St Francis Magazine Nr. 3 Vol.
III (December 2007)
Reducing the Distinct Commercial Risks Inherent
in BAM – The Tahiti Springs Case Study
By Dr. Thomas Shaker
1 Introduction
Eighty percent of small businesses in the
USA will fail within their first 5 years of
operation (96% within the first 10 years)1.
In a third world location, the business
‘entrepreneur’ (the missionary) is operating
in a cross cultural context which brings with
it additional dimensions of complexity and
hence commercial risk. The typical BAM2
‘entrepreneurs’ may have little technical,
entrepreneurial or management skill or
experience. In addition, they are going to seek
to establish a profitable small medium enterprise
(SME) despite limited access to capital in a
context where they have limited local business
knowledge and networks, and limited cultural
orientation or language skill; hence, only
amplifying what is, by Gerber’s estimation, an
already high risk scenario. Add to this a context
where it is frequently difficult for business to
operate entirely within the law or even to avoid
bribe paying.
Yet our budding entrepreneur is expected
to not only establish and run an ethical yet
profitable enterprise (miraculous achievements
in themselves in the third world), but do so
in a way which pays due heed to social and
environmental concerns (the so-called triple
bottom line) whilst achieving significant mission
outcomes (a quadruple bottom line).
Drawing on the experience of Tahiti Springs
Pty Ltd (TS)3, this paper identifies areas of
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
commercial risk which are distinctive to BAM,
and explores possible actions which can be used
to mitigate that risk. Tahiti Springs (TS) is of
course only one of many possible BAM models,
but it provides a useful means of exploring many
of the commercial risks that a star-tup, low
capital BAM operation may face in many third
world contexts. This paper does three things:
firstly, presents a brief outline of TS as a BAM
case study; secondly, we look at the key sources
of risk which we identified from our experience
with TS; thirdly, we seek to propose actions
and strategies which IS and those involved in
BAM can consider in seeking to reduce the risks
identified.
2 The Tahiti Springs Business/
Mission model – the case
study
2.1 The business model
2.1.1 Evolution from opportunistic trader to
manufacturer
Tahiti Springs began as an opportunistic
trading business, sourcing goods and seeking
export markets for those products4. The
primary product was handmade pottery, but
also included baskets, glassware and other
handicrafts. For the first few years little thought
was given to the survival of the business beyond
the current trading year and the opportunities
which that might bring for ministry.
1
 St Francis Magazine Nr. 3 Vol. III (December 2007)
Over a number of years, the business evolved
into a quasi manufacturing operation. The
business revolved around supplying ceramic-
based products into various niches within the
European garden market. This primarily meant
supplying goods in the first half of the year
to meet demand for the European spring and
summer. Some goods were also sold into the
European Christmas market, although to a far
lesser extent.
2.1.2 Sources of comparative advantage
Key sources of comparative advantage over
various sources of competition (Southern
European, Middle Eastern, SE Asian and
Chinese producers) included: cost (labour,
ceramic product and container freight costs),
functional attributes of the product (fireproof
pottery), flexibility of production (capacity
response to seasonal demand fluctuation,
product specification etc) speed of supply
(ie proximity to market) and aesthetic appeal
(handmade product). From the very beginning
we understood that there had to be some
foundational basis which would allow us to
compete with businesses with far greater capital,
technical, marketing and management resources
than ours.
2.1.3 The operations process
The required ceramic product was
manufactured by suppliers working either
adjacent to their homes or in small workshop
environments. TS’s operational role was to,
a) ensure quality and timeliness of supply
of finished ceramic and other inputs from
suppliers; b) value adding through various ‘in
house’ activities such as candle making, painting,
product modification and combining products;
c) packaging and labelling and d. warehousing
and shipping of goods.
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
2.1.4 Marketing
Marketing roles included a) identifying target
markets where we felt we could compete, and
monitoring both retail and ‘trade’ environments
in those markets; b) developing and maintaining
relationships with customers both through
existing contacts and through promotion of
goods at Trade shows in Europe; c) development
of products and packaging options to match
retail and wholesale customer needs.
The market (European garden market mainly)
was characterised by a high level of competition
due to many suppliers (primarily from SE Asia).
Competition was expressed primarily in terms
of price, quality and innovation criteria. Short
product lifecycles were commonplace with
fashion trends in colour, form and finishing
turning over within 2 years, making product
development a critical function.
The basic business rationale was to seek large
volume orders by supplying major commercial
networks (either large wholesalers or large
retail chains). Often, however, our lack of
critical mass in terms of capital infrastructure
and our lack of direct control over the ceramic
production process (and hence timing and
quality of production), and the comparatively
amateurish nature of our marketing activities
made retailers hesitant to give orders. In
addition, lack of capital also made us more
reliant on wholesalers for cash flow orders, to
mitigate against the risk of retailers not paying.
2.1.5 Financial perspectives
Our suppliers were paid a deposit with each
order and paid in cash on completion of the
order. Due to the marginalised nature of the
suppliers, we were unable to rely on them
as partial creditors to cash flow the orders.
