The 7 Levels of Scale: Building Your Advisory Board

Hey everybody. Welcome to Business Launch with Ryan Deiss and myself. I'm Roland Frazier. Nice to see you guys here again. We are very excited today to continue talking about the seven levels of scale. And Ryan, what, what is our topic for today? I think we're on five.

Yeah, level five today, which is actually to build your board. So just kind of. Quick recap. Level one, you got to sell and serve 10 customers. Got to get those first 10 customers. Level two, you gotta build a growth flywheel, meaning you gotta kind of automate your sales, perpetuate your sales. That's when you really get to, you know, that's when your business becomes a lot more predictable. Right now once you've got predictable sales coming in, then you ascend to level three, which is when it's time to upgrade your business operating system. And again, sequence matters, right? First we gotta make sure we can actually sell and serve 10, get that product market fit. Then we want to automate our sales. Then once we've automated the sales, then we focus on operations. You don't want to organize the file drawer too quickly. So level three, we are upgrading our business, our company's operating system. That is when you are truly a scalable business. That's when you can ascend to level four. Goal of level four is to double your take home pay to actually increase your profitability. Right now we're going to really have a focus on profitability. And then today level five, talking about building your board. So that is, that's kind of the scope.

Awesome. Thank you for that recap. Yeah. So board, by the way, there's a couple of different kinds of boards that you might be familiar with. And actually the one that probably, probably more of you are familiar with than the one that we're talking about is the board of directors. So when you have a corporation legally, there are different levels of people who have a role in the company. And the first people are the owners, those are the shareholders. The second set of people would be the directors. The shareholders elect the board of directors. The board of directors is responsible for creating the strategic vision for the company. And then to execute the vision, they elect the officers like the CEO, the President, etc. And we are not talking about that because you're legally required to have a board. When you have a corporation. A lot of people that have LLCs also opt to have boards and officers, even though there's not generally a legal requirement that you do. But what we're talking about here is really the board of people who is going to help give you guidance towards moving in a direction that you want the company to go, that's going to help the board of directors and the shareholders determine what should that direction and vision be and how can they inform it, and also then to really serve as guides along the way. And we're calling that a board of advisors.

Yeah. And I think the big distinction between those two, Board of directors. Board of advisors. The board of directors is really there to advocate for the shareholder. Like they're there to advocate and to make sure that everything at the company is happening like it needs to happen. Now, if you're a founder, if you're an entrepreneur, and you are the loan shareholder, well, that's fine. Right? That's fine. But the downside, especially if you go and raise capital and now you've got a board of directors that are. Maybe it's outside private equity or angel investors, stuff like that, their primary fiduciary responsibility is to the shareholders, which may or may not fully include you. I mean, you might be a part of it as a shareholder, but what we're talking about with the board of advisors is their primary responsibilities to help you.

Right.

You the CEO, you the owner. Right. They are there to support you. Yes, they obviously care about the company, but they're really there to advocate and support you so that you can support the business.

One really cool thing, like a giant important difference for you as far as how you're going to run your company, is that the board of directors actually can elect the officers, the people who are operating the company. So that could include you. So if you take on outside money or in some way lose control of the board, you find yourself, like Steve Jobs fired from your own board or several Lululemon. Had that same thing happen.

Yeah, Chip. Chip Wilson.

Yeah, exactly. Over and over and over, you see boards that disagree because they've got generally, I mean, everybody has their own agenda. And while they're supposed to be loyal to the shareholders, the truth is they're loyal to their shareholding more than they are. I mean, that's what we've seen anyway, so. So you want to be careful with that board to stay in control of it. And the nice thing about board of advisors is you can have as many of those as you want. You don't want to have crazy numbers, but I mean, you have as many as you want helping in the different areas that you want them to help in. And they don't get to control anything. They're truly just giving you guidance and advice. There's nothing binding about that. And that's really important.

