should be good enough for you. Review the backgrounds of the Directors and select who whom you believe could help you guide your company. Remember, these are busy executives so you may have to every creative when asking them to serve as a mentor to your company.
When I worked at Accenture, I was sent to an assignment where the previous firm had just been kicked out. Before I started the project, I knew I would need a mentor to navigate the company's land mines. I opened their annual report and show a board member who had a similar background as mine. I called his office for a week trying to setup an appointment and never got a return phone call. I then decided to send him a personal letter in a large FedEx box. In the letter, I offered to wash his car if he gave me just fifteen minutes of his time. The next day I got a call from his executive assistant requesting my availability for lunch. We developed a great friendship and his mentoring helped me shine with the client.
3. Look for a retired Human Resources ("HR") executive from your largest vendor
I have a mentor who is a retired HR executive for a large package delivery service. I initially sought him out because our business model required that we contract with his former company's mail parcel stores to provide services connected to our technology. I believed that he could help me contact executives who would green light the project. During our first meeting, he opened my eyes to critical issues that existed in my managerial blind spots, including organizational design, culture building, people management, and interview techniques (so we could weed out the bad characters or below average performers). The HR executive also gave me insights into how the executives at my largest vendors made decisions and what metrics drove the size of their paychecks. This sight helped me tailor our relationship with the vendor around transations that keep their executives engaged (which helped us stay ahead of competitors).
4. Look for a mentor who has skill sets opposite of your skill sets
If you are a solopreneur, it is important to have someone provide a different perspective on your business issues and opportunities. Having a mentor who brings a different set of skills can help you see blind spots.
5. Look for a mentor who is culturally different from you
According to Forbes Magazine review of a 2015 McKinsey study, racially diverse companies outperform industry norms by thirty-five percent. The study also found that "companies in the quartile for gender diversity are 15% more likely to have financial returns above their national industry peers."
Building a successful team requires that you be capable of not only managing people with different skill sets, but with different life perspectives. Having a mentor who is culturally different from the startup's founders will help them break down un-intentional organizational bias.
6. Select a sales Guru/master networker as a mentor
The phrase "your network is your net worth" is more true today for entrepreneurs operating in a social media world than it has ever been. If you are not good at networking or sales, you need to develop relationships with rainmakers who can help you find your target audience. I worked for a company that had one of the founders of Home Depot on the board. This gentleman's phone was more valuable than most people's entire business because of the individuals he who would take his call at any time of the day. I presented some exciting new technology to this gentleman during a board meeting and he immediately asked, "who are the companies you are trying to sell this tech to?" I gave him two names, and he opened his phone and called the companies' CEOs. In ten minutes, he had meetings setup with key executives at the companies. When it came to rain, this gentleman was a typhoon.
As an entrepreneur, if you are not a rainmaker or have access to one as a mentor, you should consider outsourcing the sales and marketing function to expert sellers until your company has the cash flow to hire a team of rainmakers. Check out Episode 7 of my Guerrillapreneur Podcast on iTunes, PodOmatic, SoundCloud or streaming at Ceyero.com to learn more about outsourcing sales and marketing.
7. Look for a mentor who knows how to save money
Great businesses can always find investment capital. The path to becoming a successful business requires a vision for producing sustainable profits. Having an administrative and operational expert who can literally squeeze blood out of a turnip will prove invaluable as you begin to transition your garage project into a full fledged enterprise.
I have given you seven different types of mentors to consider when developing a board of advisors; however, I would not recommend that you include all seven on your board. Peter Thiel, cofounder of PayPal and author "Zero to One," states that the best run startups have no more than three (3) advisors at a time. Why did I offer seven different types? As your startup grows, the needs of the business change. When those needs change, you should rotate new advisors onto the board who can raise your management IQ on the relevant issues.