In 2021 First National Bank (FNB), in partnership with Xero and Edge Growth, announced the launch of the FNB Xero Programme for Accounting Practices (FXPAP), a developmental initiative aimed at capacitating small black-owned accounting practices, and, by extension, the South African Small, Medium and Micro Enterprise (SME) sector.
Accounting practices, particularly small accounting practices, are vital to the SME sector. Effective financial planning and accounting supports the growth and profitability of SMEs, who, in the early phases of their businesses, typically rely on small to medium-sized accounting practices to provide these services.
But small accounting practice owners face challenges themselves. They need to put on their entrepreneur hat and navigate their own journey of building and scaling their businesses effectively. One often assumes that the technical skillset of an accountant automatically enables this, which is not necessarily the case. Entrepreneurship requires a skillset of its own.
To maximise impact, FXPAP targeted accredited accounting practices with several years of experience, and focused support across three key pillars: digital transformation, quality of services and management skills. The FXPAP engaged an advisory board comprising top-level executives to discuss challenges in running a business. It also included one on one mentorship sessions, fireside chats, bootcamps and a number of tailored projects focusing on marketing & branding, strategy, technology, practice management and leadership required to successfully scale up a business.
Heather Lowe, Head of SME Development at FNB Commercial, said “The FXPAP promotes digital transformation and business operational efficiency, thereby enhancing the ability of small to medium accounting, tax and advisory practices to produce consistent and high-quality services to SME clients, supported by robust practice management and leadership skills.”
The pilot cohort of the 11-month programme saw 15 practices from across Gauteng, Northern Cape, Eastern Cape and Mpumalanga receiving tailored growth support to address key developmental areas.
By the end of the pilot, the cohort registered 34% weighted average revenue growth and 700% weighted average profit growth and had created 21 new permanent jobs.
One of the participants in the pilot was PSTM Chartered Accountants. PSTM is an accounting and auditing business 100% owned by women and founded in 2010. Before joining the FNB Xero programme the business focused on bookkeeping, relied on referrals for new sales and had slow revenue growth. A business diagnostic indicated that PSTM needed support with its pricing, automation, cash-flow management, and HR capacity. The business received tailored support through the programme and migrated to Xero accounting software.
Tinyiko Mhlari, one of PTSM’s two co-founders, recalls PTSM’s situation before the programme: “When we decided to apply for FXPAP our business was struggling. We had poor collection methods, poor staff morale, and we didn’t have the client base we wanted. We were desperate for some direction, and we were glad to be accepted.”
Phuthanang Motsielwa, PTSM’s other cofounder, describes the mentorship process and the difficulties in shifting mindset: “The programme was intense. At the beginning we found it hard to shift focus to working on our business as opposed to working in the business. We’d done accounting for so long we’d forgotten we were a business! We’d all been through the chartered accountant process, so we weren’t strangers to hard work, but there was a tremendous amount of content, and it was consequential: we were working to improve something we’d built ourselves, and on which we relied.”
“We had weekly sessions with our mentor, and in each session, we were given a task to complete for our next session. We also had monthly four-hour boot camps. There were moments when I just wanted to send our mentor a message saying it was too much, but he held us accountable, and I’m very grateful. He cared about us as people as well as the business. We’re still in regular contact with him!”
Mhlari recalls that an early discussion within the programme proved foundational in shifting the focus of the business: “The single most important activity that we undertook was defining our purpose. It turned out that the way that we had been seeing our business was totally different to how we should have seen it. We saw ourselves as compliance officers, and as a result the clients we predominantly attracted were those looking to get out of a fix, with little interest in a long-term or proactive relationship. As a result, we, and our team, were constantly frustrated.”
“What we actually wanted to be doing was to work productively with businesses and help them succeed. Once we were able to agree on that core purpose, we were able to communicate it clearly to our internal team and to the market. Suddenly we knew where we were going, and more importantly, why. As a result, we got buy-in and commitment from our staff and began to attract clients whose needs were better aligned with our strengths.”
Motsielwa describes the impact of that shift in mindset: “Focusing on our purpose didn’t just help with our clients, it helped with our staff. Our staff morale improved after we involved them in decision making to a greater extent, as did the transfer of skills through the company. After each session with our mentor, we’d go back to the team and debrief them. They began to feel they were on the journey with us, and to take ownership of their roles. Before that shift we had struggled with delegation and had become overwhelmed by our workloads. Today I’m grateful for the team we have. It’s been wonderful to see the change in the firm from how it was three years ago.”
Finally, Mhlari reflects on what it was about FXPAP that drove such tangible impact: “FXPAP was not the first programme we’d enrolled in, but it was the most effective. I think this was due to a couple of factors. Firstly, the commitment of the partners. FXPAP is not about giving a business funding and walking away. It’s about a commitment to seeing a business change and succeed. FNB, Edge and Xero had a common purpose and held us accountable to that purpose. Secondly, the content and tools provided were exceptional. We have regular sessions with our Xero account supervisor, and we’ve become confident in the system. Our staff have become advocates for Xero software.
“Finally, we were able to meet people who inspired us. Through the programme, and at events for participants hosted by FNB, we met people whose attitude and vision prompted us to do more. Hearing a successful businessperson talk about the mistakes they made, and what they learnt from those mistakes, has been inspirational.”
Today, PSTM is a fully digitised practice with improved debtor management and staff morale, new customers, and reduced human resource risk. Revenue grew by more than 200% while PSTM participated in the programme and profit grew by more than 3 000%, driven by automation efficiencies and accurate pricing.
Lowe concludes: “It’s clear that the pilot programme was able to achieve tangible impact in these firms in line with our vision, which has positioned us well to continue the programme and reach more firms. As the programme evolves, we hope that practices will achieve increased efficiencies from leveraging digital technology in the future, sustained growth in client base, revenue and profit, improved business sustainability, maturity, and the ability to create and sustain jobs.”
The FNB Xero Programme for Accounting Practices is currently in its second year, with 14 accounting, audit, tax, consulting advisory firms participating.
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