Yeah, very important, because you know that they're there just to support you. So what we want to cover, we're going to talk about kind of who, who should be on this board, like, who should generally make up this board, get into a little bit like, how do you compensate, you know, folks who are, you know, who are on this board? Because there's a lot of different ways to do it. Then what are some steps that you can take to begin to kind of move towards this process of building your board? But I did just want to reiterate, you don't need to focus on building an advisory board if you're still back at level one or level two. So remember, the goal behind the seven levels of scale, it is to give you a proven step by step plan for scaling your business. But what it specifically tells you is focus on this now. Like focus on this step, not a future step, focus on this step right now. So if you are at level one, right, your goal is to sell and serve those 10 customers so that you can move to level two and so on and so forth. So we're talking about level five, but it's critical that you know the level that you're at so that you know if this needs to be your primary area of focus. So we've actually created an assessment for the seven levels of scale. It's called the seven level scale assessment. So if you go to 7levelsofscale.com, you can take the assessment, figure out where you are right now either way, hope that you stick around, listen, learn about it, so that when you get to level five, you know what to do. But it's critical for you that you know where you are so that you know what you need to focus on. Maybe go back and list some of the previous episodes where we talked about those. So again, 7levelsofscale.com you can spell it out or use the number 7. They will both take you to the assessment where you can figure out the level you're at and download a really awesome report that will kind of again help navigate these different levels for you. So that's kind of the freebie that we have. So with that said, let's actually, let's.

Take a quick break and then when we come back, what are you going to talk about?

We'll talk about who, who will make up your board.

Sounds great.

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About a year ago, my friend asked me if I'd ever thought about how big my company would be if I had never, ever lost a customer. And that's a pretty crazy thing to think about. Of course, 100% customer retention is, as far as we know, impossible. But after that conversation, I really started thinking about how to increase customer retention. And after all, the more customers that you keep, the more money you do make. And it's generally 100% profit. So as most of you know, one of the most proven ways to increase retention is to communicate with your customers. Which is why I've really been focusing on making our email newsletters great. And if you're interested in doing the same thing, I'd like to recommend you to our partners, the newsletter pros. They've done a ton of research on how email newsletters can make a big impact on customer retention, and they'll share it with you for free. Just Text Retention R E T E N T I O N retention to 208-269-911 that's 20826-9911 and get your free ret. And we're back. So we're going to talk a little bit now about who are these people that are going to be advising you and what's the ideal makeup and how many people should there be and how do you just go about doing this whole thing? Ryan, you want to throw out some of the criteria.

Yeah.

I mean, so broadly speaking, an advisory board should be made up of two types of groups, mentors and peers. Mentors are the people who have been where you want to go and obviously they are a critical aspect of any advisory board because the mentors are going to help you define your end game. They're going to help you point out like when you're creating your three year targets and kind of your longer range plans, they're really going to be able to say here's what I believe you could do because that's what I was able to do or that's what I saw other people do. They're going to help to close skills gaps. Hey, you really need to know how to do this. They're going to help broaden your network and make warm introductions. They're going to hold you accountable. They're going to say like, hey, I know you can do this because I've been there and I did it. But the other big thing that a really good, solid mentor is going to do is they're going to help to build and then even help help to facilitate the advisory board. And that's because you do need some mentors. But sometimes it can be really hard to build a board of only mentors. And also you do need peers as well. And this is the mistake I think a lot of people make when they're building their advisory boards is they want to build advisory boards of only people who are multiple levels where they want to be. You need those folks, but you also need to have some peers who are kind of in the trenches, but maybe in a slightly different area than you that can, you know, help you stay accountable, break through some bottlenecks, call you on your shiny object syndrome and things like that, but also just kind of commiserate on the losses and celebrate the win. So that's kind of the first thing that I would have you to think about. Right? Like yes, you need mentors, but peers.

