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Ep. 6: Richard Starkey - The Importance of Accounting in Entrepreneurship
July 08, 2019 | 20 Minutes
Richard Starkey, Managing Partner of CronosNow, shares his background and some of his personal experiences to explain why accounting and finance skills are so important to entrepreneurship and running a business. According to Richard Starkey, he has been "a serial entrepreneur" since his teenage years. So, as a business professional highly passionate about marketing, education, and productivity, he qualified as a Chartered Accountant a bit later in life to assist with his business endeavors. With a new appreciation for computer coding and automation, he believes in simple solutions that not only get results with bottom line profits and cash flow but ultimately also result in time and freedom for the business owner. Richard Starkey is someone who has interest in a number of startups, some successful and some what he refers to as "great life lessons along with some humble pie", but he explains how they all have taught him the value of thinking more like a “master designer” of the entrepreneurial machine, much of which is thanks to accounting and finance skills.
Contact Richard Starkey:
Richard Starkey's suggested reading list:
Richard Starkey's suggested reading list:
- Tim Goodenough: https://timgoodenough.com/
- Tim Ferriss: https://tim.blog/.
- Ray Dalio: https://www.principles.com/
- Adam Grant: https://www.adamgrant.net/
- Carol Dwek: https://mindsetonline.com/abouttheauthor/
FULL EPISODE TRANSCRIPT
Welcome back to Count Me In and thanks for joining the conversation about all things affecting the accounting and finance world. I'm Adam Larson and I'm joined by my cohost, Mitch Roshong and today we have a very interesting episode to share with you for this week's conversation. Mitch, you had the opportunity to speak with the managing partner of CronosNow Richard Starkey.
Yes, I did. Richard Starkey is what he refers to as a serial entrepreneur since his teenage years. His passion for business and education came across very clearly and we were able to talk about how important accounting and finance skills are to starting and running a business. He is also a great proponent for lifelong learning and share some valuable insight into how professionals can learn and develop through their careers. I enjoyed the conversation and learned a great deal from Richard and I hope you do too.
So Richard, please tell us a little bit about your background and how you ended up as the managing partner at Kronos Now.
I started being an entrepreneur quite early in life. In my late teens, I started up a small kind of publication and I was actually riding horses for as a professional show jumper and realized I needed to make some money. So you know, started a couple of small businesses, nothing too sophisticated. And as I kind of got on in in my career I realized I needed a strong kind of finance background. So I studied accounting part time while working and running some small businesses and I did my accounting degree. And during that process I wandered off and became an operations manager for a large logistics firm, got into corporate finance and then really felt the shortfall of my technical finance knowledge. So then continued with the rest of my accountancy qualification or part time in my late twenties, actually. And once I kind of finished the qualification, I went back and did my internship and articles in my late twenties. I landed up in academics teaching financial reporting as my, you know, as my real teaching subject. And from that I grew into this quite a bit of an expert in financial reporting and later in corporate finance and a deal structuring for mergers and acquisitions, not a deal maker, more a, you know, a technical accounting and tax structuring kind of guy. And through that period I really just ran with academics, you know, sometimes more academics, less consulting, sometimes more consulting and less academics. But through that process a couple of years ago we did an education corporate finance deal where we brought and structured a couple of education businesses around the world. And by accident, you know, one of those deals didn't go so well and I landed up kind of holding the reins, temporary CEO for what was supposed to be for, for an interim period and landed at actually loving it and moved from technical accounting finance guy into CEO of an education business for good three and a half, four years and had to learn all the skills around strategy, building a larger systems and marketing. And in that process I had some wins, some losses, but I really fell in love with the idea of automating and developing processes from the front end marketing all the way to the back end accounting and last year off to some, you know, personal health issues in our family. We sold the business to take some time out and during the end of last year I realized I enjoyed the entrepreneurial space, not as as an entrepreneur but in helping entrepreneurs and that's where Kronos Now was born. And Kronos Now services and looks after my own entrepreneurial and my wife entrepreneurial activities from a systems accounting and finance perspective. But also we act as an accounting firm that we like to do, say there's more than accounting. And it's been a good, you know, first year and we're learning and helping small to medium entrepreneurs are doing initially their accounting in the most automated and efficient way possible, but then building that out into the rest of their systems and, and processes.
Well, that's great. Thank you for sharing that story. For someone who, you know, doesn't come from a necessarily traditional accounting background but you certainly put in the time with your studies and they chartered accountant. How do you believe that piece of your background has helped you in these executive roles that you assumed and then started.
