“Peace be to the whole community, and love with faith, from God” – Ephesians 6:23
I have recently interacted fairly passionately with several segments of the enterprise and mentorship community in Trinidad and Barbados. While facilitating a retreat in Trinidad last week, I had occasion to mention the visionary quote “sustainable economic growth can only be achieved through a national focus on developing a family of successful high performance enterprises, one enterprise after another” attributed to the late Hon. David Thompson Prime Minister of Barbados 2008.
Sustainable economic growth is the policy focus of every country in the world. High performance enterprises imply enterprises that have the “DNA of an Elephant” i.e. they have the potential to penetrate export markets. Small states and emerging nations do not have the consumer purchasing power to grow their economies on their own market footprint and hence the export focus is mandatory. Non-high performance enterprises which may be classified as community based enterprises or small and micro commercial enterprises are destined by their DNA to remain small. These are not to be ignored in the context of sustainable development where we are not only focusing on national economic growth but on spiritual, social, cultural and political growth and physical environmental protection.
My observations of the factors that inhibit enterprise development in the context of sustainable economic growth are: (1) Poor selection of enterprises and promoters of enterprises; (2) High failure rate of start-ups, spin-outs and scale-ups; and (3) Lack of timely access to appropriate sources of finance. The CBET Shepherding Model™, in its franchise operations manual, consists of three processes designed to remove the road blocks which impede the journey to sustainable enterprise success. They are: (1) The Enterprise selection process; (2) The Shepherding process; and (3) The quick response benevolent composite Seed/Venture capital investment process. These processes can be expedited in an environment of smart public private sector partnership.
The construct of the Enterprise is characterized by the Inventor who creates the idea, the Innovator who converts the idea into a product/service for sale, the Entrepreneur who starts small, does it right, makes a profit and then expands and Shepherding which mitigates the risk of business failure. Experience shows that there is no weakness in deal flow (the rate at which potential innovation opportunities are presented).
The Enterprise process of the Model may be described as: (1) select Enterprises with DNA of an Elephant potential either through a competition or by direct application and (2) conduct careful due diligence on the enterprise and the promoter of the enterprise before final acceptance into the family of enterprises.
The Shepherding process of the Model may be described as: (1) introduce enterprises to the CBET Shepherding Model™ integrated system to give a full appreciation of what is involved in enterprise development; (2) select, assign and contract Shepherds; (3) source and contract business advisors, as appropriate, to complement the skills of the Shepherds; (4) train Shepherds and business advisors in the use of the ManOBiz Matrix™ as a Shepherding (action planning, gap analysis and monitoring) tool; (5) work with enterprises to develop a business plan with a venture capital investment request; and (6) work with enterprises to generate revenue for the enterprise. The Shepherds and business advisors may come from the local or global management consulting community and are paid for their services. When one becomes familiar with the innovative CBET Shepherding Model, one will conclude that the cost of the shepherds and business advisors comes creatively from “future profits”. This is facilitated by the concept of “Shepherding as Collateral” where shepherding mitigates the risk of enterprise failure and hence secures the seed & venture capital investment.
The quick response benevolent composite Seed/Venture capital investment process of the Model may be described as: (1) Establish Seed Capital (SC) and Venture Capital (VC) Fund and approve VC request; (2) Pay pre-investment costs of shepherds and business advisers from SC fund; (3) Mark-up pre-investment shepherding costs by 50% and add this sum to the approved VC request to augment the VC investment (the 50% mark-up is designed to ensure that the SC fund revolves and grows and is not depleted so that other enterprises may be assisted as the demand dictates); (4) commission an independent valuation to determine the share distribution between the enterprise and the investor; (5) issue enterprise shares in return for VC investment (SC refund + VC request); (6) absorb the pre-investment funds advanced by SC fund if VC investment is not approved; (7) commission an independent valuation at any time to determine how much cash is required to buy out the VC fund’s shares by the enterprise and (8) buy out by the enterprise of the VC fund’s shares at any time (cash flow permitting) based on the independent valuation.
The major constraint to the above CBET Shepherding Model™ is the capitalisation of several national funds or a regional seed and venture capital fund. Since there is no shortage of money in the private sector and since this process is designed to enhance the rate of economic growth, then the public sector should provide an incentive to the private sector to invest in the VC fund in the form of a government guarantee on the capital invested in the fund. This is another legacy proposal from the late Hon. David Thompson when he launched the Barbados Entrepreneurs’ Venture Capital Fund in November 2009.
Let us think community, let us think family of successful high performance enterprises, one enterprise after another. Let us think country. When there is Sustainable Development the nation wins, when the nation wins, we all win!