5 Risk Factors Guaranteed to Doom a BAM Business
by Larry Sharp
The Good, the Bad and the Ugly: Stories from the Frontline
Last year I was leading a seminar in a conference in Arizona, when a local business owner asked the question, “Are there no failed BAM businesses?” While I readily agreed there were, I began to think about the question in a more profound way. What is the “good, the bad and the ugly” of real life BAM business experiences – those that demonstrate that there are BAM failures along with the successes?
Over the past 10 years, I have observed risk factors for BAM enterprises which should stimulate every stakeholder in the BAM community towards better recruitment, better preparation, better deployment and better accountability. Many a sports leader, military hero, or young entrepreneur has demonstrated the oft-quoted statement of Benjamin Franklin, “Failure to prepare is preparing to fail.” And that is true in the Kingdom business endeavors of today.
So what are these factors and where are the stories which help us understand basic principles for launching and landing well in a cross-cultural business? How do we best start companies designed to work out the Great Commandment and the Great Commission? How can we improve so that there will be fewer failures and a greater chance of successful transformational businesses in the areas of the world that need them the most? If these five risk factors don’t actually doom your BAM company, not paying attention to them will seriously endanger it… at the very least!
Factor #1: Shaky Spiritual and Philosophical Foundations
The BAM Global Think Tank research determined that character and spiritual maturity is an important foundational factor in both the preparation of BAM practitioners, and for on-going scaling of their enterprise. Representative traits which need to be understood, measured and monitored are: perseverance, teachability, humility, integrity, calling of God, servant leadership, devoted relationship with God, an attitude of being a learner, and commitment to the task, among others.
While no one has all of these traits to perfection and neither does anyone have dysfunction in all of them at the same time, these areas of spiritual and philosophical foundation are often a key differentiator when evaluating why a business was not successful. Obviously a clear view of how business and mission are integrated together is vital – along with a sense of calling and determination to seamlessly integrate them.
A business was set up in an ex-Soviet country for the teaching of English and Western culture. The target customer was young professionals eager to move and study abroad, particularly in the USA. There was a gigantic market for such a for-profit school. The owner was credentialed in the teaching of English, spoke several languages and hired a team of teachers from abroad. Several things contributed to the demise of this business, most of them related to spiritual and philosophical issues.
First the owner did not readily respond to counsel even though it was offered through his agency. He was professionally qualified but lacked business understanding and commitment, and took a minimalist approach to the business. Secondly the majority of his foreign teaching staff, most sent by a well-known mission agency, were more interested and trained in evangelism and refused to understand and learn an integrated view of BAM. For example one young man said, “I really don’t want to have a full load of teaching English, but will give three hours a week.” And that was after communicating clearly about what an English school should look like, before the business started.
He and others lacked integrity to follow through with a commitment to teach English as a way to commercial success, economic viability and an integration of “mission” with business. Most people who tried to help this business would agree that several team members in the business lacked the spiritual maturity and character to bring success. The business no longer exists and most of the team members have returned to North America or elsewhere.
In another case in North Africa, a tour company was well on the way to success. Both of the co-owners were trained and qualified in the product. For a couple of years they responded to the consultant who had startup experience and was highly qualified in the product. However the day came when one of the owners decided business was too much work. He communicated that he no longer saw how business contributed to kingdom ends, despite some excellent evidence that people were responding as the owners lived out kingdom values in the company and the community. One co-owner decided to leave the company and return to the USA and the other is also out of the country deciding what he should do.
Factor #2: Weak Business Background and Experience
Again the BAM Global Think Tank report mentioned business experience as highly important to BAM success. One of my colleagues often uses this illustration: “When experienced overseas missionaries are considering starting a business in their country, they often say, “How hard can it be?” They mention that they have learned another language, love the culture and people of their adopted country; are raising children abroad and making disciples of Jesus. When successful business people in North America are considering starting a business overseas, they often say, “How hard can it be?” They mean that they have passed the test of a business startup and have made it in the hard-nosed business world.” Both parties are missing the strength of the other. Both lack experience in something, and both need preparation.