Such a good question. The reality is my accounting finance and specifically the auditing side has helped me understand the, the rules of the business games specifically around business process and risk. It has been a challenge getting out of just the process and a risk mindset when you start moving into the CEO and entrepreneurial state that understanding how businesses can build off of a good process is everything. That's the foundation, right? And quite honestly the auditing training has been exempt, just exceptional in supply me that skill sets.
Well, as you came from academia, right? And you kind of combined all of this accounting background and learned kind of on the go. How would you recommend, or how do you kind of see the needs of accounting, education and accounting preparation changing based on, you know, where today's business world is, as you previously mentioned, automation.
Oh, accounting and systems or computers and AI. I think, you know, the level of understanding of computer systems and even programming for accountants is going to need to increase drastically over the next five to 10 years. And that's the one skillset I miss all the time. I've always got to rely on a program that even to do basic integrations and, and system checking.
Now my next question is kind of what's next, right? I mean, you are in academia, you talk about educating students, educating entrepreneurs, assisting accountants today. You know, once you have that education, you have your qualifications. how do you progress through your career? What are the next steps?
I've mentored quite a few of my students as well as my previous financial managers, et cetera, on this kind of journey. And I see two broad forks in the road at some point, you know, I went through both of them so they don't have to be, you know, one choice forever. It can actually be, you make one choice now and five or 10 years locked on the line, you make a different choice. But I see the full calls, you know, one move career wise being in becoming a specialist. So he became a US guy and apply for his financial reporting specialist, the tax specialist, a system specialist, IT auditor. That specialism is, you know, you become the smartest person in the room on a small area of knowledge and you get paid very high fees to do that work. Very rewarding. I made a lot more money doing that than I ever have as much veneer. But hopefully that'll change the other fork in the road is to become a manager and a leader. Right. And those are two different things and something which we're not trained very well in as accountants. So, and that often starts as we start managing your finance team. You know, you stop being the person doing all the accounting work and you start managing an audit team or a team of accountants and managing a team requires us to learn about leadership and that can ultimately also evolve into moving out of the finance function. Yeah, the, I still believe accountants and finance professionals make the best chief operating officers and best CEOs. Well, we've got to shift and really learn how to grow human talent. And that requires you to become a coach. You know, it's so much more than just managing, managing is just lab deadlines and tasks and crack the whip until it happens. Whereas leading as understanding people, how do you grow them, how do you get the motion on them and how do you do that sustainably? That's been the area I've been really short time. And with that move into the CEO entrepreneur side, I'm also realize that as accountants we are very focused on the, no you can't. This is the risk we could at identifying risks. Whereas we, we actually have the best opportunity because we understand the rules and the risks to look for opportunity. So that mind shift to look at your risk not as a no, but as a opportunity. How do we mitigate their risks? How do we overcome that risk? And I found that skillset needs a marketing skillset. I'm working more and more with young accountants who qualify and they, this is their first journey and being entrepreneur, they want to get out there and start their own business. So I want to jump straight into the leadership straight into the innovating strategy space. And whether it's a small business opening a restaurant or you know, starting a tech company with some friends. The reality is we need to learn how to do marketing. And the cool thing about marketing these days is data-driven. It's all actually reporting it's inputs. There's processes, it's a science. And I'm still learning, I'm still a little confused to still feels like dark magic at times, but it actually suits our skill set very well now it's not about these abstract branding and imagery and perception issues anymore. There's real data, especially with online marketing world. And I think accountants, once they get into that skillset and learn some of the basics can actually Excel because we understand process inputs, controls, process output, and we trained on that. So if you, you know, you're doing accounting and you want to get into your own business as quickly as possible, we'll start today, you know, start a little blog, see if you can drive traffic to it and start a little drop shipping store, find a product, repackage the coffee and sell it, you know it doesn't have to be your forever, but you can start learning how to do marketing today while you're still studying or while you're in your accounting role.
I'm curious now with all of that knowledge and those recommendations, how have you seen the technology really play a role in your businesses? Particularly what kind of efficiencies have you realized at Kronos Now thanks to automation?
