LAYING THE FOUNDATION
LAYING THE FOUNDATION – BASIL SPRINGER COLUMN WHICH APPEARED IN THE BARBADOS ADVOCATE’S BUSINESS MONDAY ON JUNE 06, 2011
“The Lord is not being slow about His promise, as some people think. No, He is being patient for your sake.” – 2 Peter 3:9
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There is a saying “Proper Prior Planning prevents Poor Performance” or some variation thereof. The context in which this is usually made relates to the process leading to the achievement of an objective. Proper planning is advocated to mitigate the risk of failure to achieve the objective in the face of persistent countervailing forces.Â
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We must keep focused on the objective of sustainable economic growth, the rate of which may be boosted by sequential and evolutionary enterprise development or by encouraging established international businesses to locate their global headquarters in Barbados.
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The latter activity is the focus of Invest Barbados and the former activity is being facilitated by the recently established Barbados Entrepreneurship Foundation (BEF) which is private sector driven with social partnership endorsement. The BEF’s pillars of support for sustainable business development advance best practices in the areas of Finance, Government Policy, Education and Skills, Business Facilitation and Mentorship.
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As I mentioned last week, I have the honour to be champion of the Mentorship pillar and, together with a happy band of volunteers, I have the challenge to establish a process which will capture, register and monitor as many Start-up and Existing Small and Medium enterprises as possible and report on the progress of the enterprises to which mentors have been assigned.
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The mentoring pillar’s activities, along with the activities of the other BEF pillars will be reported at the annual BEF Summit in November for the next 10 years at the end of which time the BEF goal “Barbados – The #1 Entrepreneurial Hub in the World by 2020” will be realised.
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I hereby appeal to all those appropriately experienced public spirited individuals to volunteer as mentors in this programme. Whatever regular contribution of your time can be made, it will be valuable. The hypothesis is that without mentors enterprises fail at an alarming rate, but with mentors there is a greater chance of business success thus enhancing the chance of business growth which is good for us all.Â
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There are organisations such as the Youth Entrepreneurship Scheme and the Barbados Youth Business Trust where the importance of mentoring the youth is recognised. Then there is BIM Ventures which is a Venture Capital programme, based on the CBET Shepherding Modelâ„¢, where the shepherding process is an enhanced mentoring process designed to mitigate the risk of failure of enterprises which have the “DNA of an Elephant” i.e. they have the potential to grow beyond the footprint of the local market and seek exponential growth in the global market.Â
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Last Friday I was a member of a panel of judges, at the request of the Barbados Chamber of Commerce and Industry, in the production of the 2011 FirstCaribbean International/UWI Bank Case Analysis Competition. The competition which was started in 2007 as a UWI inter-campus competition, features undergraduate student team analysis and presentations of Caribbean business cases with the objective of: (1) promoting the use of Caribbean business cases as a teaching device in University classrooms in the Caribbean; (2) developing skills in business case analysis; (3) promoting interaction between business students within UWI and between UWI and other universities. One other judge was chosen by the Barbados Chamber of Commerce and Industry and three other judges were from the sponsors FirstCaribbean International Bank.
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There were three independent competitive presentations by teams from the Mona, St. Augustine and Cave Hill campuses of the UWI. The same business case, a Caribbean enterprise that was floundering, was researched by each team and the objective was to present a solution for the recovery and growth process.
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It is instructive to note that the chosen business case had the “DNA of an Elephant” and that all three teams recognised the importance of mentorship even though the structure of the mentoring input varied from team to team. What was also worthy of note was that all three teams resorted to traditional sources of finance, the commercial loan and private equity financial instruments whereas, in my opinion, access to benevolent venture capital, as practised by BIM Ventures, would have been more appropriate.Â
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Benevolent venture capital has the advantage of: (1) no hard collateral requirement (shepherding is the collateral since it protects against the risk of business failure); (2) no interest payments up front thus considerably reducing the cash flow burden; and (3) permitting the enterprise to buy-back the shares of the venture capital source thus permitting the owners of the idea to own the business 100% after it has grown and the cash flows are strong enough for an internal buy-back process.
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All of the presentations recognised that the business recovery process takes time as you grapple with the turn around process and that management must focus on increasing productivity in all the business systems including: (1) strategic management; (2) marketing; (3) product/service delivery; (4) human resources; and (5) finance. There is the temptation to make aggressive revenue projections but it is better to be conservative since there will inevitably be some challenge that will slow the growth process down until you reach steady state.
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My conclusion is that patience and a good mentoring foundation is required for each enterprise and the collective impact of all enterprises will redound to the benefit of the country. This has certainly been the experience of BIM Ventures in its formative years. This concept is being promoted by BEF.
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Dr. Basil Springer GCM is Change-Engine Consultant, Caribbean Business Enterprise Trust Inc. – CBET – Columns are archived at www.cbetmodel.org.