2
 St Francis Magazine Nr. 3 Vol. III (December 2007)
The vast majority of sales were through the
wholesale distribution channels into garden
chains and supermarket/variety stores. On
average, the business shipped about 50
containers per year with an annual turnover in
the range of 300 – 500,000 USD. Gross margins
were generally in the order of 30% of sales but
profits were generally very modest, averaging
less than USD15,000 per year, with expatriate
management effectively subsidising the business
through their low or unpaid labour.
2.1.6 Market trends
Over the period that the business has operated
we have seen increasing competition in our
target markets from SE Asia and China. This
competition has been felt in terms of price,
quality, and pace of innovation. The rise of
China as an exporter has also diminished our
comparative advantage in shipping times, with
it becoming commonplace for ships to go direct
from China to Europe taking only 30 days. In
addition, as China consumed more raw material
resources, prices and availability of the raw
materials (especially metal) in our location were
adversely affected.
2.2 The people
Most suppliers were from a Muslim
background, although we did try to work also
with Christian suppliers where opportunity
arose. Over the past 9 years it is estimated
that we have worked in more than 25 different
communities (both rural and city based) with
over 70 different suppliers of a variety of
handicraft products. However, the vast majority
of our work has been in 5 communities with
about 15 suppliers of ceramics, metalwork and
packaging materials.
Most permanent staff and all of our key
management were Christian believers, whom
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
we encouraged to share a vision of work as
a means of Christian ministry to our non-
Christian suppliers. On a regular basis, we also
employed casual labourers from the villages
where we worked. We estimate that through
subcontractors, casual labourers etc, the work
generated employment for up to 250 people
during the order season.
The business has also involved a number of
long-term expatriate volunteers in commercial
management, product development and social
development roles. We also benefited from the
input of short-term volunteers in helping to
address a range of shortcomings in the business,
from the technical to marketing to operational
management etc.
Whilst the business was legally owned by the
two main principals in the business (see footnote
1), our approach was to see ourselves as trustees
rather than profit-taking owners. To assist
with this, an advisory and accountability board
was established to whom all major decisions
(especially where there was potential conflict
between mission and business) were taken. The
board had full oversight of all financial accounts
and were often consulted individually within
their own speciality, ie finance, cross cultural
issues, legal matters, outreach, development etc.
Whilst the board had no legal authority, we made
it clear to them, to our sending organisations
and to our supporters that we voluntarily placed
ourselves under their authority and committed
to taking no profit for personal benefit.
2.3 Mission activities:
The business provided us with three main
avenues for sharing our faith, firstly, through
our personal relationships with suppliers,
community members, casual employees etc;
secondly, through the relationships our staff had
3
 St Francis Magazine Nr. 3 Vol. III (December 2007)
with these people; finally, to use ‘celebratory’
events as opportunities to more intentionally
proclaim the gospel. The latter occurred on
a somewhat ad hoc basis when time allowed.
Typically, we looked for opportunities such as a
Muslim or Christian festival or the completion
of a large order or the end of the production
season.
These ‘parties’ had two primary targets - the
children of the communities in which we
worked and the people with whom we worked.
The children’s parties were a combination
of entertainment and teaching, usually from
the Old Testament prophets. The parties for
workers usually revolved around a shared meal,
followed by a play of some sort and a personal
testimony. We were very aware of trying in these
activities to walk a fine line between sharing
something that was distinctive of Christ without
going so far as to cause offence.
On other occasions we ran a summer program,
like a vacation bible study, in the main village
where we worked for a week. However,
adverse reaction from the community and the
security police meant this was never repeated.
In recent years we took the young men and
young women who worked as casual employees
away for an annual 3 day ‘conference’ (separate
conferences for each gender) which sought to
blend fun activities with work development
issues, and the message of the gospel. In all of
our proclamation work we frequently struggled,
especially in more closed environments, to
ensure that in sharing, ie from the old testament
prophets, our message didn’t just become how
to be a good ‘Muslim’.
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
3 Sources of risk distinct to
BAM:
3.1 Failure to develop a compelling business
proposition
Accenture5 identify three things which high
performing businesses do: a) focus on their
markets and their position in those markets; b)
develop distinctive capabilities, ie a unique set
of connected business processes and resources
that cost-effectively satisfy customer needs and,
c) develop an organisational culture of high
performance.
The conception of a BAM business proposition,
by contrast, may be strongly influenced by the
economic, social or spiritual needs of a specific
group of people, community or region. So there
is a real danger that the business proposition will
fail to adequately focus on keys to commercial
success outlined above. In reality though, this
is probably a false dichotomy. Many BAM
activities, as was the case in TS, start up in a
far less intentional manner than the business
school ideal, and with comparatively little
capital at stake, i.e. BAM start-ups tend to be
opportunistic responses to the environment
in which the mission entrepreneurs finds
themselves, rather than being driven by a
formally conceived business or mission strategy.
