How this newly qualified CA declined several job offers & co-founded a thriving CFO service company in Capetown

The Finance Story

 

  • Meet Louw Barnardt, a CA(SA) and entrepreneur based in South Africa. 
  • Straight out of articles, Louw co-founded a company with his friends to offer hands-on financial expertise and technology to help start-ups navigate the complexities of scaling up.
  • In 2013 they started at an incubator with only two desk spaces and in just 7 years they built a thriving company with a 30 member team having more than 70 years of industry experience.
  • Was it an easy road? Not at all. It was a real tough call to give up CA Salaries that they could otherwise have earned.
  • Find out how Louw and his team built 'Outsourced CFO' from scratch. 

The dream to be…

My dad is a chartered accountant and growing up, he was the partner of the entrepreneurship division at PWC in Kimberley.

My parents also ran a property business as a side-hustle thus business, entrepreneurship and real estate were dinnertime conversations growing up.

All of this created a deep desire in me to be an entrepreneur someday. In fact, ever since I was 6 years old, I wanted to be an entrepreneur.

Keeping my entrepreneurial pursuit in mind, I planned my career ahead. To me, the chartered accountant designation is the best skill set that a businessperson could acquire.

So after matric, I packed up and left for Stellenbosch to enroll for BAcc. This was the start of my CA(SA) journey.

Identifying a gap in the market during articles 

During my first year at university, I met both of my current business partners - Dana Pretorius and Jacques le Grange.

Between the four years at Stellenbosch University and the three years of articles at Baker Tilly Greenwoods, a mid-sized auditing firm, we got to know each other pretty well, to say the least. 

In our third year of articles, the idea of starting our own business became a serious coffee break topic. A pivotal moment was when Dana and I attended our first-ever Startup Grind event in Cape Town.

These events comprised about seventy or so entrepreneurs, who would all join in a fireside chat-style interviews with successful start-ups.

I remember meeting engineers, software developers, designers, and all sorts of startup folk – but not an accountant insight. And it hit me – who helps all of these entrepreneurs with their finances?

A market need clearly existed but we needed to figure out how to address it. 

What next?

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Co-founded CFO Services revolution back in 2013

In 2012-13, we did a lot of research and came across Bandwidth Barn, now one of the leading ICT business incubators in Cape Town.

We shared the idea with them and they accepted our concept. This enabled Dana and me to start building the business model in the evenings and on the weekends in between finishing up our articles.

The offering we wanted to create was one of adding top-end finance expertise to small and mid-sized companies to help them create the scalable financial infrastructure and strategies that they will need to realize their vision. 

We’ve seen many examples in our articles of mid-sized companies having achieved massive, continued success after having brought a CA on board. But when you’re early into growing your business, not everyone can afford to hire a CA.

That is when we decided to introduce ‘CFO Services’ into the market, not having found anything like it in SA at the time. This fractional CFO offering was what we led with.

With a burning desire to build a company that could help more entrepreneurs succeed through sound financial management, the idea of 'Outsourced CFO' was born in 2013. 

Bootstrapping our business as CA freshers

By now we were sure that we were headed in the right direction. We shortly qualified as CAs and knew what we wanted.

It was a really tough call, giving up the ‘CA salaries’ that we could otherwise have earned. But we knew that this was our calling and we had to make it work.

As newly qualified CAs, we had just about no savings. But we had time and ambition and a vision bigger than ourselves (and luckily a fair bit of youthful naivety about how hard it is to start a business).

Fortunately, I had a small property investment that we could leverage. This, coupled with paying ourselves worse than articles clerks in the early years and some grace like free office space at the incubator, gave us just enough legs to start moving.

Also Read

This CA from a semi-rural area in South Africa quit his well-paying job and built a thriving 250+ member practice: the story of Desmond Msomi

 

Convincing the first few clients to take a chance on us

The first clients will always be the most difficult. You have no track record, no brand, no case studies, or referrals. It’s a graft. Starting in a collaborative space where you get ample opportunities to meet new people and practice your pitch is imperative.

Conversations over coffee in the co-working space where we initially set up and some out-of-the-box marketing helped us overcome the hurdles of convincing those very first clients to try us out.

At the time, the concept of part-time CFO services was very new to founders, so a lot of educating the market needed to happen.

Facing challenges through building resilience

Building a company from the ground up is really, really hard. 

An incredible array of skills unrelated to your background is required. You need immense focus and discipline.

Some of our biggest mistakes relate to what we call ‘shiny objects’. Opportunities that sound big and exciting, but ultimately do not align with what we do directly.

