Ugi Fitness Inc.'s co-founders have some big decisions to make.
After giving up 12 per cent of their company in return for $200,000 of startup capital from friends and family, they have gotten their fitness business to a point where they can almost cover their costs with money from customers who order their Ugi at Home System. But it doesn't leave much cash left to try new marketing ideas.
The most expensive idea Ugi is contemplating is an infomercial, which would cost more than $1-million when they factor in the cost of both production and airtime. It would be a bet-the-company kind of move and they'd need to raise a lot of money or find a strategic partner.
The ideal partner would be someone like Chip Wilson, the founder of Lululemon Athletica Inc. and one of Canada's wealthiest people.
Lululemon shares a similar brand position as Ugi Fitness and Mr. Wilson is a revolutionary. But having recently cracked the Forbes list of billionaires, Mr. Wilson will be on the radar of a lot of companies looking for seed money.
Instead of asking Mr. Wilson to invest in Ugi, my suggestion would be to ask him for something smaller: to join Ugi's advisory board.
Setting up an advisory board can be a way to get A-list entrepreneurs to help you think through the strategic decisions you're making. They have seen how the movie ends and can often provide advice and a Rolodex to tap.
I established an advisory board for my last company and, based on my experience, here are five tips for recruiting a rock star group:
1. Find your Obi-Wan Kenobi
The ideal advisory board member has done what you aspire to do. Pay your accountant and lawyer for their time but leave them off your advisory board. You're looking for entrepreneurs.
Mr. Wilson has built a highly successful fitness lifestyle company, which is why I think he would be an ideal recruit for the Ugi team.
2. Think one degree of separation
If Mr. Wilson were to say no to Ugi, I'd suggest asking him if there was someone else in the Lululemon inner circle who might be willing to help.
Getting a Lululemon insider would do two things. First, it would give Ugi some amazing insight into how to build a fitness lifestyle brand. Second, it would get Ugi one step away from Mr. Wilson, which might come in handy down the road.
3. Limit the commitment to six hours a year
By meeting as a group for two hours, three times a year, you're limiting the advisory board's commitment.
One of the reasons people say no to advisory boards is that they don't receive a clear message about what the commitment would involve. It's hard for someone to use their busy schedule as a reason to say no when you're asking for this kind of limited commitment.
4. Recruit locally
Do whatever you can to limit the travel time of the group. As Mr. Wilson lives in Vancouver, he'd make a good choice for Ugi, which is based in the same city.
5. Be vulnerable in your request
Asking someone to invest is different than asking someone to be on your advisory board. When you're pitching investors, you need to make a compelling argument about the financial opportunity you're offering, but advisory board candidates often make the decision based on how good they think it will feel to help.
That means you need to put away your PowerPoint and get naked. Explain your vision and all of the decisions you're trying to think through. Share some of the emotions you feel around building a company.
Weigh in: Who do you think Ugi should target for its advisory board?
Special to The Globe and Mail
John Warrillow is a writer, speaker and angel investor in a number of start-up companies. You can download a free chapter of his new book, Built to Sell: Creating a Business That Can Thrive Without You.
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