In this Easter period of reflection, it struck me for how long human beings have been running governments and doing business. Take for example the biblical story of Jesus’ birth.
His parents lived in the village of Nazareth and as luck would have it the Roman government of the day, led by Caesar Augustus, demanded that a census be held over all Roman occupied territory.
This was not about resource distribution to counties, constituencies and wards. It was quite likely a Roman government move to establish the scope of taxable revenues from colonised domains.
Joseph, being the head of the home and a descendant of the house of King David, had to travel south with his very expectant wife to their native home in Bethlehem, “shags” as we would call it here.
Bethlehem, according to Google maps, is a good 150.9 kilometres away via the Yitzhak Rabin Highway or Route 6 taking an expected one hour and 58 minutes in 2023. Well it took weeks in those days.
Arriving hot, dusty and exhausted beyond belief, Joseph looked for shelter. Now this is what I found interesting. There were inns in those days, as in places for travellers to sleep overnight.
Which means that people used to crisscross the country for various reasons back in the day, be it trade, census or perhaps leisure? After all, Bethlehem is about 30 kilometres from the Dead Sea, a place that could likely have been a great tourist attraction.
But I digress. Even though Bethlehem was Joseph’s native home, it would appear that there were no relatives that could give him a place to sleep. Or maybe the relatives had relocated over the years to brighter lights and bigger cities.
Whatever the case, the inn was full and the only shelter that the innkeeper had that could be safe for an expectant mother and deeply worried father was the animal pen next door.
The innkeeper was all about finding simple solutions to complex problems. But the long-term thinking he should have been having by this time was the need for expansion.
I give this story as last week someone asked me on Twitter when does a micro business start to think about governance structures.
The answer to this question is the classic non-answer: it depends. Governance structures are usually put in place to ensure that stakeholder interests are equally monitored and protected.
Stakeholders are many in a business and don’t necessarily rank equally in the need for monitoring and protection. They include shareholders, employees, suppliers, customers, the taxman and regulators.
All these stakeholders have different demands on the organisation and, commensurately, different levers that they can pull to get their demands met.
For a micro business, survival is the primary objective of the founder. The Bethlehem innkeeper, for instance, just needs to ensure he gets enough business to keep his doors open and feed his family.
Revenues don’t feed families, profits (revenue minus costs) do. As business grows, he needs employees to clean the rooms, cook the food if he has a dining room and serve the guests.
He has to pay suppliers of the food, the cleaning materials and whatever else is needed to keep the inn running smoothly. Caesar Augustus has his Kanjo representatives probably hounding the innkeeper for a business licence, a music licence, a parking licence for guest’s donkeys and then the Roman Revenue Authority officer also comes around every now and then to get income tax.
If he has borrowed from the local shylock to build more rooms, then the shylock is added to the growing list of stakeholders whose needs are to be monitored and protected.
The innkeeper can manage all of this by himself, until he cannot. Eventually he will have to hire a manager and, as his business expands, managers.
As he gets older he has to take a step back from the business and appoint a general manager to run the business while he provides oversight. By this time, if the business is still surviving, it cannot be regarded as a micro business any more.
Growth and expansion should have taken it into a small or medium-sized business. That is how a governance structure begins to set in as all the stakeholders, including the founder and his family want to ensure the business continues to survive beyond the founder.
A board, whether advisory or statutory, would help provide the necessary governance oversight beyond the aging innkeeper’s capacity.
Have a restful Easter break.