I would add a category to that of strategics because I think that like if we think of, we think of mentors as people who kind of have seen the way and they're going to take you under their wing and help guide you because they've, they've gone through a lot of the things you've gone through and then the peers as being kind of in the trenches with you. So they've got real world current experience and all of them have, both of those have connections that they can connect you to. But some other things you might think about on the advisory board would be people that you aspire to do business with that you might think about as a connection to the business that you are hoping to get, let's say that you want to do business with, I don't know, gosh, Disney. Then you might think about having somebody that is an executive officer at Disney or if you're in a smaller thing, maybe you want to have a strategic partnership with keep or infusionsoft. And so you want to see if would it be possible to get one of those people on because now you're connected to them. And if you're thinking about them as either a potential business partner or a strategic alliance or even somebody that might ultimately be an acquirer for your company, then it doesn't, it doesn't hurt to get to know those people up front sooner rather than later. And if they come in as an advisor, they will be your advocate within the company that you're trying to get business in or sell to or whatever. And they'll also be able to provide insight that is positive about your company and that gives you credibility when you're dealing with those people as well. So I think if you, if you think about it, it might be a member of a private equity company, a partner that you're thinking that you would like funding from, but you want to be careful with that because that will also potentially alienate other private equity companies. So unless you feel very strongly about that, I'd probably stay away from that bankers. I mean, initially, I think somebody that's, that has some financial connection would be good, but, but I would stay away from private equity and family office for that matter. Then the second kind would be the people that have the connections that you want. So somebody that has a big network that you would like to tap into, that's a center of influence for that network would also be a strategic that you'd want to think about. And they might not be a peer, they may be an employee at another company. So they're not really an entrepreneur and they're not going to be there shoulder to shoulder with you. And they're not really a mentor in the classic sense. But you will get tremendous benefit from the connectivity that they, that they offer. So I think, I think I'd have that as a, as an additional category. I'd include.

Yeah, and I would include kind of same in that like broader strategic category is other just strategic professionals like you mentioned finance, but also legal, especially if you're in a market that might have kind of more liabilities to it or there might be more regulatory type things like. So having somebody, whether it's your attorney or another more prominent attorney who has experience in the space, asking them to be on your advisory board could be very beneficial. Same with. If there's a specialist area, like maybe you're in E commerce, direct to consumer, but you think you might want to go off, then it could make all the sense in the world to have somebody with more of a traditional retail background, ask them to be on your advisory board. So think about all of those kind of specialist level, strategic level folks. You want to have them. You also want to have peers. So people who are entrepreneurs like you, but in different businesses that could share it. And you need those mentors. Very often the mentors are also going to provide that specialist level. But those groups are going to, broadly speaking, be the groups of people that you want who are on your advisory board.

There's one more that is completely optional but is very effective when done right. And it may be that some of the people that we've talked about in those categories fall into this as well. But even if it's just an independent category of celebrity, celebrity can bring huge credibility, huge following, huge access to audiences and markets that you didn't otherwise have. And so it might be that your mentor or the other categories we talked about are well known. And celebrity doesn't necessarily mean like the most famous person with the most people following on Twitter. It could be a celebrity within the industry. One thing I learned when I was practicing law is that I. You'd represent people like Tony Robbins, and this was early on in his ascendancy. But like within his group, everybody adored and idolized him. But then you'd go out and you'd be talking to other clients and they're like, what are some of the other clients you represent? We represent Tony Robbins. Who's that? Right. Within the. There are micro celebrities within groups that, that can be very valuable to you as well. But I do believe that that's something to think about. And particularly as celebrities are thinking more, there's definitely a trend that we're seeing of celebrities not wanting to be paid help anymore. They actually want to get a piece of Things. And so advisory shares or advisory equity in a company or options can be a really good way to let them have a write up on the growth, get them kind of have a vested interest, but bring you again, tremendous credibility just by association with them. Those, those are the only ones I can think of, but I think, I think those four definitely are worth considering. And the celebrity, if you've got one or if you can attract that, it's not a bad thing. I think that's why a lot of people go on Shark Tank. It's like I'm in business with Mark Cuban. Well, that opens a lot of doors, right?

