When you’re running a young company, you’ll have a lot of questions. Are you on the right track? Should you change course? In which possible directions might you want to steer the business?
With a million responsibilities on your plate, you’re not always the best—or most objective—person to answer these questions. That’s why you need advisors. Good advisors are an invaluable to companies in the early years (and beyond), according to Jeff Dennis, who advises early-stage companies as entrepreneur-in-residence at Fasken Martineau DuMoulin LLP in Toronto: “It’s like having a cabinet around the Prime Minister,” he explains. “You need people to give you the input you require to make good decisions.”
Trouble is, such people aren’t always easy to find. And when your business is new, small, unproven and/or totally starving for cash, you might feel intimidated about the prospect of asking top business minds to share their advice.
PROFIT asked the leaders of the 2013 PROFIT HOT 50 ranking of Canada’s Top New Growth Companies how they tapped into the expertise of advisors. Here are their six best suggestions:
1. Family and friends
Yes, your loved ones might be biased; they may think everything you do is amazing. But they’re also likely to have a stake in your success—financial or emotional—that outsiders may not. Besides, some may have expertise that proves useful. That was the case for Joanna Duong, CEO of Henkaa Inc. (No. 15 on the 2013 HOT 50), whose husband has a background in IT and was instrumental in getting her etailing website off the ground. “I leveraged his advice a lot,” she says. And even if your friends and family don’t have any business training, if your product or service is consumer-oriented, you can use them as a cheap focus group.
2. Other entrepreneurs
Many HOT 50 CEOs turn to fellow entrepreneurs for advice, whether through formal channels such as peer-networking groups and mentorship programs (think: EO, the Young Presidents’ Association or CEO Global Network) or through informal interactions (think: strategy talks over beers). Sometimes, these relationships can come from unlikely sources: at Henkaa, Duong has forged some great connections with other entrepreneurs introduced to her by her lawyer.
3. Potential investors
Looking for an unvarnished take on the value of your business? Ask someone to invest in it, recommends Jamie Clarke at Live Out There.com (No. 39). “Going through the effort of getting money—even if you don’t need it—is critical to test your idea,” he advises. “It forces you to go through the exercise of presenting your idea, and it opens you up then to what I think is very helpful criticism.” Bonus? You might actually get some cash.
4. Actual investors
If you have scored some investors already, it’s smart to treat them as more than simple sugar daddies, advises Michael De Monte of ScribbleLive (No. 11). If your investors are engaged and interested, they can be “a really great sounding board,” he says. And since their money is on the line, they have a strong interest in making sure you’re on the right trajectory. Of his own advisors, De Monte says, “they’re my reality check. I’ll ask them Am I doing the right thing here?’ And sometimes they’ll answer Yes,’ sometimes ‘Yes, with modifications’ and sometimes “No. Get off.'”
5. Free consultants
Government and/or NGO entrepreneurship grants aren’t just sources of capital: they often come with free expertise in the form of a mandatory mentor or advisor. For Andriy Azarov, CEO of Ottawa-based gift and flower etailer CanaFlora (No. 22), this has been huge. When he decided to expand his business into physical production of flowers, he applied for—and won—a loan from the Canadian Youth Business Foundation and was assigned a mentor. “I didn’t have too many business contacts at the time, so he was very helpful,” says Azarov. “He’s older than I am, and knows a lot about business. And he has shared that with me.”
6. Paid consultants
Even when cash is tight as can be, it’s sometimes worth shelling out for a paid consultant or coach, says Dave Mason, owner of Oakville, Ont.-based IT services firm Shift IT Solutions Inc. (No. 41): “We didn’t have a lot of money when we started, but we did hire an industry-specific outside coach,” he explains. “At the time, it was fairly expensive, at least relative to our revenue, but it has been a huge help. He has helped us challenge our assumptions. He helped us arrive at conclusions we probably would have made on our own, but much quicker. When you’re short on cash, it’s a tough cost to absorb, but there has been a huge payoff for us. It’s better to get it for free, of course, but not everyone can.”