(By now we have learnt to spot these from a mile away. Heavily reliant on external partners and forces, such projects are never as successful as when you focus each ounce of your energy on building your core business. It is imperative to know what you want to achieve with your company – and then say no to anything and everything that does not directly benefit that path.)

Growing the business

One of the early lessons we learnt was that a CFO cannot do their work without quality underlying accounting information. And most small businesses had horrible accounting.

About a year into the journey we realized that an accounting offering will be needed to support the CFO team. That’s when we stumbled upon cloud accounting and how the world of accounting was being revolutionized through this. Today, our cloud accounting division makes up close to half of our business. 

Today Outsourced CFO offers an array of services and has a team of 30. Clients were no longer start-ups, but scale-ups and mid-sized companies and groups.

Services we offer 

1. CFO Services

  • We offer clients one of the three CFO Packages, called Performance, Growth and Eminence. 
  • Clients can have access to advanced financial modelling, cash flow forecasting, board reporting capabilities and much more – without the massive expense of employing a full-time CFO.
  • Our CFOs also often get involved in helping companies prepare for and navigate fundraising.

2. Cloud Accounting Services

  • Our Cloud Accounting Department helps entrepreneurs take the pain out of month accounting and tax.
  • Again, three packaged offerings called Accounting Lite, Intermediate and Advanced take care of all bookkeeping, accounting, reporting and tax needs of client companies.
  • We also do a large volume of complex Xero conversions (I’d argue that we are the best outfit in the world for this).

3. Automation

  • The last key element of what we do is automation.
  • Our Integrate Department helps business owners to automate not only finances but various aspects of operations.
  • CRM systems, workflow management tools, inventory systems, e-commerce tools and much more all get seamlessly set up and integrated with finance to help smooth over operations, making companies more scalable.

Timeline growing our business

Jan’2013 – 14

  • Our early years were spent on creating our offering and finding the first clients to test it on. 
  • We worked relentlessly and somehow managed to convince just enough people that 25-year-old CA’s know a thing or two about running private company finance.
  • By the end of 2014, the team was about eight or so strong.

2015 – 16

  • Early in 2015 – getting dangerously close to the end of our ‘runway’, we managed to secure a contract with Microsoft BizSparks.
  • Here we got to work with the top 10% of these startups. This was a game-changer, not only in terms of earning stable corporate revenue but also in the experience our team gained.
  • Company valuations, VC investments, financial modelling, and all things finance for tech companies - This became an early niche.
  • Coupled with the introduction of fixed monthly retainers, paved the way for continued growth.

2017 – 19

  • Invested heavily in our ability to attract, train and retain top finance and accounting professionals. 
  • Started investing heavily in our own systems and processes, making sure that we can deliver quality, consistent service to clients.
  • Our CFO department and its team of CA’s had at this stage ‘seen it all’, gaining great market traction and a solid reputation.
  • We also launched a cloud systems integration arm, Integrate. 
  • Gained momentum and achieved 50% growth per year. The team reached 30 for the first time.
  • Clients were no longer start-ups, but scale-ups and mid-sized companies and groups.

2020 and beyond

  • 2020 was the ultimate curveball. Entire industries were crushed as the novel coronavirus gripped the world and its economies. A lot of clients suffered. A few closed down.
  • We planned for business as usual – it was everything but that! 
  • Our team made the switch to 100% remote work, which thankfully worked perfectly due to our cloud infrastructure.
  • Some local business was lost, but by grace, an influx of international business started flowing in, the likes of which we have not seen before.
  • We moved our .co.za domain to ocfo.com and started focusing to build a more globally relevant company.

Wrapping up…

Deciding what to do once you complete your articles is an incredibly difficult decision. It is the first time in this very structured path to qualify as a CA, where there is no structure, and you are told: "the world is your oyster!"

Where do you even begin? Luckily for me - I knew that I wanted to be an entrepreneur. This gave me some sense of direction.

I was also incredibly fortunate to have met such excellent business partners so early on in my career - this makes such a big difference!

My advice to you is simple, tune in to that voice at the back of your head and deep in your heart, that's kind of been telling you what you want to do your entire life, and start working towards that.

Lastly, don't be afraid to put yourself out there - you'll be surprised how quickly we adapt when we push ourselves.

Now It's Your Turn...

Would you take an entrepreneurial leap right as a newly qualified professional?

(Article edited by Catherine Belle Edmunds and image by Ankit Lodhi)

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