It absolutely does.

Yeah.

It opens doors with customers, it opens doors with potential partners, with vendors. It lends a lot of credibility. And so, yeah, so I love those categories. So the mentors, the people who have been where you want to go, right, that those are the most obvious ones. Also having just those trusted peers who you can commiserate with, who are, and maybe you're, you're on their advisory board and they're on yours, right? They're truly peers. But you want that insight, you want that, that opinion. The strategics, the folks who have that specific strategic knowledge or they're a strategic customer opportunity or a strategic exit point. And then, yeah, those, those influencers, those celebrities, the door openers. I know we had a friend that called him the bug light, that, that could draw people into you. So think about those four categories. Now we mentioned four categories, but in general, Roland, how big do you think somebody should make their, should have their advisory board be in, you know, in your experience?

I think it's largely dictated by looking at those four categories and saying who would I ideally like to have? So I like to start with kind of my dream list of categories. Not necessarily people. I'd like to have this, this, this, this, this and then kind of whittle back. Well, actually, three steps would be, what's my dream list? Categorically speaking, then who are the individuals that I know or would like to have fill those roles? And then take a look and say, okay, does that seem manageable? So if, if I've whittled down and now I've gotten, I like, I started with 17 categories and then I didn't know people in a few of those. So now I'm left with eight. Well, is eight okay? Maybe, maybe not. I just think about is, is that going to like, am I going to be able to operate within that environment? I think that I've just recently was in a meeting where there were 13 members, and it's a lot. It takes a long time to get through that meeting because everybody has something to say. They're all smart, they all have valuable contributions. But my gosh, it lasts forever. So in the interest of expediency, I think seven is a good high number and five is a good low number. I think if you're between 5 and 7, you can get at least one person from each of the four categories and then maybe one other really important person that you think should be there as well. And, and that, that's what I've, I've seen work for me. How about, how about you?

Yeah, I think that range is really good. So what we've seen and kind of what I've recommended, if you can build a board, an advisory board that is, let's say 10 to 15 people, then what you're going to find is not all of them are going to commit to like some kind of quarterly meeting. And you don't need to do that. Like, again, we're talking about an advisory board, not a board of directors. So you don't have to have like regular meeting times with the groups. Now I do think you should have that. I do think that you should have a group of people that are on your advisory board that you are meeting with on a, you know, quarterly, or maybe even on a monthly basis, depending on, on that's, that's kind of a different group. We'll, we'll talk about that in just a second. But there can very easily be folks on your advisory board that you don't ask to attend those quarterly or monthly meetings because they just won't. But by saying, being able to say, hey, this person is on my board, you're going to be able to attract more people to it even if they can't come to all of them, even if they are unwilling to commit to that. What we're looking for with an advisory board member is somebody who is basically promised ahead of time. Look, if you send me an email, I'll reply. If you text me, if you call me 91 1, I'll, I'll answer. That's what we are looking for.

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And so in general we found if your board is made up of 10 to 15 names and you are asking them to kind of gather on a regular basis, then yeah, the number of people who actually gather with you on a semi regular basis is probably going to be in that 7ish number, which is a really good number to have five to five to seven people who are on that. You can say like hey, can we all do like jump on a quick zoom and talk about this? Or hey, hey, can we meet in this area? My tree. That's kind of a good number. So just keep that in mind. The other thing I'll say is you're gonna have people who go on and off. So you're not. This shouldn't be a perpetual commitment. We will ask people, hey, would you be willing to be on my advisory board for a year? Right. And then maybe it would renew. Okay, so this concept of an advisory board, usually you want at least a minimum one year commitment. Two years is at least. If it's a mental one is better. Cause kind of you need that long to get a sense of what's going on. But, but it's not a lifetime appointment, right? We're not asking people to serve on the Supreme Court here. Now the question you're probably wondering is okay, that's a big commitment. You're talking about having celebrities and all these other folks, how do we compensate?