Of course, there is the risk that such an
unplanned approach to business (and mission)
will result in a failure to achieve satisfactory
business or mission purposes. On the business
side, at least, this should be self correcting as
a poorly conceived business should (in the
absence of subsidies – see below) quickly run
out of cash. If we could avoid this waste of
effort and resources, that might be preferable.
However, given the relatively small quantities
of capital usually at stake in most BAM start-
4
 St Francis Magazine Nr. 3 Vol. III (December 2007)
ups at present, it could be argued that such
failures actually represent an excellent training
mechanism for would-be BAM practitioners.
In the case of TS, whilst we began in a very
opportunistic fashion with very little capital and
indeed with minimal profit expectations, we
quickly focused on what sources of comparative
advantage our business had. For example, we
realised early on that one of our key sources of
comparative advantage was our physical presence
and (attempted) monitoring of our suppliers
on a day to day basis. This was something
which would be uneconomic for importers
from Europe to do without us. In addition,
the answers to the question of our sources
of comparative advantage over competitors
(Section 2.2.1), were ultimately critical in
identifying our target markets, likely customers
and hence channels of distribution, our mode of
promotion, pricing and even types of product.
For example, since we had a comparative
advantage in the cost of sea freight over SE Asia,
we sought to focus on voluminous products
which amplified that advantage.
3.2 Operating in low profit sectors
Small businesses often survive by operating in
niches which, due to limited size, poor growth
prospects or narrow margins, are unattractive
to larger more powerful competitors. In TS
our flagship product line was a comparatively
low-cost Chimenea (patio fireplace) which
was difficult for others to replicate due to the
tendency for ceramics to crack when exposed
to fire. The only direct competition we faced
was from various Mexican producers (the origin
of the product idea) who produced a far more
upmarket offering. By virtue of price and size,
however, these were largely complimentary
rather than competing products. The Chimenea
market was relatively small and to some extent
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
a novelty market, and hence did not attract a
great deal of competition from larger ceramic
producers. This was in contrast to the ceramic
planter market, for example, in which we also
sought a market share. It was a far larger market
segment and hence had a significant number
of highly competitive participants. Whilst we
generated significant turnover, market demand
and indeed niche size continually limited
turnover and hence profitability.
In a third world context, where competition is
often intense in even small niches, expatriate-
driven SMEs can only succeed by bringing
distinctive technological, operational or
management advantages backed by adequate
capital to realise these advantages, and/or by
tapping into markets, ie exports which local
businesses find difficult to access. The problem
for the SME, though, is that unless it can grow
the niche or diversify and build its competitive
capacity against larger more capital and
technically endowed businesses, it is likely to
remain trapped in low profitability unattractive
market niches.
It is worth noting that BAM activities amongst
the poor, especially where the poor act as the
supplier rather than merely the source of
cheap labour, are almost inevitably low profit
sectors. By definition, if these sectors were
more profitable, either the suppliers would have
created more wealth and hence no longer be
poor, or others would have entered the market
to share in the profits available in that market
segment and in the process enriched the poor,
assuming there are no market distortions which
inhibit competition i.e. monopolies.
In TS’s case we sought to overcome the low
profit trap that our suppliers found themselves
in by servicing export markets exclusively.
However, we frequently found that the poor
5
 St Francis Magazine Nr. 3 Vol. III (December 2007)
quality and reliability of suppliers’ production,
as well as our own lack of marketing and
operational management expertise, meant that
we lost customers as often as we found them.,
Indeed my partner once characterised our
marketing efforts as an unending search for
victims to replace those we had lost the previous
season!
3.3 The delusion of subsidies
Whilst TS’s use of export markets overcame the
extreme low profit environment of the domestic
pottery market, the continual fluctuations in
demand from season to season meant that
overall our profit levels were quite poor, i.e. the
business could not have afforded to pay even the
real costs of having expatriate management, let
alone obtain significant return on capital. There
were seasons, perhaps 4 or 5 years, where there
were significant profits (more than 25,000 USD)
and these profits were usually used as a source of
capital investment.
This ultimately leads to one further danger of a
BAM business and that is the risk that subsidies,
principally expatriate management receiving
income from third parties, will mean that a
business which in reality lacks commercial
viability can be propped up for years by such
subsidised management labour, i.e. the risk
in a sense is that the business will not fail, but
will not be sufficiently commercially sound to
grow and flourish. This, of course, raises the
highly subjective question of what is success,
either commercially or from a BAM perspective.
One widely published BAM prognosticator
(Eldred6) has suggested that he would not invest
in anything that didn’t give a return on equity of
20%. In a context where a key outcome is work
which benefits the poor, however, that could be
considered a rather ignorant measure of success.
In addition, BAM operations often begin with
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
little capital, so achieving a high return on capital
invested may not be the biggest challenge.
Certainly in the case of TS, we were never
sufficiently profitable to pay the real cost of
expatriate management. In any case, a lack of
capital meant we were always very keen to see
as much profit reinvested in the business as we
could manage. Hence, the salary subsidies that
expatriate staff brought to the business were
effectively used to help build our capital base.
