Entrepreneurship is increasingly viewed as a desirable career option in Botswana and at the same time, the accounting profession is undergoing rapid development. What can these two fields offer each other?
As Botswana’s business landscape evolves, entrepreneurs will increasingly value accounting skills and vice versa, say academics and researchers.
Across Africa, the appetite for entrepreneurship is increasing. The latest Global Entrepreneurship Monitor (GEM) report notes that in Botswana, the rate of perceived entrepreneurship opportunities is at 57.8 percent, ranking 7th out of 65 countries. At the same time, 74 percent of the adult population aged between 18 and 65 believe that they have the ability to start a business, ranking the country 4th. Total early-stage entrepreneurial activity (TEA) comes in at 33.2 percent, which is the third highest in the world.
However, there is a lower rate of established businesses, those that survive longer than three-and-a-half years, suggesting that entrepreneurs are struggling to keep their companies going. The established business rate is just 4.6 percent, ranking 47th – which means entrepreneurs have some distance to go before they can start to impact the country’s high unemployment rate.
Justin Kyriakou, International Development Manager for the Association of Accounting Technicians (AAT), says that it is now well established that a stronger financial skill set could help Botswana’s entrepreneurs break through this three-and-a-half-year barrier.
“Having financial knowledge goes hand-in-hand with entrepreneurship, though too often entrepreneurs lack even basic financial savvy,” he explains. “If you are running your own business it is important that you know how the business is doing, what your incoming and outgoing payments and cashflow are, and are able to plan your finances for the future. Having the financial skills to be able to do this, or hiring someone who does, helps entrepreneurs have a better chance of success.
“As Warren Buffet said: ‘Accounting is the language of business’ and he knows what he is talking about.”
Internationally, accounting skills are in demand and financial professionals play a disproportionate role in shaping organisations and economies. In October alone, Economia listed several accounting and finance professionals among its top “movers and shakers” worldwide who had moved into top positions in business. However, it is not just in large organisations that accounting skill can make an impact. A recent study found that accounting skill contributed to entrepreneurial performance and recommended that entrepreneurs should “embark on capacity building in accounting skill” as they were “agents and drivers of development in most economies of the world”.
Entrepreneurship specialists Acton recently listed three main reasons accounting skills were valuable to entrepreneurs in Forbes. These were: firstly, to make more accurate predictions; secondly, to make more effective commitments of time, energy and money; and third, to measure and reassess progress, so that profitable behaviours could be rewarded, progress could be reported accurately, and direction could be changed when necessary. “Aspiring entrepreneurs must learn to grasp accounting and finance tools, rather than merely develop the ability to regurgitate formulas and reproduce financial statements in carefully controlled environments,” they argued.
It’s also important for entrepreneurs to understand what their own accountants are saying to them, argues consultant Michael Burdick in Entrepreneur magazine. “If you’re a founder or CEO you should never leave ‘the numbers’ to your accountant. Running a business without a good grasp of accounting means you’re flying blind,” he says.
But while entrepreneurs can undoubtedly benefit from an injection of accounting skill, accountants also have something to learn from entrepreneurs.
Against a backdrop of a rapidly changing global landscape, the accounting profession is gearing up to face significant changes in the next three decades including the rise of ever-more sophisticated technology, rising regulation and greater public pressures and stakeholder expectations around social and environmental considerations, says Kyriakou.
These pressures open up new possibilities for accounting technicians and other professionals – but they will need to draw on the entrepreneurial mindset to take advantage of these. As Burdock writes: “We’re living during a watershed moment for accounting, which creates repercussions throughout the business world. It’s the end of accounting as we know it, but entrepreneurs should feel fine.”
Entrepreneurs are better at taking risks and also focus on creating solutions the world needs and how they can deliver those solutions, rather than just on ‘running a business’. Writing in Accounting Today, Melinda Crump argues that risks should be viewed as an economic positive since that is how profits are produced and how growth occurs and that the entrepreneurial accountant should spend his/her time primarily innovating new services, business models and team structures in order to stay relevant in the changing world of work.
“Accounting professionals are increasingly being expected to look beyond the numbers, which means they need to be equipped with a broader skill-set and mindset to be successful and to stay relevant,” says Kyriakou.
He adds that there is a special magic in the relationship between accounting professionals and entrepreneurs and that the combination of their skills is a powerful force for unlocking economic growth.
“If accounting and entrepreneurship continue to evolve as they are, the resulting knowledge sharing could have a long-term positive impact on Botswana’s economy,” he concludes. “Finding ways to foster this collaboration should therefore be a priority for educators and policy makers alike.”
Issued by Rothko on behalf of the AAT.