And that we will talk about when we come back.

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Okay, so we talked about what Kinds of advisors should we have, how big should that be? What are the categories? Now we're going to talk about where the rubber meets the road, how do you get them on board and take care of them, how do you compensate them and then what is the actual commitment that you're looking for? So I think let's talk about the commitment, like kind of how, how do you work with an advisor first, Ryan, if that's cool. And then wrap with how do we get them paid?

Yeah. So there's really two ways to work with an advisor. There is the, you're going to ask them to show up regularly to a meeting, either online or offline, typically online. So you're going to ask them to take an hour, two hours usually how long these sessions would go out of their day for you to just be able to take. So throughout like here's my issues, here's my questions, you would have submitted to them ahead of time. Some of the questions that you have, you're likely sharing your financials, your high level business metrics with them and you're asking for feedback. I mean, so that is usually how these, you know, meetings are structured at.

The high level, the bigger companies, right?

Yeah, yeah, yeah. You're given the, the big picture perspective of how are you doing right now. We'll have some highlights, we'll have some low lights and areas where I need help. That's the basic structure. And you got advisor. Here are some highlights from the previous period. Here are some lowlights from the previous period. Here's where I need help. So this is what you're submitting and then there's folks that are going to show up again digitally or kind of in, in the flesh. So there's that group. Then there's also people, again the second category of advisors who they're not going to show up in a group setting. They're just simply available when and if you need them. And that's a bit like a coach or a consultant. Right. So they're not necessarily going to go but, but by structuring saying like hey, can you be on my advisory board? It kind of suggests a different level of, you know, commitment. So there again there's kind of the active where they're showing up, committing to showing up at a specific place in a specific time or the look, I'm here when you need me, send me your stuff and we can communicate going back and forth. So those are the two different, I guess, types of deliverables. And that's why we're saying if you build a board of 10 to 15 people, probably seven to 10 of them are going to be in that first category. Well, they're actually willing to show up on a semi regular basis then talk.

A little bit more about that first. So if we, if we call those basically advisors on tap, right, Those are the people that you can reach out to when you need something. I like being personally that kind of advisor because I'm not, I'm not scheduled into formal meetings, which tend to be boring and not as productive as we would like them to be. Not that you guys won't run the most productive meetings ever and always have just great, interesting things to talk with your advisors about. But the truth is, I think the meetings on the good side, they force you to get together. And so they forced some preparation to get together. But if you've got any kind of discipline at all, I think that they are forced, that they feel forced. Like nobody's excited to go to that. What you might think about is having your AOTs, right, your advisors on tap first and then have a single meeting. But make the meeting something cool, like not in a boardroom with fluorescent lights flickering, but instead in a private dining room or a retreat at some place where everybody's actually eager to go and business is just part of it. Because remember, a lot of the reason that we pick these advisors is to build relationships. So you want to be able to give to them some experiential getting together and bonding time and you want to help connect them with each other. So I think like, if you could be an aot, if you could be an advisor on, for, or use your advisors that way for all, but maybe one meeting a year and then hold that, then that's kind of a hybrid model that I think helps to be interesting and really build relationships and, and kind of move things. So I'd, I'd argue for that one. Unless you get to like public companies and things like that.

Yeah. And it's a lot easier to get people to gather quarterly if again, your advisory group is made up of the people who are gathering regularly, is made up more of peers and facilitated by maybe like a single mentor who's helping to facilitate it across all of them.

Who knows how to facilitate a meeting.

