“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: 4.
As we tackle the post-COVID-19 recovery and growth challenge, the quality of leadership coupled with an unwavering strategic focus will be paramount.
Before we conclude this leadership series with discussions on (1) the compelling case of Singapore as a small state success story; and (2) recognize the value of the optimal use of the labor force; we shall concentrate today on the importance of The Shepherding ModelTM as the ring beam which reinforces a business across its five integral systems.
Some countries have exploited low-hanging business sectors and have achieved only marginal success. The enterprise development sector, which is about entrepreneurship and intrapreneurship, i.e. entrepreneurship within the existing corporate structure, has the potential to augment the growth rate of all countries.
This sector has not grown commensurately with the plethora of ideas that emanate from entrepreneurs because of the lack of formal guidance, and the lack of access to appropriate, timely investment capital. The result has been the high global average 90 percent failure rate for startups within the first five years of operation.
In contrast, the global average death rate for humans within the first five years of life is less than 4 percent. What a difference, how can we reduce this gap?
The robust human body has five basic systems: (1) Structure – skeleton, muscles; (2) Protection – external (hair, skin, nails), internal (immune system); (3) Life – brain, cardiovascular, pulmonary; (4) Growth – nourish, excretory; (5) Sustainability – reproduction.
Similarly, a fragile startup has five primary systems: (1) Structure – governance to do things right; (2) Protection – appropriate quick response investment; (3) Life – marketing to generate revenue; (4) Growth – operations to efficiently convert investment and revenue to profit; (5) Sustainability – unlocking human potential to achieve happiness.
The Shepherding Model strengthens the startup by life coaching and business mentoring the entrepreneur to convert the business idea into a scalable concept, systematically grow the business, and creatively capitalise and efficiently manage a quick response seed, equity, working capital growth Fund to financially invest in the startup. Simply stated, the Model mitigates the risk of business failure and hence secures the capital investment.
A Shepherd is assigned to the entrepreneur at the outset to engage in life coaching and business mentoring. Life coaching is to provide advice and support to entrepreneurs at the crossroads who wish to improve their lives, make decisions, solve problems efficiently, and achieve goals.
Business mentoring helps the entrepreneur to master the management of the five business systems. How long does a shepherd stay with a business? Well, the answer may be found in the question, how long does a parent stay with a child?
The growth fund has three components: (1) a revolving seed capital fund which will advance the initial short-term seed capital needed by startups and roll it into equity with a service fee; (2) an equity fund which will invest in startups in amounts to (a) refund the revolving seed capital fund advanced and a service fee; and (b) stabilize the startups’ cash flow until the startup is in a position to buy back its shares in the equity fund at the market price of the shares on the date of repurchase and regain 100 percent ownership; and (3) a working capital fund to facilitate short-term interest-bearing advances with shepherding contracts and sales agreements, as collateral.
The Shepherding Model can help our Caribbean entrepreneurial class lead the post-pandemic recovery. Hopefully, our leaders in both the public and private sector will soon see the value of this simple and sensible approach.
(Dr. Basil Springer GCM is a Change-Engine Consultant. His email address is basilgf@marketplaceexcellence.com. His columns may be found at www.nothingbeatsbusiness.com.