By Meredith Booth

Photos George Fetting

At Fishburners Sydney, Australia’s largest co-working space for technology entrepreneurs, one of the most enlightening events for 2018 was a seminar by John Stewart FCA called “How to Read a Balance Sheet”. It was so useful, Fishburners has asked him to repeat it.

For Stewart, who is the managing director of KPI Consulting, the lack of basic accounting knowledge among the start-up community is startling. “They can talk the language of fundraising – like convertible notes and series B funding – but they can’t talk the language of profit and loss and accrual accounting,” he tells Acuity.

A decent grasp of accounting and finance basics – such as understanding a balance sheet or profit and loss statement – is essential for start-up founders looking to turn their great idea into a successful business.

“Entrepreneurs need to learn how to develop budgets and forecasts, so they can gain a strong understanding of how sales are tracking and who their customers are, before they can start building empires,” Stewart explains. And he is ideally positioned to help. A chartered accountant for more than 30 years, Stewart is a former CEO of Ferrier Hodgson, and he chaired the MYOB Audit Committee for a decade.

“I think our profession has an opportunity to step in there and give the sort of services the start-up scene needs,” he says.

Innovation catalyst

John Stewart FCA

On the back of his Fishburners experience, Stewart advised the team at Chartered Accountants Australia and New Zealand (CA ANZ) on its CA Start-up Adviser Program. CA ANZ members who volunteer with the program will spend a minimum two days a month with a start-up, sharing their knowledge of business and accounting.

The program is a collaboration between CA ANZ and three of the region’s leading start-up incubators: Fishburners in Sydney, Melbourne’s Stone & Chalk, and The Icehouse in Auckland. Volunteer advisers will all have a minimum of five years’ experience as a chartered accountant.

The program is part of the CA ANZ Catalyst initiative, which will also launch a pilot CA in Residence program in 2019. CAs in Residence will have a dedicated workspace in one of the three participating start-up hubs in exchange for spending a minimum one day a fortnight consulting to the entrepreneurs based there.

CA ANZ Innovation General Manager Jeremy Rowe believes the CAs in Residence will benefit from being exposed to new developments in technology that could improve their own organisation’s capabilities.

“Transactional accounting is being lost to automation... the future of the accounting profession will be consulting,” Rowe says. He encourages CAs to engage with the start-up community as a way to learn about technology businesses and develop a network among this nascent market of future clients. 

“I think our profession has an opportunity to step in there and give the sort of services the start-up scene needs.”

Give and take

Fishburners CEO Pandora Shelley says accounting expertise will be warmly welcomed by the 330-plus companies in the incubator’s ecosystem.

“A lot of our founders come in with a great range of skills, from marketing to technology and legal. However, we have noticed that very few come from an accounting background and can often struggle to build these skills alongside the other work they are doing,’’ Shelley says.

Henry Weaver, Fishburners head of community, adds that, “It’s a two-way street. A lot of older people that are CAs want to get some exposure into what’s going to disrupt them.”

Since it began eight years ago, Fishburners has had several successes, including “mattress in a box” business Koala Mattresses and online tyre retailer Tyroola. But it remains a fact that most start-ups fail, and poor accounting practices can contribute to their demise.

Ross Borrill, partnerships manager at The Icehouse, is excited that start-up founders in the incubator’s Flux Accelerator program will soon have access to chartered accountants.

“CA ANZ has a massive network that may include mentors or advisers, as well as potential investors for start-ups looking to raise cash. The Flux companies are early stage, but ultimately we want to work with the best teams working on the best ideas,” Borrill says.

So far, Farro Fresh food stores, JUCY campervan rentals and Pic’s Peanut Butter have all grown out of The Icehouse incubator.

Rita Yates, who is head of corporate partner experience at fintech start-up hub Stone & Chalk, is optimistic the CA ANZ initiative will help more entrepreneurs grow their businesses to the next level.

“Our start-ups are scaling, and many are already going global, which carries its own challenges,” Yates says. “The average age of our founders here is 42, so they generally already have quite a lot of experience and are looking for mentors who can help them with specific challenges.” 

Put up your hand

CA ANZ’s Rowe says that CAs who want to get involved with the Catalyst program will need to be “engaged and curious and have an appetite for changing their typical ways”.

One member who has already put up his hand is Steve Watson CA, the managing director of National Audits Group. After nearly a decade leading the firm – which was then a division of CountPlus – Watson and business partner Stephen Prowse CA made a management buyout of National Audits Group in mid 2017. The adjustment from being part of an ASX-listed company to running their own private business has been a big one, and Watson jokes that at times it has felt like being in a start-up.

As for volunteering as a CA Start-up Adviser, he says: “It’s all about helping other people… and I have always found, if you give, you shall receive.

“At the same time, it will also give me an insight into the start-ups: how they operate, what they’re going through, and what’s challenging them.”

Get involved

For more information about the CA ANZ Catalyst initiative, or becoming a CA Start-up Adviser or CA in Residence, contact CA ANZ Innovation General Manager Jeremy Rowe on +61 2 9290 5644, [email protected].