So I'm gonna start with the boring kind of numbers, outputs, you know, the amount of time span driving down costs. Actually in my previous business, senior education, you know, we had 300 staff across five countries. And in that space, you know, we took three years and we took a business that had full five, six different systems and created and efficient automated and interlinked system, which are very smart IT guys. There were partners in the business called the cubits where we literally reduced workload on processing a student's registration, ongoing operations, you know, their submissions, their interactions, their invoicing, their collections, all of that process that was previously done manually. I would say we reduced the human interaction on a student's lifecycle, a student being inclined by a 60, 70%. And that's just the one for one.Where you look at, there's additional workload created a, because every time there's a human capturing an invoice we've already got information already captured on the CRM, on the operating system. So you duplicating data capture and you also making errors. So there'll be reduced to 60, 70% just on a normal work. So the time requirements by humans, we actually would use to buy more because that doesn't take into account the amount of time fixing, reviewing, fixing. Again, human errors. So that is my personal internal experience. Kronos Now is currently working on a company here in South Africa that's a manufacturing organization and we have literally in a staff of 30 people, of which six of them are Edmund staff by setting up a one centralized database that drives all the systems. We've got rid of all the manual sales orders, invoices, quotes, we've automated the customer order that goes to a production order that automates the invoice, the accounting system that's used the zero pools, the bank statements automatically and matches the customer receipts against the invoices, which feeds back to the production orders and the shipping documents. All of those steps used to be manual, so lots of errors, you know, and lots of time wasted. We've reduced the requirement by, you know, the company's requirement by three or four Edmund Clark's already. Now your company's great. It hasn't retrenched. It's kept those people to reallocate them to other resources as we grow the business. The softer side has been the managing people, you know, with automation we have real time data. We can have kiss dates of accountability and KPIs for people. And that's not just the crack the whip, but it also identifies where people need training, when processes need to be improved so that people are more effective and efficient and managers have the proper tools to identify shortfalls for either training or disciplinary action. So the benefits are so much beyond just the, what you can quantify in a spreadsheet. And all of that also then leads to what we see specifically with Kronos Now clients now is that the small business who's run by the founder, these are businesses that you can picture or less than 5 million turnover, less than 40 staff that business owner has, is the controls on the business, right? They live in that business. They check all the bank statements every day. They have to sit on the production team by giving them proper data that they can rely on the controls and the data that's been fed back to them in your real time as well as error reporting. So they don't have to check everything. The system will thread errors and inform them, proactively send me those founders start getting freedom from their business.
For those who are maybe just starting in their careers maybe progressing through their careers or want to start their own business. What advice do you have for these accounting and finance professionals in today's industry? With this automation available to them and the skills and competencies needed? How would you recommend they progress into their futures?
I think the first thing is that they need to read you know non finance stuff. They need to read from good authors in order to figure out what they value. The long gone are the days where you went and worked for a company for 40 years and you were happy with the paycheck, right? And the stability. Stability is a bit of a false TV thing, right? You need to be adaptable. You need to, you need to be happy in what you do. So what I found most of my accounting staff, most of my accounting students, and it's a big generalization stuff to give me an advance, but most of them really benefit from reading as a starting point. Carol Dweck book called mind States. So accountants are generally drawn into the accounting profession because the a type personalities and it just fits well, right? And that is changing granted, but it's still a big number of people who are drawn to the accounting profession. And that fixed versus growth mindset is quite important for all of us as finance professionals to understand and to start working towards a growth mindset. And with that being said, I think the thing is to learn, so let's face it's accounting. You land up in some type of internship or apprenticeship that you feel a bit better about sometimes. Now you feel you're underpaid, overworked, the work isn't as exciting as you would think it might be. But in accounting you're exposed all these systems and processes and other managers or the businesses, most inner, most finance details, which other people don't get exposed to. So you can learn in that process from the business managers, from the entrepreneurs that are running the businesses that you do the finances. So get down and read, trying to figure out what it is you want, post your qualification. And that I find comes from looking at your own principles and your own values. No. Are you wanting to be a specialist or are you wanting to be an entrepreneur? Do you want to, you know, go into a big corporate, do you want to go into a small business where you're your own boss? And again, read, read, read. So the, the books and people I suggest are Carol Dweck. As I said, I'm a big fan of Adam Grant. Yeah. His book give and take was quite, you know, quite fundamental to me as well as in his new book on entrepreneurs, which is a great study saying entrepreneurs actually more successful if they're not Cowboys. They're very risk averse people, but then manage risk really well in their personal lives. And then Ray Dalio, once you get into a management position, the Ray Dalio book on principles was really good. So I think read, read, read, get exposed and listen and learn to as many businesses, entrepreneurs, or people that you want to be like Identify the people who you see you would like to become more like. Align that with your principles and values and see how you can serve and give into that space because the world is much bigger than spreadsheets and financial statements. That's your starting point. Great starting points. Most of the rest of the world was confused by those, but it's a starting point to your career, not the ending points.
This has been Count Me In, IMA's podcast, providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you liked what you heard and you'd like to be counted in for more relevant accounting and finance education, visit website at www.imanet.org.