In 19th century China, Ching Shih (Also known as Zheng Yi) is working aboard a floating brothel off the coast of Canton, now modern-day Guangzhou and British Hong Kong. It is here around circa 1800 she meets Cheng I, a captain of the pirate flotilla, The Red Flag Fleet, operating in the South China Sea. He was a fearsome pirate who pillaged and raided the coasts of China and Canton and took Ching Shih for his wife.
Though Cheng has reputation as a swash buckling pirate, it would be Ching Shih who’s legacy would far exceed that of her husband. Following his untimely early death in 1801, Ching Shih succeeded his Red Flag Fleet. Her crew grew from just 300 ships in her first year as captain to 1,800 ships and an estimated 80,000 pirates by her third year. For comparison, Blackbeard commanded only 4 ships with 300 pirates. Ching Shih amassed the largest navy in the world in just 3 years, and a pirate navy at that!
You may find hard to believe, but one thing pirates need are accountants – which are exactly who Ching Shih introduced to her pirate utopia. A shrewd businesswoman herself, she introduced taxes and laws to her fleets. All loot had to be registered and evaluated before being distributed among the fleet, and if you didn’t agree with her financial policies, you were free to hang up your sword and leave – just so long as you left your head behind.
The fleet grew under her command with expanding reserves of loot, and an organised system of business and trade. Whichever ship captured the loot were entitled to retain 20% of its value, while the remaining 80% was placed into the fleet’s collective fund. Her raids at the height their success expanded from the South China Sea to as far as the Bay of Bengal.
In 1809, the Chinese, British, and Portuguese had all suffered humiliating defeats by Shih. Desperate for an end to the pirates reign, they offered Shih and her pirate fleet with amnesty. Her power was slipping away by this point, so she accepted – but not without first negotiating to maintain the riches and power she earned as a pirate lord; having the collective of treasures distributed fairly among what remained of her (excessive) fleet; the prisoners freed from the gaols using the collective fund as bail money; and receiving her own property in Canton.
Shih eventually settled in Canton and opened her own gambling house, before passing away peacefully in 1844 aged 69. It is estimated that Shih’s estimated pirate loot would be worth $1.7 million dollars in today’s money.
You may have read up until this point and are wondering why an article promising to outline the merits for good accounting in small businesses started with a story about a pirate? Let me rephrase the story into simple, business terms –
- Ching Shih, though inherited her pirate fleet initially upon the death of Cheng I, essentially started out as a small business.
- Her late husband, Cheng I, though a powerful and ruthless CEO (captain), operated his small business with a staff (pirates) of only 300. In contrast, by the end of Ching Shih’s third year as CEO of the Red Flag Fleet, had 1,800 shops (ships), and 80,000 staff.
- While Cheng I was in power, the estimated worth of his wares were paltry in comparison to Ching Shih’s fortune amass of $1.7million.
- Ching Shih’s appointing of accountants for her small business helped it grow into a profitable large business which benefited her staff through taxation and profit registration (loot). Payroll was distributed fairly among her shops and staff, which lead to fewer staff quitting (deserting), and no recorded staff strikes (mutiny).
- Ching Shih’s small business operated originally only along the South China coast and Hong Kong. Her business expanded during her short time as a pirate CEO to international trade and business agreements.
- Ching Shih’s tactical accounting strategies lead to her decision to portion away 80% of the profits made to a collective fund. These saving allowed her to negotiate lucrative trades with foreign investors, gained valued interest in the years it remained in the fund, and eventually was paid to her staff at the end of her career at triple the value when it was originally stolen acquired. This rainy-day fund saved Shih, her staff, and her business on numerous occasions.
In short, Ching Shih was a 19th century entrepreneur who was beyond her time in understanding the importance of having accountants on board (pun intended). Had she attempted to keep the power and decisions for handling The Red Flag Fleets finances alone, the fleet would have disbanded and mutinied early on, and her legacy would be lost to the ages.
Often when a small business is starting out, financial tasks such as payroll, tax, and business activity statements fall squarely on the owner’s shoulders. It can be tempting to maintain that control once the money starts to flow, and few business owners, like pirates, love giving up control. If you’re anything like Shih, you know that having a professional accountant by your side is a crucial element to your business’s success.
You don’t have to be a swash buckling pirate to get accounting advice for your small business. Auditax Accountants offer a wide range of professional, and affordable, accounting services to businesses across Australia. Speak to one of our business accounts specialists.