Setting up an advisory board can be like trying to introduce a new food to a picky eater in the Philippines. While advisory boards can be incredibly helpful for businesses to get expert advice and grow, many Philippine companies, especially small and medium-sized enterprises (SMEs), find them hard to adopt. It’s not that they don’t want the help, but a mix of cultural reasons, financial constraints, and a general lack of awareness makes it a challenging proposition, and this article will discuss how to overcome such challenges.
Why Advisory Boards Can Be So Useful
Before we dive into the reasons why advisory boards struggle to take root in the Philippines, let’s quickly recap why they’re so powerful. An advisory board is essentially a group of experienced individuals from various fields who provide guidance and advice to a company. They’re not part of the company’s management or decision-making structure (unlike a board of directors), but they offer an outside perspective that can be invaluable. Think of them as seasoned mentors whom you can consult, who are knowledgeable about the industry, economy, business aspects, and/or technology. They provide insights on strategic planning, navigating market changes, improving operations, and many other important decisions.
For example, a small food business in Manila might want to expand into a new region. An advisory board could include someone with expertise in distribution, someone with experience in marketing to that specific region’s culture, and someone who understands the local regulatory landscape. Their combined experience could help the business avoid costly mistakes and accelerate its growth.
The Cultural Hurdle: “Bahala Na” and “Pakikisama”
One of the biggest challenges in getting Philippine businesses to embrace advisory boards is cultural. Two Filipino values, “Bahala Na” (roughly translated as “come what may”) and “Pakikisama” (maintaining smooth interpersonal relationships), often play a role. “Bahala Na” can sometimes lead to a reactive rather than proactive approach to business issues. This means businesses may only seek help when they’re already in trouble, instead of proactively seeking preventative advice from an advisory board. According to a research paper from De La Salle University, this can hinder strategic planning and the willingness to invest in long-term solutions.
“Pakikisama” can also be a factor. Filipino businesses often value close, personal relationships. This can make it difficult to openly discuss problems or seek objective advice from outsiders. Owners might prefer to rely on trusted family members or friends, even if they lack the specific expertise needed. It can be difficult to disagree with family, and also, it might appear rude or be seen as untrusting if you have “outsiders” suddenly influencing your business. This kind of thinking makes outsiders look less appealing than insiders.
Money Matters: Affordability for SMEs
Let’s be frank: money is always a factor. Many Philippine SMEs operate on tight budgets. The thought of paying for an advisory board, even if the long-term benefits are clear, can be daunting. The cost of compensating advisory board members can vary widely, depending on their expertise, the frequency of meetings, and the scope of their involvement, as reported by Harvard Law School Forum on Corporate Governance. Many businesses, especially those just starting out, might think that these costs will be better off spent elsewhere or on other things, even if they are not useful.
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It’s true that establishing a board can be expensive, since you will need to compensate the advisor. However, there are ways to minimize the costs. For instance, instead of paying large fees, you can offer incentive programs linked to company progress, smaller fees, or even equity in the business. It is important to find an arrangement that both parties find appealing.
Lack of Awareness and Understanding
Many Philippine business owners simply aren’t aware of the benefits that an advisory board can provide. They might be familiar with boards of directors (which are legally required for corporations), but they don’t understand the difference between a board of directors and an advisory board. There’s a perception that only big, established companies need such a structure. This is largely due to the lack of clear information on how advisory boards work and the positive impact they can have on smaller businesses.
To address this, more educational initiatives are needed. Business organizations and government agencies can play a role in promoting the concept of advisory boards through seminars, workshops, and case studies that showcase their value. Showcasing success stories of Philippine businesses that have benefited from advisory boards can also be highly effective.
Trust Issues: Letting Go of Control
Many entrepreneurs in the Philippines are highly independent and protective of their businesses. They find it hard to delegate or share control, even with trusted advisors. This reluctance to relinquish control can make them hesitant to involve outsiders in their decision-making processes. They might be afraid that the advisors may not understand their business and how to approach business matters. They might simply believe that only they know how the business can survive.
Building trust is key. Start by seeking advice on specific projects or challenges, rather than handing over full control to an advisory board. This allows business owners to gradually build a relationship with the advisors and see the value they bring. It is also important to carefully vet potential advisory board members to ensure they have the right experience, skills, and understanding of the business culture.
Finding the Right Fit: The Challenge of Recruitment
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Even if a business owner is willing to establish an advisory board, finding the right members can be a challenge. It’s not just about finding people with impressive resumes; it’s about finding individuals who understand the specific business, industry, and the Philippine market. The members should have a genuine interest in helping the business succeed. This can require a lot of time, network, and effort.
One strategy is to leverage existing networks and connections. Business organizations, industry associations, and even universities can be valuable resources for identifying potential advisory board members. When recruiting, focus on individuals with diverse backgrounds and perspectives, as this can lead to more innovative and creative solutions. It helps to hire members you trust to avoid having trust issues.
Navigating the “Red Tape”: Legal and Regulatory Considerations
While advisory boards don’t have the same legal obligations as boards of directors, there are still some legal and regulatory considerations to keep in mind. It’s important to clearly define the roles and responsibilities of the advisory board members in a written agreement. This agreement should also address issues such as confidentiality, intellectual property, and conflict of interest, as stated in the SEC guide. Consulting with a lawyer can help ensure that the advisory board is established in a legally compliant manner.
Communication is Key: Bridging the Gap
Even with the right people in place, an advisory board won’t be effective if communication is poor. It’s important to have regular meetings and open discussions. Business owners need to be transparent about the challenges they’re facing, and advisory board members need to be willing to share their insights and provide constructive feedback. Encouraging the use of technology, especially online collaboration tools, can facilitate communication and keep everyone on the same page. Having the advisory board members be on a similar time schedule for meetings is also important.