So, it could be argued that in fact TS was never
a viable business but just charity dressed up as
business. However, from our suppliers point
of view, the economic impact that the business
had on the communities in which we worked,
and the input it allowed us into the lives of
the national Christians who worked with us,
this was a real business demanding much of
them and in return providing a good income.
Whether this will be a sustainable business in
the long term remains at this point a highly
questionable proposition. An alternative view
is that we should only invest time and capital
in businesses which can demonstrate by their
unsubsidized performance that they are viable
and hence sustainable commercial propositions
which represent, in the words of Accenture, ‘a
unique set of connected business processes and
resources that cost- effectively satisfy customer
needs’.
3.4 The Regulatory and Legal compliance maze
One of the real challenges for someone from
the developed world seeking to be a BAM
operator, is that we are used to living in a legal
environment which is clearly defined, i.e.
where most things are either right or wrong,
possible or not possible, legal or illegal. In
much of the third world the law itself is not well
defined; the administration of law is frequently
struggling to keep up existing laws; old and
6
 St Francis Magazine Nr. 3 Vol. III (December 2007)
new laws contradict, and the rate of social and
economic change and demographic shifts i.e.
rural population migration to the cities, render
the law and its administration ineffectual and
indeed irrelevant7. De Soto observes that, in the
end in most of these underdeveloped countries,
‘common practice’ substitutes for a more formal
legal system8. From a Western perspective, we
have no framework with which to conceive of
this situation and hence, with our ‘black and
white’ mentality, keeping Paul’s admonition
to submit to those in authority, see any non-
legal behaviour as essentially unacceptable and
unethical, i.e. counter-productive to our witness.
However, this is an ignorant oversimplification
which results from us placing our own cultural
perspective onto a very different environment.
More important, perhaps, is the perceived and
accepted social contract which underlies those
laws or the notion of those laws.
It is important to grasp that these common
practices are not just some sort of anti- social
behaviour, and are often executed and enforced
by a combination of local communities and
local legal authorities9. An example of this is
the process by which illegal building activity
is sanctioned. Whilst there is a law requiring
appropriate permission to build, in fact the
system doesn’t function. TS tried for 3 years
to obtain permission to build on our land and
as De Soto notes, in our location about 90% of
construction is done without the appropriate
legal papers10. Instead, the practice, for domestic
dwellings, is to build the house very quickly,
connect the electricity and get your family in.
Once you are ensconced, another law protects
you from the government department that
would demolish your dwelling. Before you can
get your building to that stage however, you
have to pay bribes/donations/local taxes to the
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
low level government authorities so that action
to demolish the building isn’t taken until you
have in fact completed it.
A good comparison is perhaps England in
the 1800’s where laws were created regarding
vagrancy. Indeed, the venerable British society
was so unable to cope with the rapid social
and demographic changes it was experiencing,
that its solution was to rid itself of those it was
unable to care for by transporting them to the
antipodes for trivial misdemeanours like stealing
a loaf of bread. Heckscher quotes Oliver
Goldsmith in 1762 as saying, ‘There is scarcely
an Englishman who does not almost everyday
of his life offend with impunity some express
law’.11
It is no accident that in a climate of such
apparent injustice Karl Marx, in the footsteps
of many Old Testament prophets, identified
the law as merely a device used to serve the
economically powerful: the point being that
the circumstances in which these developing
countries find themselves is by no means
unprecedented, but we from the developed
world struggle to conceive of how a Christian
operates ethically in such an environment.
In many third world countries, the legal system
functions better for businesses with substantial
capital. In our location we would estimate that
to jump into a better defined legal environment,
ie work in a legally defined industrial zone, for
example, will require a minimum capital outlay
of around about half a million US dollars.
Nevertheless, even in that case, the business will
face many situations where the inability of the
existing bureaucratic processes to cope, requires
‘innovation’ on the part of those responsible for
executing and enforcing the law.
7
 St Francis Magazine Nr. 3 Vol. III (December 2007)
In our experience, for most low capital
small businesses it is simply not possible to
fully comply with the legal requirements:
the compliance costs are prohibitive and
competition quickly eliminates those foolish
enough to seek to do so. De Soto, however,
argues that functioning outside of the legal
system places immense financial and operating
constraints on a business as well12. However,
in our experience, these extra legal financial
costs were from a cash flow perspective more
readily dealt with even if the outcome was that
the business was fated to live in a commercial
cul de sac. Our experience is that innumerable
activities will be ‘extra legal’. Some of ours
included working with suppliers who did not
have registered manufacturing premises (all
of them); working with suppliers who did not
provide appropriate invoicing receipts (95%
of them); paying bribes/local taxes during the
‘extra’ legal construction of our warehouse;
employment of casual labourers; employment
of refugees without work permits; dealing
with the tax and sales tax authorities; operating
unregulated manufacturing facilities etc. Even
where the business itself is not behaving outside
of the law, it will inevitably be paying others to
do so, on its behalf.