Yes, yes, exactly. And so, you know, a lot of times this is what's known as a mastermind. But what we encourage businesses to do, what we actually help entrepreneurs do at the scalable company, is build advisory groups where, yes, there is a mentor, somebody who knows what they are doing and they will put together A group of peer entrepreneurs to essentially serve as one another's advisory board. Now, each of those entrepreneurs should also have their own additional advisors on tap. Like you said, Roland, that they could kind of go, what doesn't get answered there, kind of between the mentor and the peers. And so that might be the group that meets more regularly. And then if everybody also has their own advisors on tap, then what's beautiful is within the context of this advisory group, that again, you're getting a lot of good, solid efficiencies because there's one mentor helping to kind of facilitate the advisory group for everybody. And then all these advisors, all the members have their own outside advisors on tap. Now, the brain trust that happens not just within the group, but one degree of separation removed and then another degree of separation beyond that for all those advisors. Truly, you're at a point where the answer is always in the room, or it's one or two degrees of separation.

Exactly.

So that is my favorite way to do it. And if you can do that where you're meeting quarterly, in person for maybe like a day or a half day for everybody, that's great. And doing it in a fun, cool spot. If it's digital, we recommend more virtual, shorter, but meeting more frequently, because being on Zoom for a day or a half day is just death. But if you want to have everybody meet and gather once a month for two hours, and you just go around and everybody submits ahead of time, here's my top level. Numbers, highlights, low lights, where I need help. And you just kind of go around the room. You got five to seven people. You can get that knocked out pretty quickly. So that's a good structure, good options, I guess, to choose in terms of your structure. So you got your core advisory group that's mostly peers because everybody's willing to show up, and then a mentor that's being compensated for doing that. Now, you might need to pay this mentor 25, 30, 40 grand to facilitate that. Right. And it could be worth absolutely every, you know, penny in the world to have like that. That coach that. That mentor to be able to do that who actually knows what they're doing. But how. How do you think you go about compensating? What are some things you've seen in the past, Roland? Best practices for compensating other advisors outside of just pure cash, which, by the way, should not be off the table.

I would say it should be on the table and that it should be on the table more than anything else. And I know we've done all different ways on companies that we advise. But the truth is, is that equity, like actual ownership of your company, is very, very precious. And it's the most expensive thing that you'll ever give away because your company is hopefully going to be continuing to grow and grow and grow. And so I think that the very first thing that I would argue for is if you can afford it, it's really better to pay them cash. They will appreciate it because equity in a company that never sends them any money isn't particularly exciting. You also want to be sure that no matter what, you're covering their expenses. So if you're asking them to fly out someplace, you need to have the ability to fly them however they normally fly. And that could be coach or first class or private. It's however they do it, you, to me, rise to that level because you're asking them for help, right? So you want them in a good mood when they get there. If you can give them cash, that generally puts them in a good mood. And then they'll understand. Like the conversation I have is like, we're going to do this as cash right now, and then we'll see how things go. Cause I have no idea where the company's gonna go. Hopefully it's gonna do big things, and whenever we have those big things occur, then we're definitely gonna be thinking about all the people that helped us get there. But in the meantime, rather than have you have equity that isn't gonna really perform for you, how about if we just pay you some cash? So I like a quarterly cash payment for advisors to start with and whatever is gonna be just enough to show them that it matters. I think if you were much less than 5k a quarter, you would be not really valuing them at all in a way that would mean anything to them. Because hopefully these are people who are fairly successful to start with. So you want it to at least be worth their time. Then you can go to all kinds of hybrids. But. But there are other things you can do besides equity, which actually might be much better for the advisor, because if the advisor takes actual equity, they'll have to pay taxes on it. In most countries, the minute that they get equity at whatever the value is. So if you just did around $2 million and you give away 10% of your company to your board of advisors, there's $200,000 of income that they will collectively have and pay taxes on having not received any money from you. Right. So that's kind of, oh, great. Not only do I not get paid I get to pay to be an advisor. That's not necessarily the best deal. So I think in those situations it's good to think about options. You can have stock options, you can have incentive options that are based on how well have they performed. They can be time based, how long are they there. They can be some combination of those things. Typically you're going to be fairly low in equity in terms of points. On the low side, maybe a quarter of a point for an advisor. On the high side, maybe as much as 5 if they're like really, really key. But it's, it's seldom would you have more than that going in. If they're not going to actually like just for being an advisor, they're not going to actually kind of roll up their sleeves and help you like get clients or accomplish some things. And when you do that, then typically it's more than that. So I think there's phantom stock which is treated as if you have stock, but it's not, so you don't pay taxes on it. Generally, no legal advice here on business lunch. There is a profits only interest, which is a generally approved thing that people can have an interest in a company. Something that our Internal Revenue Service recognizes and you don't get taxed on. There are options and then there's, there's equity. And so there's a lot of steps to think about between there. But I would be really, really hesitant to give equity. Equity also generally carries with it minority owner rights. So if you have people that actually have an ownership in the company, you got to think about those people when you're doing all the things you're doing. Because if you're doing something that is arguably self interested or doesn't really think about them, they have rights and they have rights to inspect books and all kinds of other things that could be just kind of get in the way of you operating the business. And if you don't have a mechanism, if you do give equity and actually any equity, like things, you want to have some right to buy them out. So part of that deal has to be that you can cash them out at some point on some formula. And those are things I would generally be thinking about.

