Many entrepreneurs and CEOs ask me if they should create a formal Board of Advisors so they can get advice from experienced leaders or well-known figures in their industries.

The most common reason to create a formal advisory board is to allow you to promote the stellar credentials of your advisory team to the world. In return, a well-known advisor will typically get something valuable for their advice and use of their name – stock options are a typical form of payment.

Before you get formal, I recommend that you make the most of individual relationships with informal advisors and mentors. There are plenty of experienced business leaders who will gladly discuss and offer perspective on the big questions of your business without having a formal relationship or even payment.

You should cultivate at least ten trusted advisors and mentors that you can call on occasionally to ask for advice on the big questions in your business. These informal (unpaid) advisors may include successful leaders in your industry, a former boss, coworkers, other CEO’s, parents or friends.

Networking and cultivating these relationships takes work, but experienced advisors can provide valuable perspective and guidance when you need it.

Keys to working with informal advisors:

• Learn from successful people. You should only ask qualified and capable people to offer advice, not just anyone who has an opinion. Learn from mentors who are successful in their field, capable of understanding your situation and who have offered to help at some time in the past.
• Share your problems and your personality. Advisors are the most helpful when they know you very well and are familiar with your situation. The more they know about you, the more they can help.
• Ask for advice. Most experienced businesspeople will respond with gusto if an earnest entrepreneur they know politely asks for their time to offer some advice. “I’m working on a big idea and I would like to run it by you to see what you think, if you have a few minutes for a call or coffee.”
• Be considerate. Advisors and mentors will continue to provide useful insights if you appreciate the value of their time and show respect for their advice. Pick up the tab for lunch and send a nice thank you note after you meet.
• Don’t abuse their generosity. An occasional lunch meeting is fine. Calling every week and taking too much time will burn out your network. If you ask an advisor to do actual work for you, then you should start paying them.
• Take some advice. Not every recommendation should be acted on, but if you ask for advice from qualified people and never take it, you are not learning from the mistakes and experience of others. They will also stop helping you – what’s the point of their effort?

Remember, one of the best things these people offer you is an outside perspective. They are not working all day and all night in your business. You probably lost perspective the moment you got crazy about your business idea long ago.