The whole strategy of most small businesses in
our location was to remain sufficiently small
to be beneath the radar, i.e. not worthy of
attention, rather like a street vendor selling shoes
who, when he sees the police coming, gathers
up his sheet with his produce on it and hides
down a side street until the authorities pass on.
It is simply delusory to imagine that a small
scale entrepreneur operating in an ill defined
and poorly functioning legal environment is
going to be able to do everything according to
the law, even if he can figure out what the law
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
is! The problem this raises is that the western
entrepreneur is left to figure out how he or she
will behave. It is very much as Moses writes at
the end of Judges, ‘And in those days there was
no king in Israel: all the people did what was
right in their own eyes’13.
This problem is only exacerbated, the more
closely you work with the poor as they are
the most marginalised in society and hence
function for much of their lives outside of the
legal framework. In such an ill-defined context,
meaningful accountability for the would-be
missionary-entrepreneur to those not directly
involved in the situation is both critical and
yet very difficult to achieve. The problem is
that once you become accustomed to operating
outside the law, definitions of ethical behaviour
become increasingly subjective or indeed
meaningless. It is a little like seeking to stand
in a queue while everyone else rushes to the
front. If you want to achieve anything, then you
need to use your elbows! The question is how
to use your elbows in a way that honours Christ
and does not represent an unfair use of our
advantages. What exactly does belong to Caesar?
From a commercial perspective the negative
consequences of these legal problems for TS
included:
a. distracted management
b. additional unproductive work, i.e. creative
accounting and a variety of activities to get
around obstacles
c. delayed or prevented necessary
infrastructure development
d. Reduced profitability, increasing the risk of
loss of assets, i.e. we have written down the
value of the warehouse by 66% in the first 3
years, due to the risk of its demolition, hence
8
 St Francis Magazine Nr. 3 Vol. III (December 2007)
reducing profitability (though not cash flow).
e. suppressed business growth, i.e. hard to
grow naturally from a small business into a
medium sized operation as one set of assets
are held extra-legally and cannot be smoothly
diverted into a larger legal business.
These represented an enormous drain on
the business, and along with issues of quality
and our lack of marketing expertise probably
represented one of the greatest limitations to
achieving a sound commercial foundation.
What could we have done better?
a. Worked harder at having an effective
accountability environment.
b. Worked much harder at developing
relationships with those in authority.
c. Ensured a sounder legal framework from
the beginning, instead of spending lots of time
later when we wanted to act legally, trying to
untangle past ‘extra-legal’ activities.
d. Taken more time to understand the legal/
extra-legal environment before commencing
business.
e. Worked with local partners who have
experience of the legal environment and
can assist in developing relationships and
identifying legal implications of actions before
they are taken etc14.
f. Determined how to function in that legal
context and have that more thoroughly
planned out, rather than simply reacting to
obstacles as they arose. Of course, all of this
is very easy to say, but very difficult to do.
The point, in these contexts, is that the legal
compliance/non-compliance aspects of the
business plan are more important than they
would be in a developed country context
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
where compliance and the functioning of the
legal environment are taken for granted.
3.5 People risks
To believe some BAM writers, BAM offers the
opportunity to emancipate the much maligned
‘business laity’. BAM is going to open up the
flood gates and enable these dynamic business
people, formerly relegated to the ‘support’ role
in church and mission, to overcome the artificial
boundaries put in place by the ‘missionary elite’
and participate directly themselves in the task of
world mission. To date, there has not been a lot
of evidence of the flood gates opening up. Most
of those engaged in BAM have come via the
route of being called to mission. Consequently
many (most) lack well developed business skills.
We can perhaps identify at least three areas of
expertise which a successful business requires.
These are entrepreneurial skills, management
skills and technical skills.
In the case of TS, we had the benefit that
my partner in the business (who started the
whole enterprise) had a business background
in trading. Given the importance to us of
working with suppliers, this was a critical skill.
As the other key manager in the business,
I brought no business skills, experience or
orientation to the organisation at all. Largely
we learnt from mistakes, which is a very costly
way to operate when you are trying to build a
business. We sought to overcome our technical
and managerial inadequacies through input
from contacts through the mission, through
the business etc. We had a number of short-
term visitors who gave valuable input into the
business and particularly helped us as managers
to understand the technical and managerial
domain in which we were seeking to operate.
Nevertheless, we frequently struggled to
9
 St Francis Magazine Nr. 3 Vol. III (December 2007)
translate their ‘developed world’ experience
into our somewhat chaotic developing world
environment.
It would obviously be desirable to see more
experienced business people directly involved
in doing BAM. Indeed, no one would suggest
that someone completely devoid of experience
should set up and operate a medical clinic
etc. However, such an extreme analogy is not
necessarily appropriate for a business – although
it perhaps becomes increasingly appropriate as
the scale and capital investment of the business
increases.
