A few years ago, Carl Bates, a New Zealand-born business speaker, mentor, author and global entrepreneur received a call from his mother telling him that his father had suffered from a life-changing stroke. “A few days later I had to make the toughest, single decision of my life.”
Bates, who has had to make tough decisions about firing CEOs during his career, said this decision was more difficult than any he had ever made before.
“Because I had to sign a piece of paper that put my dad’s business, after 30 years of business, into voluntary liquidation,” he explained to an audience of business owners at a Business Partners seminar in Cape Town. “Because when you pluck the master craftsman out of the business that has been built around the master craftsman, it doesn’t matter how much life insurance you have got, the business loses its life if it is based around an individual. And many of us base our businesses around us,” he said.
Bates went to university at age 16 and had his first directorship position at age 18 at a private hospital in Palmerston North, New Zealand. At 19 he was appointed as a director of New Zealand’s largest multi-stadia complex, the Arena Manawatu, also becoming chairman of the finance and audit committee. He is now the founder and managing director of Sirdar Global Group (and CE of the Sirdar South Africa Group) which has partnered with the Institute of Directors in Southern Africa in the education and implementation of governance in the small, medium and micro enterprise (SMME) sector in Southern Africa. He speaks regularly on the role of governance in growing a business in the SMME sector.
According to Bates, the most profitable businesses per employee in South Africa are those businesses that employ fewer than five people. However, entrepreneurs, who are skilled in a particular craft, often lack an understanding of how to grow a company and run an enterprise.
Craftsmanship vs a big organisation
“We become brilliant in a particular craft but then ego kicks in. We want a bigger business, we want to grow our business, we want to make more money and we wonder why profitability drops through the floor.”
Bates said it’s important to understand the distinction between two games in entrepreneurship: the craft game and the enterprise game. The existence of a craft business depends on the active involvement of the owner. “Because he or she represents the expertise required to keep a business going,” he explained.
“An enterprise is a business with a promise and a structure that makes it sustainable beyond the persons that either founded or operate it.”
He added that craftsmanship is about owning a job, and while there are some brilliant examples of craftsmen and women around the world who have made a lot of money, they are often the exception. “Craftsmanship is about sustaining the small; it’s not about becoming a big organisation,” explained Bates.
“Understand the game you are choosing to play… Enterprise has nothing to do with you. Enterprise has everything to do with the purpose an organisation promises.”