Measuring Success: Setting Realistic Expectations
It’s important to set realistic expectations for what an advisory board can achieve. It’s not a magic bullet that will solve all of a business’s problems overnight. The advisory board is a long-term investment that requires time, effort, and commitment. Establish clear goals and metrics for measuring the success of the advisory board, and regularly review these metrics to ensure the board is delivering value. The metrics have to be realistic and achievable. Don’t set the bar unattainable.
Overcoming The Challenges: Practical Steps for Philippine Businesses
So, how can Philippine businesses overcome these challenges and successfully implement advisory boards? Here are some practical steps:
- Start small: Don’t try to create a large, formal advisory board right away. Begin by seeking advice from a few trusted mentors or experts on specific projects.
- Educate yourself: Learn as much as you can about advisory boards and how they work. Attend seminars, read articles, and talk to other business owners who have experience with advisory boards.
- Build relationships: Network with potential advisory board members and build relationships before asking them to join your board. This will help you assess their fit and build trust.
- Be clear about your needs: Before approaching potential advisory board members, clearly define your needs and goals. What kind of expertise are you looking for? What challenges are you hoping to address?
- Offer incentives: Consider offering incentives such as equity, profit sharing, or other forms of compensation to attract and retain high-quality advisory board members.
- Communicate openly: Foster a culture of open communication and transparency within your advisory board. This will encourage members to share their insights and provide honest feedback.
- Measure your results: Track the performance of your advisory board and measure the impact it’s having on your business. This will help you demonstrate the value of the board and make adjustments as needed.
Examples of Successful Advisory Boards
While advisory boards might be less common in the Philippines, they certainly exist and make a big impact. Imagine a small, family-owned textile business in Iloilo struggling to compete with cheaper imported goods. They form an advisory board with a design expert, a marketing guru familiar with online sales, and a financial advisor with experience in securing micro-loans. The design expert helps them create unique, culturally-relevant designs. The marketing guru guides them on setting up an online store and reaching a wider audience. The financial advisor helps them secure a loan to upgrade their equipment. All these improvements, thanks to the advisory board’s advice, helps the business triple its sales within two years and preserve its cultural heritage.
Another example is a tech startup in Cebu developing an app for farmers. Their advisory board includes an agricultural expert, a seasoned entrepreneur successful at marketing, and someone familiar with how regulation works and how to get them for your business. The agricultural expert ensures the app is actually useful for farmers in the area. The seasoned entrepreneur helps them develop a solid business model and attract investors. The regulatory expert helps them navigate government requirements and ensure compliance. With the advice of these members, the startup secures funding, launches the app in multiple regions, and improves the lives of countless farmers.
Finding Advisors in the Philippines
Finding the right advisors can be tricky, but not impossible. Look within your industry’s association. These are groups of business owners and professionals within a niche who have a lot of experience and may be willing to lend a hand in an advisory position. Also, there are business incubators and accelerators. These organizations help tech startups get off the ground, so they often have a network of experts who can mentor younger businesses. Another option is to check with local Universities and Colleges. Business faculties often have established professors and alumni who would be good options for advisory board members. You can also join networking events in the Philippines. Business conferences, trade shows, and community events can be good places to meet potential advisors.
Long-Term Benefits of an Advisory Board
Establishing a strong advisory board is much more than a short-term fix; it is an investment in your business’s future. A good advisory board can provide you with much-needed strategic guidance, helping you see the forest for the trees and make informed decisions about your business’s growth and direction. The benefit also comes from the mentorship. You are essentially getting access to experienced professionals who can share their knowledge and insights, and help you avoid the pitfalls that often plague businesses within the Philippines. Another advantage is that it creates validation. Having credible advisors behind your business can increase its credibility and make it harder for competitors to compete.
FAQ Section
What exactly does an advisory board do?
An advisory board provides guidance and advice to a company on various strategic, operational, and market-related matters. They are not part of the company’s management structure, but their expert insights can help business owners make better decisions.
How much does it cost to set up an advisory board?
Costs can vary widely depending on the expertise and frequency of meetings. It’s possible to work out compensation arrangements that fit your budget, such as equity sharing or performance-based bonuses.
How do I find the right advisory board members?
Look for experts in your industry and related fields who understand the Philippine market. Leverage your existing network, business organizations, and universities.
What are the legal considerations when setting up an advisory board?
You’ll need a written agreement that clearly defines the roles, responsibilities, confidentiality, and intellectual property rights of the advisory board members.
How often should an advisory board meet?
The frequency of meetings will depend on the company’s needs and the scope of the advisory board’s involvement, but a good start is once a quarter.
How do I ensure my advisory board is effective?
Foster open communication, be transparent about your business challenges, set realistic expectations, and measure the board’s impact on your business.
References
De La Salle University. (2016). Philippine Values and Management Practices: An Exploratory Review. College of Business, Manila.
Harvard Law School Forum on Corporate Governance. (2020). The Use and Abuse of Advisory Boards. The Program on Corporate Governance.
U.S. Securities and Exchange Commission. Advisory Board. Office of Small Business Policy.
Ready to take your Philippine business to the next level? Don’t let the challenges of setting up an advisory board hold you back. It’s time to challenge the cultural norms, budget wisely, educate yourself, build trust, seek legal guidance and start investing in the future. The right advisory board can be the catalyst for growth, innovation, and sustainable success. Let’s get started today!