This, however, raises the risks associated with
the experienced business professional’s aptitude
for operating in a cross cultural environment,
and resilience in what is often a physically and
emotionally adverse environment, e.g. it not
easy, particularly for someone with a teenage
family (as is likely for most experienced business
professionals) to be plucked out of a relatively
middle class Western subculture and expected
to function effectively in a very different cross
cultural environment. It is informative to see
how multi-nationals achieve this, through
great expenditure and short- term (usually
up to 5 years) placement of their personnel.
More importantly, these people generally live
in relative cultural isolation from local society
and tend to recreate (as do missionaries to a less
extravagant extent) miniature versions of the
countries/cultures from which they come.
It is the opinion of the author that it is highly
unlikely that we are going to see a substantial
flow of experienced business people as full-
time partners leading businesses from within a
developing country context. What is far more
likely is that we are going to see more and
more would-be cross cultural workers adopting
business as a means of fulfilling their missionary
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
intent. Hence our thinking as an organisation
needs to be driven by the need to adequately
recruit, equip and manage people in that context
and not wait for the messiah in the form of a
‘45 year-old experienced businessman’ to turn
up, i.e. a. he wouldn’t be mad enough to come
and b. if he is, he may struggle to function
effectively, from a business, ministry and
personal perspective.
This is not to negate a role for the experienced
businessman. The real challenge though is
how to harness that experience in partnership
with those who will execute the business.
In an age of internet communications, the
building and execution of effective partnerships
between experienced business professionals
in the west and ‘missionary business people’
on the field should be achievable. However,
these partnerships need to be clearly driven by
achievement of mission outcomes and not just
commercial outcomes. Of course, in this the
devil is in the fine print. Ultimately, the answer
lies less in written definitions and more in a
shared vision of business as a means of mission
as the underlying purpose of the partnership and
not monetary profit for the business partner in
the West15.
One of the major challenges that we continually
faced in TS related to lack of management time.
This was exacerbated by many factors including
our (the missionaries’) lack of business acumen
and experience (in operational, technical,
marketing, people management etc); by legal
and regulatory problems; by the inconsistent
commercial performance of our suppliers; by
lack of familiarity and experience of many of our
national staff in taking the initiative or problem
solving; and in a lack of capital (and profitability)
which lead to us seeking to save costs at all
junctures. Frequently we found ourselves
10
 St Francis Magazine Nr. 3 Vol. III (December 2007)
in situations where our time was consumed
with managing mistakes and overcoming
obstacles. A lot of time is consumed in
activities which qualify you to be active in the
business realm, but do not add to business
competitiveness or profitability. Hence, this
environment represents a significant capacity
drain on management compared with a business
operating in a developed country environment.
In a normal business, this capacity drain would
be overcome through the recruitment of
additional management staff. However, two
issues make this problematic for a BAM business
– (a) cost, and (b) management with the right
capacity and vision, i.e. a Christian, with the
right management skills and a shared vision of
what the work should achieve. In the end, (b)
is a far greater challenge than (a). Within TS we
sought to recruit and equip national Christians
with a vision for mission and good work skills to
carry out as many of the management functions
as possible. But we frequently found that many
people, despite having high opinions of their
own capacity, lacked the ability to deliver in the
work realm. It may be that we were, in fact, not
looking for sufficiently well qualified staff, or
offering high enough salaries.
The only other solution we had was to seek
to recruit additional expatriate volunteer staff
(missionaries). These were either from people
already on the field who were interested in
working with us, or by seeking to recruit people
through mission organisations by placing job
advertisements on websites. The great advantage
of the former is that people were immediately
ready to work, usually having done some
language study and already knowing how to
live in the context. However, management
of ‘volunteer’ staff is probably a domain of
management science in itself. Much thought
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
has to be given to how to work with volunteer
expatriate staff. The factors which motivate
them (us) are clearly a fairly complex package
of mainly intrinsic rewards. They (we) are
not there for the salary or the conditions, but
for the opportunities through the work to be
agents of the gospel. From a management
context this raises issues particularly around
the point of management authority and doing
the job required, rather than the job which
the individual feels is important. If there are
different views on priorities or implementation
processes, this has to be managed carefully. In
particular, there is great need for consultation
and communication of the reasons for actions.
Such a management approach is often in conflict
with the nature of a start up entrepreneur!
In the case of TS, we sought to use networking
and accountability as a means of mitigating these
risks. Where volunteer staff disagreed on key
issues, we sought, where possible, to take our
problems to our accountability board for their
input. Nevertheless, we did struggle with some
volunteer staff, to achieve adequate productivity
outcomes. Likewise we struggled to direct
staff, with some feeling that their ‘calling’ was
in one direction while the commercial need of
the business was in another direction. We were
always open to taking on additional expatriate
management leadership, but it was difficult to
find people willing and able to take on that level
of workload. In addition the very lack of time
constrained our capacity to build networks. The
more recent actions of EGRIT16, in particular,
in building that network will make accessing a
business resource network less time-consuming
in the future.