To emphasise the importance of this, I often ask people, “Would you enter a hospital for heart surgery from a person who was not a medical professional and had no certification?” or, “Would you fly on an airplane piloted by someone who had never flown before and had no certification?” The answer is obvious! I then ask, why would you expect someone with no business training or experience to be able to start a business and be successful – and do so in another language and culture?
Rick was a great missionary; he loved the people, spoke the language well and had a great college degree in chemical engineering, plus seminary training. He raised his three kids in East Asia and had a happy family. He got the idea he should start a business, one which built on his chemical background. The business model was around water purification and it seemed like there were some customers for the product.
As consultants we said, “Well, the starting point seems good with just about everything except business experience in place.” So we tackled the project of teaching Rick business and helping him get started. However despite Rick’s great attitude and patience provided by the coach, Rick just never seemed to “get it”. He constantly defaulted to his “evangelism first” response. He seemed risk averse and lacked the courage to make significant sales calls. He did not seem to understand that business was a full-time calling and required him to have skills he did not yet have, ones that could be learned only through experience. The business did not succeed and as we evaluated we determined that if Rick had worked in industry for a while he would have had the experience to understand his endeavor.
In contrast, Lee had good business experience in Florida before setting out to start businesses in South Asia and in Vietnam. He understood from experience that this demanded more than a 40-hour work week. He was not discouraged with the setbacks that inevitably come along. He even failed at his first business in South Asia. I called him to encourage him and ask what he would do next, thinking that he may return to Florida. “Oh” he said, “No problem, I have already gone down the street and opened a new office for a new similar business.” His experience had prepared him for the rigors of overseas business.
Factor #3: Lack of Cultural Training and Experience
Again, the research has identified cross-cultural understanding and experience as a highly important preparation factor. It is a pretty common occurrence that personnel in multinational companies fail to consider the nuances of culture, and that business norms mirror the general culture. This is true in the West, as it is everywhere.
Issues such as power distance, a relationship vs. transaction focus, perspective on time, individualism vs. collectivism and uncertainty avoidance1 are a few of the areas which if not considered can doom a business in another culture. Perhaps even more fundamental is the willingness and ability to listen and learn in the context of difference. Some call this “cultural intelligence”.2 Cultural intelligence can be learned but the learner must want to do so, since it does not come naturally.
A successful executive left the manufacturing industry in the Midwest of the USA, assembled a team of highly qualified business guys and set off for a West African country that was desperately in need of his product. His invention had proven to be cost effective and met a significant market need in the deteriorating infrastructure of the country in question.
Each of the four men was married and each had children, all of whom planned to move to Africa. They came to us ask for consulting expertise, not so much on business startup or planning issues, but on issues of culture, family transition and lifestyle. We designed a learning package for the eight adults and their children.
It soon became evident that the entrepreneurial leader of the group had little time for such “soft skills”. He decided not to buy the section of the proposed training that had to do with learning to live in a foreign culture and learning to transition families, providing schooling, people group interaction and language competency. Upon hearing this news three of the wives came to me lamenting this decision and asking for help in putting pressure on the leader. The leader refused the training.
In short, the group of eight and their children all moved to Africa and set up life, while the guys also started to set up the factory. They had raised the capital and they knew their product. While there were some cultural difficulties in the business, what killed the project were cultural issues related to living in the culture without the preparation they needed. Africa was not home and the differences in living, shopping, finding friends, going to church and much more were overwhelming. The business was liquidated and they all left the country in less than a year at a cost of more than one million dollars.
Contrast this story to Fran and Leanne who started a business in a large South Asian country. They studied cross-cultural living in college, lived in an Indian community in Philadelphia for over a year, and visited the country several times. By the time they moved to India, they loved the people, loved the food and loved the culture, and spoke the language pretty well already. They were prepared for a very different life ahead and for business success.
Factor #4: Poor Planning
Toby Miles in his book on BAM failures3 has two chapters on poor planning and the mystery of marketing. While this section also relates to business experience, it has everything to do with the planning process. It is a principle for life to plan before an activity is begun, but it is amazing how many BAM businesses begin with minimal or no business planning.
I find that there is common leap people mistakenly make. They think they can easily go from knowing how to do something – such as make a good coffee, or teach English – to operating a business with that product. Product knowledge or technical skill is only one facet of business success.