Yeah, I know when I've done it in the past because I've been, you know, both sides of these deals where we've had advisors for our companies and we've been advisors for other people's companies. A standard thing that I see very often is a quarter point and it might vest over two to four years kind of thing. Or depending on how, how long somebody is there. And that can make sense if you're talking about a, a company that's growing fast, getting funding, and that quarter point can actually turn into something. But here's the reality. All right, and why I would encourage you, if you're thinking about, if you're at level five and you're saying, okay, I got to build my board, I would encourage you, don't go the equity route. Because in general, it's not actually what is going to motivate most advisors. Okay, so most advisors, let's go back to kind of the categories. There's the peers. They're going to be motivated by the fact that oftentimes it's going to be reciprocal. You're on their board, they're on yours, you're helping each other out. It's a mastermind type relationship. Very often if you're compensating one another at all, you're doing it. You're each paying each other kind of the same thing. But in general, it's like, hey, this is going to be a reciprocal kind of thing. And so the motivation there is, I want to have access to what's going on in your world, and I want, you know, you to help me out with mine. And so that's why peers would do it. With advisors, it's the mentors, rather, and a lot of the strategics, it's the same thing. They want access. Oftentimes with mentors, they want access to emerging entrepreneurs who have been where they were because they want to give back. Right. And so it's access to people who are at that level. They want to be able to kind of make an impact. Very often it's access just to stay in the game and to stay fresh and stay sharp. Oftentimes it's access to deal flow. So we've been willing to be on people's advisory board because it's companies that we perhaps wanted to acquire. Now, we're rarely going to do this for free, but we'll significantly discount what we would discount or what we would normally charge for just coaching or consulting.

I don't think we would do it for a quarter of a point or a point like you think about a quarter of a point in a $10 million exit. You got 25 grand. Right. That's, that's not going to do anything for either of us. But might we do it if we saw that it was a foot in the door so that we could then have the opportunity to do other things?

Yes.

Right. So.

Or might we do it because of the other advisors who are in the group. So I've been on advisory boards because I wanted to network with some and they got like, hey, you should know, we got this person like, God dang, okay, I'm that person. And so that's where sometimes what it's worth doing, it's worth investing what it costs to get one high level person in the room. Because that's what's going to draw other people at some very low investment or very often no investment. So just understand that the motivation for advisors is rarely the equity upside. Most advisors are doing it because they either want a reciprocal peer relationship, they're doing it because they want access, they're doing it because they want to give more status. And so building in advance. So building an advisory board does not have to be a substantial line item in your company budget, but you should plan on budgeting something for it. I would not. This is likely to be a six figure a year investment for your business. Which is why we say you're doing this at level 5. I see this all the time. People want to build some complex advisory board, they still got an idea for a business, haven't made their first sale yet. At that point, maybe you hire a consultant, maybe you get in a good coaching program. Not the time to build a formal advisory board. That's why when we talk about the seven levels, sequence matters, okay? We're telling you this is the thing you work on now. You know what's coming down the road. But you don't have to work and make those investments.

