March 19, 2010. It was a joyful Friday night in Robertson in South Africa’s Western Cape. Wedding guests drove through the cool breeze of a warm night on their way back from a cruise on the river and everyone was merry. The piercing sound of a cellphone stopped the joy in its tracks.
“I just knew there was something wrong,” says Carl Bates.
“I always knew I would get a phone call from New Zealand late at night. This was at 10:15 on a Friday night. I always thought it was going to tell me that one of my grandparents had passed away.”
The voice on the other end of the line told Bates the bad news: his father had suffered a stroke back home in Wanganui in New Zealand and couldn’t speak or use the right side of his body. It was the prelude to a worst day that would tear at the heart of the Bates Family.
“I knew what this would mean for me: wealth destruction, business destruction and family destruction.”
It was a story rooted in rural Wanganui. The Bates family was known for its entrepreneurs in the small town, population 45,000, where the Wanganui River flows into the sea on the west coast of New Zealand’s North Island. Between them they ran a butcher’s shop, a greengrocer’s, a bicycle shop, a florist and a concrete plant.
“They were all small businesses. I was wondering why have none of these businesses made a whole lot of money? What is stopping them succeed? This whole learning and thinking was going on in my brain,” says Bates.
One of the biggest fish in Wanganui was Mike Bates, the father of Carl, who ran a plumbing; property; plant and vehicle hire business.
“I was born on March 13, 1983; dad’s business was incorporated on August 15, 1983. I had grown up with the business. I had learned about the business and watched it grow; I had watched the trials and tribulations, like when his secretary had stolen his money from him and when builders had gone bankrupt and we had not been paid,” says Bates.
“My dad was fun loving, carefree, a little bit unreliable but he was clever. He was determined and stubborn and he was a winner. People knew who he was; he wasn’t in everyone’s good books. He was fit and went to the gym and had played international roller hockey for New Zealand. He was only 51 when he suffered the stroke.”
Sadly, for Bates junior, in the years leading up to the tragedy, he had struggled to talk to his father of the dangers of building a business around one person. Ironically, passing on this message to entrepreneurs around the world was the core of his business. In his late 20s, Bates built up a R10 million-a-year ($1.16 million) business, Sirdar, which he expanded to South Africa in 2008 after a chance meeting over breakfast in Hong Kong. The business specializes in coaching entrepreneurs through independent non-executive directors assigned by the company.
Bates, who entered Massey University, Palmerston North, aged 16, had a claim to being a wunderkind of Wanganui. He studied accountancy and finance, while working full-time at McDonald’s. At 17, he was elected chairman in Palmerston North for the Young National Party; at 18, he became a director of a private hospital in the city; at 20, he was a director of Arena Manawatu—the largest multi-stadium complex in New Zealand.
Little in life could have prepared Bates for the ordeal he was to suffer on March 26, 2010, as he sat in South Africa and agonized over his father’s business.
“I was the power of attorney, along with the family lawyer, while everyone agreed that this decision to liquidate his business had to be made, I knew dad would blame me,” says Bates.
“On March 26, 2010, I made the single hardest decision of my life. I assigned the resolution that put my dad’s business into voluntary liquidation. It involved 30-odd staff; some of whom had been with dad for 30 years. My granddad, Ken, a greengrocer and part-time magician, who has just won a lifetime award at the New Zealand Magic Convention, had to talk me through signing the bit of paper. He was on the phone from Wanganui coaching me, though it was late at night. What it meant was that 30 years of business had gone. It couldn’t have carried on, the business was all built around my dad and the minute you took him out, it didn’t work. Most small-business people do this. My brother worked in the business and he said he didn’t want to take it over in the middle of the building depression.”
The signing of the paper was not the beginning of the end, to borrow words from Winston Churchill, but maybe the end of the beginning.
“The bank jumped all over the problem, they froze accounts, called in mortgages and what they did to my dad’s property company was send it under and all the businesses followed. To save the family, my mum and I took over some R6.5 million ($757,000) of debt on property assets. The value of the assets and the value of the property left us with negative value. We were drained trying to hold it all together. I used to get up at 4am bleary eyed, in South Africa, to negotiate with the banks and key creditors,” says Bates.
The rift between father and son proved just as complicated and even more heart rending.
“In an instant the hierarchy of our family was turned upside down. I was gutted, I knew dad would hold it against me, which he did. He literally didn’t communicate with me for six months. He can’t talk but he can communicate.”
Clearing up the financial mess by realizing family assets, triggered even more pain.
“A trespass notice was served on him to get out of the house in December 2011 while we were still dealing with tidying up the mess. One of the things we had to do was sell the house he lived in… He decided he didn’t want it sold and he barricaded himself in and got someone to change the locks to stop us getting the building inspector in to do the final inspection. We had a cash offer on the table, but couldn’t sell. Dad had another mini stroke while he was driving to buy some food. While he was in hospital we had to sell the place, then he didn’t communicate with me for another six months.”
As the Bates family balanced the books and licked its wounds slowly, very slowly, the sun peeped through the clouds over Wanganui.
“Out of every hardship comes opportunity. I think for my father it was a release from something that could have killed him. Dad’s stroke was the basis for a book I wrote called The Laws Of Extreme Business Success, I knew dad’s business had some problems, I wanted to show him the way he could make it a sustainable business. Ironically, he had the stroke and his businesses has gone and now I am travelling the world telling business people like him what they can do to create a sustainable business, moving from being a craftsman to being entrepreneurs. Now, he spends his time doing what he always wanted, he doesn’t have to work, he has no financial pressure and spends his time sketching, painting and recovering. He is exercising every day and slowly getting movement back. He is a case study for Auckland University on stroke recovery.”
Even so, the family feud was not quite over.
“I went home to New Zealand in August 2012. When I went to his house he tried to close the door on me and if my grandmother wasn’t there he wouldn’t have let me in. Then after two minutes in the house he made us go and then his social worker asked me to come back next day. That started us talking and when I came back to South Africa he started skyping me,” says Bates.
“I use this story as an example. I talk about my dad and I think about him all the time.”
Finally, father and son appear on the road to healing the wounds of their worst day.