I recently read a letter from an acquaintance and a coffee expert who had been trying to start a coffee company in an Asian country. He had become an expert in coffee growing and production. It was a passion and love for him. But the letter last month said that the business which had been registered and operating for three years had been closed down. The owner admitted that he was not cut out to be a business person and had not planned well. He had just kept working harder and harder trying to make it all work. After requesting help from new consultants who were frank and honest with him, giving him some good reasons why he would not be successful, he became honest himself. He realised that his heart was not in it and admitted that God has gifted him to be a preacher and not a business person. This person had failed, but so had his agency, who had not recruited the right person or determined appropriate factors for success.
How in the world did this man, his family and his business partner ever make it that far? We all agreed that had adequate and honest business planning taken place long ago this emotional stress, waste of capital and time could have been avoided.
Another case of poor planning took place in Eastern Europe where the labor pool is huge and poverty intense. An agricultural business seemed obvious after some preliminary investigation. But as one of my mentors in business always reminded me, “Larry, no one has a business unless they have a customer.” Many a BAM person thinks they have a great idea or wants to do something interesting to them without considering that someone has to be willing buy it. Without customers you can’t be profitable or sustainable – which is central to the definition of a BAM business.
Back in Eastern Europe, the crop of vegetables grew at the start but before long, unforeseen obstacles developed – disease, collapse of prices, transportation issues, and broken contracts. A debrief revealed weak planning, inadequate market studies and misunderstanding of cultural factors. Could most of it been avoided? Probably.
In contrast, a large for-profit English school in China was experiencing cash flow problems after several years of success. Our consultants visited the facility, interviewed several teachers and the owners and pointed out some fundamental issues. The consultants then made some recommendations. Within days, the owners made some pivots which saved the business from sure disaster.
Factor #5: Flimsy Financial and Legal Preparation
Capital is always an important issue for any business, and legal propriety should always be a concern for a person of integrity. Consultants are always seeking clarity on these issues. Biblical wisdom affirms that anyone building a tower first sits down to count the cost to see if they have enough to complete it (Luke 14:25-35).
Capital development is difficult for startups in the West and almost impossible in the developing world. It is tempting to capitalize with donated funds which might have been provided by a charity and ignore ownership questions and IRS regulations related to private inurement, equity ownership and international tax issues. To do so can bring ruination. To be prepared in the area of finances and the law is mandatory.
A tour business in a large South Asian nation recently closed its doors after doing rather well for some years. The issue: taxes! The owners had done a remarkable job of capitalizing the business and accounting for significant profits. However, some unknowns regarding tax laws for which they were unprepared brought them to their knees. Preparation for legal and finance issues unique to the country demanded expertise beyond a foreign consultant. Had they had that expertise it might have made the difference.
In another case, a manufacturing company in Indonesia was unprepared to compete with corrupt officials who expropriated their leased land and put them out of business. There were political factors at play for sure, but a better understanding of the financial risks and the legal issues could have mitigated them closing their doors.
To conclude, launching a Kingdom business is a very difficult task which demands the best of experience and training. Without better preparation, the BAM movement may be at serious risk. These five factors need attention by practitioners, consultants and coaches, stakeholders and anyone else concerned with the bottom lines of successful business as mission.
Article first published on The BAM Review in January 2016, and has been reposted as part of the BAM Failure series.
Larry Sharp is the Founder and current Director of Strategic Training and Partnerships of a Business for Transformation (BAM, B4t) consulting firm, International Business and Education Consultants (www.ibecventures.com). Larry served 21 years in Brazil and then 20 years as Crossworld VP of Operations and as Vice President of Business Partnerships. He is currently a VP Emeritus and consultant with Crossworld. Since 2007 he has devoted energies toward Business as Mission (BAM) and currently is a consultant on BAM and education themes. Larry travels within North America speaking and teaching in conferences, colleges and churches on themes related to Business As Mission (BAM, B4t) and missions. His travels abroad relate to BAM, crisis preparation and management, and team building.
References
1 – Hofstede, Geert. Cultures and Organizations: Software of the Mind. 2005
2 – Livermore, David A. The Cultural Intelligence Difference. 2011
3 – Miles, Toby. Seven Reasons Tentmaking Businesses Fail. Kindle Ebook, 2014