3.6 Ownership risks
Another domain with which we struggled and
which is critical to the long term viability of any
11
 St Francis Magazine Nr. 3 Vol. III (December 2007)
business is the issue of ownership. There are
two relevant features of ownership.
Firstly, ownership strongly influences who will
be passionately committed to the business.
As demonstrated by the way capitalism has
prevailed over would-be ‘socialist’ states,
private ownership brings a commitment to
the wellbeing of the asset which is rarely
demonstrated when it is owned by someone
else or worse still communally owned (eg the so
called ‘tragedy of the commons’). Tom Bethell,
in his treatise on the history and virtues of
private property (The Noblest Triumph), argues
that even where Christians have sought to
establish communes they have largely failed
due to indolence. The exception he gives is
the single gender religious order’s capacity to
accumulate and use assets17. On this basis,
it is expecting a lot from people to ask for
commitment to the wellbeing of something not
considered their personal domain.
The second issue concerns distribution of
profits from the business. This refers to
payment of dividents to shareholders, not salary
packages as these are a business expense18 In
many Kingdom/Good News/Great Commission
etc companies, the business is established
with the clear intention of providing profit to
the investor. Within Interserve at least (and
probably many other mission organisations)
the situation is slightly more complex. On the
one hand, Interserve partners are supported
by churches/individuals in their sending
location, to do ministry – essentially to fulfil
the Interserve mission of ‘Making Christ
known through holistic mission’. It would then
seem inappropriate for such fully-supported
individuals to reap additional financial benefits
through a business, which is meant to be set
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
up primarily for its ministry benefits (however
those are defined).
However, very often, mission entrepreneurs
setting up a business end up using their own
money to get the business off the ground. So,
should they not receive some dividend both for
the interest forgone on the money invested and
the very real risk that this money will be lost if
the business fails? In addition, personal interest
(scope for personal gain) is a proven powerful
motivator which can provide additional
motivation and energy critical to the survival of a
business.
But how does this align with individuals
committed to mission rather than to personal
gain? It is interesting in the case of the monastic
movements, that the individual took a vow of
personal poverty, whilst the asset and profit
accrued to the religious order to which they
belonged – what we might call the ‘Cistercian
model’. The asset was privately held (by a
defined group), without right to personal
benefit, although the group as a whole might
benefit (under the direction of the leadership).
This is not a matter of missiological semantics,
but a critical commercial issue. The business
world is littered with examples of businesses
which foundered for lack of a committed
shareholder base.
The key issues are:
a. How does ownership affect the drive and
commitment of the management team? In
our experience, the contribution of our
accountability board, critical as that was,
could not have substituted for the vision and
drive brought to the situation by the nominal
owners of the business.
12
 St Francis Magazine Nr. 3 Vol. III (December 2007)
b. How can a BAM business obtain subsidies,
i.e. short-term volunteers, consultancy, access
to subsidised capital, subsidised expatriate
management and a whole host of other
benefits, but provide some rewards for only
those who have invested capital?
Despite my socialist preference for the
‘Cistercian’ model, I would propose a mixed
ownership model (and hence dividend
payment), based on a combination of
entrepreneur (where the entrepreneur puts
in capital), mission, and an independent third
party BAM equity holder (an EGRIT-type
institution). It may be that a combination of
these three would provide the right mixture
of vested interests to ensure the long term
viability of the business, whilst ensuring that
personal profit does not compromise the goal
of holistic mission. In this way, the individual
brings the intense day-to-day management and
vision which the business requires; the mission
organisation’s investment via the provision of
expatriate management capacity gives a stake
in continued success of the business, and the
EGRIT-type institution, by providing much of
the capital, has a vested interest in seeing that
that capital is well used and yields an appropriate
commercial return for the context.
4 Conclusion
Whilst BAM is more commonly being
considered as an exciting new tool for mission in
the 21st C, the BAM case study presented in this
paper illustrates the extensive sources of risk that
doing business in a cross cultural, developing
world context with a mission intent brings to
the equation. The complexity of issues and
their interaction make it difficult to offer simple
solutions. Not least amongst these difficulties is
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
the definition of ‘success’ by which any solution
will be measured.
However, in order to maximise the chances
of commercial success of a BAM business, we
would argue for:
a. A clearly defined commercial proposal
with well defined sources of comparative
advantage, ie a rational reason why this
business will beat the competition,
b. An assessment of realistic profit
expectations for the given business sector and
the likely sustainability of a business in that
environment, where assessment of the value
of the business is not limited to the anticipated
profitability but also incorporates ministry
outcome opportunities.
c. Mechanisms to identify the reliance of the
business on subsidised expatriate management
labour and the appropriateness of such
subsidies.
d. A business plan which incorporates
a thorough understanding of the legal/
regulatory environment in which the business
will operate and a clearly defined strategy
for how the business will operate in that
ambiguous context.
e. A clear understanding of the experience
and expertise limitations of the management
team and the establishment of partnerships
with businesses/business people to help offset
these limitations.
f. Use of networks and accountability
mechanisms to help with recruitment and
management of expatriate volunteer staff.
g. Development of innovative ownership
models which will ensure a shared
commitment towards the business’s needs
13
 St Francis Magazine Nr. 3 Vol. III (December 2007)
from the entrepreneur/management team,
the financial capital providers, and the
organisation providing mission strategists
(such as Interserve).
