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
- I am Desmond Msomi, a practicing chartered accountant in South Africa and CEO of an auditing firm known as Ngubane & Co.
- Growing up, Amatikwe, in Inanda a semi-rural area though quite advanced, the ravages of apartheid ensured that people in that area did not progress.
- Fast forward, after completing my B.Com, I started my articles with Deloitte and later qualified as a CA in 1992.
- In 1995, I resigned from Lever Brothers and joined Mr. Wilfred Ngubane to start an Auditing firm from scratch.
- An optimistic by nature the risk paid off and today the firm has 7 offices in 6 provinces in South Africa with about 260 people including 16 directors.
- Here is my story.
Back story: Deciding to be a CA
My mother was a privately-paid teacher earning R11 per month when I started school in 1968.
I remember as kids my mother showed us (my sister and me) graduates wearing gowns saying ‘those people are highly educated’. It, therefore, became my ambition to wear this funny looking cap and coat.
As expected, I started giving my best at school and was always in the top 5. (I always had this drive to achieve, mainly to please my mother who had struggled alone to get us to where she could afford.)
After my mother managed to save sufficient funds she enrolled me in a boarding school. This was a remarkable turning point in my life.
I found Dlangezwa High School to be a melting pot of young people from all over South Africa. I got a great experience and knowledge which I would not have gained otherwise.
Our Accountancy teacher used to talk about this "B.Com" which could enable us to be accountants for big companies.
I also heard the term CA for the first time and was told that it was very difficult to pass...it was here that I made up my mind to become a CA!
Challenges on the way
Fast forward, in grade 11, I scored 98% in Business Economics and had the highest in Maths with 82%.
When it was time to apply for University, I applied to the University of Cape Town (UCT), and when I informed my mother she nearly fainted as there was no money for me to go to any university! (University is very expensive in South Africa.)
I told her I will get a bursary when I get there. Unfortunately, the late Mr. Hartzenberg who was the then Minister of Education did not give me consent to study at UCT!
What now? The next option for me was - The University of Fort Hare.
I got an acceptance letter and looking at my grade 12 (matric) results, I was awarded a Johnson & Johnson bursary of R1000 per year for three years.
It was at the University of Fort Hare where I actually got to know more about CA.
I remember one of our professors telling us that there was only one Black African CA - Prof Wiseman Nkuhlu, that day, I swore that I was going to be the second one!
Struggling to find articles training
After graduation, I struggled to find articles training. So, I ended up being a teacher at Hlahlindlela High School and later went on to be an accountancy trainee with Ethekwini Municipality.
Eventually, when I started articles in 1988 with Pim Goldby (which later merged with Deloitte, Haskin & Sells) I was the only black trainee who was recruited in that year. (I have to mention that it took me 3 years to get articles!)
Needless to say, clients were in for a shock as they thought only white people could audit. There were a few clients I was never assigned to because of my skin color!
I did not fight instead did my job as I knew I was far good than the way I was treated.
In January 1991, I completed my articles.
I then joined Lever Brothers in July.
I soon appeared for the remaining CA exams and passed in 1992 in the second attempt...a dream come true!
Change in plans: Quitting a well-paying job and starting a CA Firm
After I qualified as a CA, I got a lot of offers but I had envisioned myself getting into a very senior position within Unilever Group and turned down those offers.
My four years at Lever Brothers was a good management experience that I will cherish for the rest of my life. (I was promoted twice while sitting on the same desk with added responsibilities.)
In 1994 while working for Lever Brothers, I got a call from Mr. Wilfred Ngubane. (We did not know much of each other, just met a couple of times at UNISA.)
We met and he came up with the idea of incorporating an Auditing firm in early 1995.
We did a budget and a cash flow forecast which seemed very promising. Also at that time, South Africa was ushering in democracy and the government had begun putting in place policies to encourage economic transformation.
I had a positive feeling that this would open doors to prove myself in the auditing field and in August 1995 at the age of 33, I left a well-paying job at Lever Brothers and joined Wilfred to start Ngubane & Co.
(I did not tell my wife that I was not going to receive a salary for another five months and I was able to hide a financially stressed face.)
Initial roadblocks of starting a firm
Wilfred had launched the firm in March'95 on Smith Street in Durban and I joined in August 1995.
At that time there were two trainees and a receptionist/secretary. They used an old computer which Wilfred brought to the office. I remember getting my own desk as well!