And speaking speaking of sequence and down the road, next time we're going to Talk about Level 6, which is ones near and dear to my heart, which is complete your first acquisition, right?

Yeah. Do an acquisition for expansion again. Each one of these levels has a reason, right? The reason that we tell you, level one, you got to sell and serve 10. That's where it all begins, right? If you cannot successfully sell and serve at least 10 clients, you don't have a business yet. Once you've done that, it's time to really begin to automate and perpetuate sales. That's level two. Because if you can't do that, guess what? You're not gonna have a need to upgrade your operating system. You're not gonna have operational constraints cause you don't have any customers.

Right?

Then you can really begin to focus on the profitability of your business and really banking significant profits. You know, you've earned it. Then build the board. Why? Because it's at that point when you need support, it's at that point when you need to level up. It's at that point when you really need accountability. Because now you're running something much bigger then what. What is going to stall out every business all the time is you do reach the limits of organic growth. You reach the limits of organic scale. So you need to think about that inorganic, which is fancy way of saying acquisition. And so, yeah, that's what we'll talk about in the next one and then ultimately talk about hitting your number. And what does it look like once you've done that? How do you build that generational wealth? That's, that's level seven. So hope, hopefully you're enjoying these episodes. I know we're kind of taking a break from our normal business lunch shenanigans to go through the seven levels of scale, but this is important. You know, this is the roadmap to going from that struggling startup to that scalable, exitable business.

And remember, if you are thinking, where do I fall on it? Now let's do an assessment for you. We've got a free one over@7levelsofscale.com and you can spell it out or you can write the number and either one will take you there. You can go through the assessment and then kind of see where do I sit right now and where should I go from there?

Perfect stuff.

Awesome. Cool. Thank you guys for joining today. If you enjoyed the podcast, please do subscribe to it so you don't miss out. I mean, what if you know five levels and never learn six or seven? You could be cheating yourself out of something horrible, right? A huge amount of progress and money and everything else. So subscribe so you don't miss out. So for that, we're gonna sign off. We'll see you next time and we'll talk about level six. You've been level listening to Business Lunch with Roland Fraser. If you're enjoying the show, let us know by subscribing and leaving a review. And for more information, go to businesslunchpodcast.com thank you for listening. Ever wondered how some people build real wealth through acquisitions, while others just sit on the sidelines? Well, I'm here to tell you it's not about luck. It's about having the right system, the right deals and the right guidance. And that's exactly what we give you in the epic deal fast track. If you've been thinking about buying a business, but you keep getting stuck, whether it's finding the right deal, structuring the financing or negotiating with sellers. You are not alone. Too many people waste months, even years just thinking about acquiring a business while the real opportunities pass them by. The EPIC Deal fast track is not another course. It's actually an implementation program and it's designed to get you from the idea to the acquisition in just 16 weeks or less. We work with you one on one to help you find, fund and close your first or next deal. And once you do, we're going to plug you into our elite EPIC board community so that you can keep scaling through acquisitions. We install three powerful systems in your business. The first is the deal flow engine so you always have high quality off market deals coming to you. Number two, we give you our offer and funding system so that you can structure offers that get accepted and fund them creatively many times with no money out of your own pocket. And number three, our closing and integration system so that you don't just buy a business, you actually successfully run and scale it once you have acquired it. Plus you'll have direct one on one support from an EPIC Deal Advisor every step of the way. And that's people that have actually come up through the system and done these deals themselves. That's the only way to become an EPIC Deal Advisor. And if you're serious about acquiring a business this year, don't just sit on the sidelines. Just text I'm in to 334-458-9034 and we'll get you in. So text I'm in to 334, 458-9034 will get you in. No fluff, no wasted time, just real deal making from people that are actually out there doing deals right now. I'll see you there.