Discussion questions:
1. Establishing clusters of activity as a
business strategy.
One idea for developing sufficient capital and
human critical mass would be to build up
regionalised centres of capacity, using existing
successful BAM operations to piggy back and
guide additional BAM activities in the same area.
This could impact on management capacity,
utilising diverse management and technical
skills, guiding capital investment decisions
etc. Is this highly interventionist approach
appropriate in a resource limited and highly
unstable mission context?
2. Use of franchising of successful business
models.
Michael Gerber also notes in his book, The
E-myth Revisited, that unlike ordinary businesses,
franchises have a failure rate of only 40% in the
first 5 years. He puts this down essentially to
excellent planning and clear implementation /
operation processes.
Is there scope for us to do the same with
successful BAM businesses?
3. Investment in training and development
of mission entrepreneurs with an
emphasis on their mobility and capacity
for redeployment as needed within the
organisation.
If our successful BAM managers are going to
come from the ranks of ‘wannabe’ missionaries,
rather than from relocating existing business
professionals, what sort of training/preparation
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
would be helpful? What role should IS play in
this? What sort of attitude should we have to
investing in training and development and from
where should the resources come?
Having established a pool of experienced BAM
managers/entrepreneurs, how can we utilise that
pool of experience strategically? Traditionally,
many people in mission feel they are called to a
specific location. How does such a view fit with
organisations seeking to marshal resources to
meet disparate management and technical needs
in a variety of locations?
Endnotes
1
Michael Gerber, The E-Myth Revisited.
2
The acronym BAM stands for Business as Mission. That is
a strategy which employs commercial activity as a means
of carrying out holistic mission.
3
Due to ‘security’ concerns, the names of places, the
business and the author have been altered.
4
One of the dangers in a case study is that it tends to
describe the outcome more than the process, which in
the case of BAM is possibly as significant. What should
be clearly understood is that the Tahiti Springs business
did not arise in a particularly intentional or preconceived
fashion. Rather it was much more opportunistic and
intuitive. This was more like a voyage of discovery and
exploration where God filled the sails and we sought to
direct the ship as best we could. Like most would-be
missionaries we were fixed on working in a given location
(Barbados), amongst a particular faith group (Muslims)
and with a particular bias to one sector of society (the
poor).
5
Accenture is a business management consultant. More
info on their research of 6000 companies can be found at:
http://www.accenture.com/Global/High_Performance_
Business/HPBHighlevelOverview.htm
6
K.A Eldred, ‘Kingdom based investing’, in T. Yamamori
and K.A. Eldred (Eds), On Kingdom business (Crossway
books, Wheaton, 2003), p. 207.
7
For example, TS has been tied up in court cases related
to boundaries on the land we purchased. Those cases
have now been running for more than 3 years. The case
is listed for hearing, we attend and a new date is set for a
hearing a few months later. This process may take 5 to
14
 St Francis Magazine Nr. 3 Vol. III (December 2007)
10 years to come to any resolution. In the meantime, any
investment activity on that asset are halted due to the risks
associated with uncertain legal outcomes.
8
H. De Soto, The Mystery of Capital. (Bantam Press,
Randomn house, Sydney Australia, 1995) pp. 62, 64.
9
Ibid, pp. 78, 158-159.
10
Ibid, pp. 26.
11
Heckscher, Mercantilism, Volume 1, p.323 cited in De
Soto, The Mystery of Capital p. 85.
12
De Soto, The Mystery of Capital. p. 73.
13
Judges 21:25. New Revised Standard Version,
(Zondervan, Grand Rapids, 1991) p.366.
14
In fact the largest legal problem we faced related to the
land we purchased. This land was purchased with a local
partner. Unfortunately he believed he understood how
to work within the system but, in fact, he was (if possible)
even more niave and optimistic than we were about how
the system worked. Hence, choosing partners with
St Francis Magazine is published by Interserve and Arab Vision
www.stfrancismagazine.info - www.interserve.org - www.arabvision.org
appropriate experience and a sober grasp of their own
pertinent knowledge and abilities is also critical.
15
This can be taken as a kind of de facto anti-profit stance.
That is not what is meant. Without profit, the business
lacks rationale. But if growing profit overly dominates the
agenda, then other important ministry outcomes will be
neglected.
16
EGRIT is a BAM incubator and investment group, the
name has been changed for security reasons.
17
T. Bethell, The Noblest triumph (St Martin’s Press, New
York, 1998), pp. 34, 41, 54.
18
This could include salary, provision of a mobile phone,
car or computer for work, or payment of children’s
school fees etc. The extent and suitability of these
benefits can be negotiated between the individual and the
organisation (board) employing them.
15