The office was quite small but suitable for our purposes.
Our initial strategy was to target the public sector and parastatals (as we were aware that the private sector was mainly the market of the medium to large accounting firms.)
In the beginning, it was very disappointing as all the work which you believed was there suddenly became difficult to secure.
I had some money saved up but it was not enough as we started to battle after five months.
I am not sure whether it was naivety or just a gut feel as I was more hopeful than Wilfred. I used to tell him that things will be fine but the evidence was saying something else.
Finally, our persistence paid off when in 1996 we secured a meaningful assignment at Ithala Development Finance Corporation Ltd and at Transnet.
These assignments gave us a breakthrough for us to engage qualified staff.
We built our foundation from there and we never looked back. We grew from 1996 and we were able to open a Johannesburg office in the year 2000. Thereafter we set up satellite offices in Limpopo, North West, and Mpumalanga provinces.
Our Durban office grew from three employees in 1995 to about 50 in the year 2000.
In 2001 we moved to bigger and better offices on West Street. We had a few hiccups but life was good.
Losing our biggest client and starting all over
Our client base from 1996 to 2006, mainly consisted of Transnet divisions. Our share of the work and the audit fee as the consortium increased which provided us with more income. There were very few divisions of Transnet at that time I was never involved in.
However, the hope of growing even bigger faded after we lost the Transnet audit in 2006.
It was a big struggle to start again however, we had built a client network and we had senior employees who could do the work properly.
Cash flow became a big challenge at that time as the clients we had taken longer to pay. Banks at that time were quite reluctant of giving us good facilities.
We decided not to give up and kept going.
As of today, the firm now has 7 offices in 6 provinces in South Africa with about 260 people including 16 directors, and we still have a long way to go!
Timeline of our journey
- The most difficult year as there was no income literally but we had to pay salaries and rent.
- We had only two bookkeeping clients and we got the third one when I joined.
1996 – 2000
- These were great years when we auditing Ithala and Transnet and we were able to grow our Durban Branch from 3 employees to about 50.
- We opened the Johannesburg office with satellite branches.
- We even opened Pretoria and Cape Town branches which we later closed as no work was secured to justify the costs we were incurring.
2001 – 2005
- We kept on growing the firm by adding to our client portfolio.
- Managing growth was not easy such that our Johannesburg office experienced a high turnover around 2005 The management of that branch kept on changing such that Wilfred had to move to Johannesburg to maintain a certain level of stability.
- We set up an Asset Management Unit and we got a big assignment (through a consortium) in KwaZulu Natal Treasury to set up our fixed asset management system.
2006 – 2008
- We lost our biggest clients -Transnet and Ithala during this period thereafter we experienced high staff and partner turnover, especially in our Johannesburg office.
- We were not securing meaningful assignments. We set up a Forensic Investigation Unit
2009 – 2014
- We kept on growing and improving our turnover.
- Unfortunately, our Durban office was burnt down in September 2012. This was due to the forensic work we were involved in at the time. We had to move to another floor of the same building.
- The license of being the only supplier of the fixed asset management software was cancelled.
- We celebrated our 20th anniversary in Johannesburg where the then Hon Minister of Finance, Mr. Nhlanhla Nene was a guest speaker, and also in Durban where the guest speaker was the late Mr. Don Mkhwanazi.
- As always we kept growing.
2016 – 2018
- We kept growing.
- We again experienced a departure of some directors in the Johannesburg office.
- The positive aspect is the increased participation of women in our Executive Committee which is more than 60%.
- Both Johannesburg and Durban offices have women as managing directors to prove the point.
- This year saw the retirement of Mr. Wilfred Ngubane and I took over as the Chief Executive Officer, which is a turning point.
- We had a revenue target we set to meet by the end of 2020, unfortunately, we are not going to meet that.
- Overall I am happy with the resilience shown by our practice. We were able to deliver to clients under the circumstances.
When I left Lever Brothers, my director sat me down to understand why would I leave a nice office, a well-paying job with a company car to join a firm with no income!
He said if it fails you will need to return to the corporate world and I told him - "I will not come back because we will succeed!"
Almost 25 years later, I can say that the road has not been easy (as we thought) but one is left with a certain level of satisfaction that the firm is still there and it is becoming stronger by each passing day.
So, all I can say is BE BRAVE. BE BOLD. HAVE INTEGRITY.
Now It's your turn...
Have you considered starting your own? What is stopping you?