SHEPHERDING IN THE BUSINESS CONTEXT
SHEPHERDING IN THE BUSINESS CONTEXT – BASIL SPRINGER COLUMN TO APPEAR IN THE BARBADOS ADVOCATE’S BUSINESS MONDAY ON 08 JUNE 2009
“Yes. I’ll stay with you, I’ll protect you wherever you go, and I’ll bring you back to this very ground. I’ll stick with you until I’ve done everything I promised you” – Genesis 28:15
The definition of the word “Shepherd” in the Concise Oxford Dictionary has been traditionally – “a man who tends sheep at pasture” and this concept has been extended to a minister of religion who tends his congregational flock. The innovative CBET Shepherding Modelâ„¢ and twin seed and venture capital concept, which emerged in the first decade of the 21st century, extends this definition to a man or woman who mentors or engages in hand holding of an entrepreneur in the cause of enterprise development.
At the Commonwealth Partnership for Technology Management Limited’s End of Year “Open House” in London in November 2008, I reported on this innovative model as follows: “We’re seeking sustainable economic growth by encouraging the emergence of enterprises that have the potential to export their goods and services. Our new system, which we have launched just this month in Barbados, with very positive support from our new government, requires us to assign a ‘shepherd’ to an innovator or entrepreneur who seems to us to have the basis of a commercially promising project.
This experienced shepherd serves as a mentor, an adviser, to new enterprises to reduce the failure rate of start-ups or emerging businesses. The Seed and Venture capital funding is managed by a company which is operationally financially self-supporting and which facilitates the advance of funds through the shepherds as the entrepreneurs’ projects begin to gather momentum.
The value of Smart Partnership in laying the foundation in this scheme is crucial. It’s a three-way Smart Partnership involving CBET Inc., the Barbadian government and the private sector.” The model was well received by the international audience (primarily Commonwealth country representatives) and recognised for its catalytic potential to reduce the rate of business failure.
The implementation of the model in Barbados is well underway and there has been extremely positive feedback from for those entrepreneurs to whom shepherds have been assigned and have started the shepherding process. There have been many observations: (1) the entrepreneurs are happy to have the dedicated experienced shepherding resource on call to complement the entrepreneur’s passion for the business and to partner with the entrepreneur on a journey to sustainable business success – already there is talk about having the shepherd on call indefinitely ; (2) it should be noted that in the venture capital model there should neither be a concern about the fee rate of the shepherd on a person-hour basis, as long as the value provided by the shepherd is perceived to greater than the cost – in the venture capital model the ability of the entrepreneur to buy back the shares of the venture capitalist is a function of the success of the business which in turn will be due to the success of the shepherd for the most part – the cash flow to buy back the shares eventually comes from global market sales as the business grows;
(3) the entrepreneur gets attached to the shepherd and a partnership develops to the extent that the entrepreneur wants to augment this relationship; (4) the shepherd is an experienced business person or business consultant who will be the management advisor or business doctor and who will be responsible for working with the entrepreneur to identify problems in marketing, technical operations, administration, bookkeeping, ITC, human resources and finance – to the extent that the shepherd requires assistance in any of these areas then the shepherd may acquire the services of specialist business advisors in specific areas who will be drawn from the cadre of CBET business advisors; (5) a benefit that is already materialising is that the entrepreneurs are freed up to engage their talents while the shepherds train the entrepreneurs and get the businesses organised; (6) there is already interaction between the enterprises and the family of enterprises as suppliers and buyers interact to form their own market place; (7) there are plans for the project manager, shepherds, business advisors and entrepreneurs to meet regularly and benefit from the synergies of interaction.
In the commercial banking context where the primary instrument is a loan, the entrepreneur’s proposal is assessed for risk. When a positive decision is made to offer a loan this is accompanied by a demand for collateral, usually in the form of a fixed deposit or real estate title deeds. The quantum of collateral required is directly proportional to the assessed risk. It should be noted that the collateral required by the bank has absolutely nothing to do with mitigating the risk of failure of the business.
My hypothesis is that the shepherding activity mitigates the risk of failure of the business and indeed may be a factor which reduces the collateral requirement and may obviate the need for any collateral at all. The CBET Shepherding process and the commercial banks may then work hand-in hand to offer an optimal solution to the entrepreneur. Remember that economic development only takes place if we have one successful business after another.
The shepherds are committed to stay with the entrepreneurs and to protect them from the vagaries of the business environment – the shepherds will stick with them until they have done everything that they have promised to be done, everything that they have promised the entrepreneurs.
(Dr. Basil Springer GCM is Change-Engine Consultant, Caribbean Business
Enterprise Trust Inc. – CBET – Columns are archived at www.cbetmodel.org)