WHO PAYS THE SHEPHERD?
WHO PAYS THE SHEPHERD? – BASIL SPRINGER COLUMN APPEARED IN THE BARBADOS ADVOCATE’S BUSINESS MONDAY ON DECEMBER 21 2009
Click here for information on a new venture capital investment opportunity! www.bimventures.com
“The LORD is my shepherd; I shall not want. He maketh me to lie down in green pastures: he leadeth me beside the still waters. He restoreth my soul: he leadeth me in the paths of righteousness for his name’s sake. Yea, though I walk through the valley of the shadow of death, I will fear no evil: for thou art with me; thy rod and thy staff they comfort me” – Psalm 23: 1-4
The biblical notion of a Shepherd is the inspiration for the CBET Shepherding ModelTM, which is being promoted as a necessary and sufficient condition for sustainable business success. Without the Shepherding model there is little focus on: (1) mitigating the risk of failure of start-up businesses in the first two years (which stands globally at the staggering 80-90% level); (2) businesses ideas for the global market (ideas which possess the DNA of an elephant); and (3) addressing the lack of timely access to appropriate finance for start-up businesses (manifested by the all too familiar mantra from most financial institutions – “we do not fund start-ups”).I
With the Shepherding model there is an immediate focus on: (1) the appointment of a shepherd, who is paid at market rates, to restore the entrepreneur’s soul and lead the entrepreneur along the right path; (2) massaging business ideas to target the larger markets and engender the visions of exponential growth; and (3) introducing an in-house seed and venture capital facility to provide the necessary financial energy to allow the businesses to take-off.
Entrepreneurs who participate in the application of this model may well say: “The business advisors are my shepherds; I shall not want. They inspire me with a disciplined approach so that I can access greener pastures: they leadeth me beside the competition and divert me from the valley of the shadow of death; and they comfort me with words of wisdom and experience so that I shall not be afraid”. The shepherd may well respond “Yes, I’m first, I’m last, I’m everything in between, I’m the only show in town.
The feedback since the official launch of the Barbados Venture Capital Fund over a month ago has been awesome. The rate at which entrepreneurs call with business ideas is unprecedented. The number of potential shepherds/advisors interested in participating in the programme has increased. Interest from abroad in the model abounds. Response locally to sophisticated investors has been positive, especially when advised that the principal sum invested is guaranteed by Government. Early in the New Year there will be more news as to how this interest can be converted into investment. Further afield, investment in the Barbados Venture Capital Fund is reassuring.
Over the last six months, we have exposed six pilot enterprises in the application of the model and have gained significant experience about the process. These enterprises have begun to make their cases to the venture capital fund. The next cohort of enterprises and shepherds anxiously await the decision about their advent to the programme.
In London two weeks ago, I gave a progress report to an audience consisting of sovereign emerging nations in the world. Interest was not only expressed by potential shepherds and investors but by those who would like to see the model introduced in their own country.
One interesting question was posed from the floor – “Who pays the shepherd?” The motivation for this question is perhaps because the service of mentoring or hand holding traditionally implies a voluntary effort on the part of the persons offering the service.
Also, someone called me last week to ask what funding agency was supporting this project and they seemed to be a bit taken back when I said none but that the governance was a smart partnership between CBET and the Barbados public/private sectors. They were fascinated by this.
My short answer to the question, “Who pays the shepherd?” was that the global market customer pays the shepherd. I went on to explain. The emerging enterprise is at the centre of the model in that services are received and products/services are sold. At the start of the process BBEC, manager of the Seed and Venture Capital Fund, advances money to pay the shepherd/advisors to get the business off the ground and prepare a business and implementation plan for use of the entrepreneur and to attract investment from the Venture Capital Fund and other potential investors. This plan is owned by BBEC.
The enterprise then purchases the business plan from BBEC at a profit, using funds from the Venture Capital investment in the enterprise. The enterprise then follows the plan, guided by the shepherd, to sell its products and services on the global market. As a result of this business activity the enterprise then grows from strength to strength. These profits are used to repay the Venture Capital investment with an attractive return. Hence, my answer, “the global market customer pays the shepherd”.
A significant point to note is that it does not matter what the shepherd costs, because it is recoverable from the global market in the fullness of time, on the assumption that the advent of the shepherding model is successful. Shepherds may be sourced from anywhere provided that they do their jobs to engender trade in the global market. However we must Start Small; Do it Right; Make a Profit; Then Expand.
(Dr. Basil Springer GCM is Change-Engine Consultant, Caribbean Business
Enterprise Trust Inc. – CBET – Columns are archived at www.cbetmodel.org)