How Marnus Broodryk Became a Self-Made Millionaire At 24
Not only has the 31-year old entrepreneur achieved what he set out to do, but he was a self-made millionaire at 24, the youngest investor on South Africa's Shark Tank, and an entrepreneur who is shaking up the entire accounting industry. All without taking a single cent of debt.
Marnus Broodryk was a self-made millionaire by the time he was 24. He’d arrived in Johannesburg two years earlier in a rented bakkie with all of his possessions – a bed and R37 000 in the bank.
While doing his articles at an accounting firm in Harrismith, he’d travelled often to Sandton and loved it. But he also knew there was no way he could afford rent in Joburg’s economic hub.
His only other knowledge of Joburg and its surrounds came from watching Carte Blanche every week. The team said they were broadcasting live from Randburg, so Marnus found a flat near Randburg.
And that’s where he set up The Beancounter, a revolutionary approach to accounting services that was quite literally going to change his fortunes.
Starting at the bottom
“There wasn’t any money for me to study,” Marnus says. “I was going to need a job to pay for my degree if I wanted one. I’d read an article in Rapport that CAs were the best paid professionals, so I applied for bursaries and internships at local auditing firms in Harrismith in the Free State, and applied to study accounting through Unisa.
“A local auditing firm offered me a position to do my articles with them, and that was how I got my degree — I studied through Unisa and worked at the auditing firm, earning a tiny salary and doing my articles. And I worked hard.
“Every day, from 5am to 10pm I was working for this terrible salary, generally in the filing room, and studying at night. I did that for four years.
“I still have memories of climbing up the ladder to the top files in this windowless room and having a little cry to myself. I was overworked, exhausted and earning almost nothing, and my mates were all loving their university lives, going out partying every night, sleeping until 10am and attending a few lectures. It was tough.”
It was also incredible training
Not only did Marnus learn discipline and discover the ability to suffer short-term for a long-term goal, but by 22 he had completed his degree and his articles, and he was ready to start building his career.
“I knew two things. If I died that day my life would have been wasted in a file room. But if I didn’t, if I could put those skills to work, then I’d have a pretty good life.”
But he was also having a crisis of faith in what he’d chosen to do. “In my last year of articles I was part of an auditing team that was heading up a big Afrimat audit as part of their bid to list on the JSE. I realised that I hate audit procedures. I wanted to add value to companies, and I just didn’t see how audits did that.”
It was this realisation that spurred Marnus into action. The idea for The Beancounter was forming — an accounting practice that would help SMEs build bigger, more sustainable and profitable businesses — but he also knew that Harrismith wasn’t the right place for his business. And so the small town boy packed up his life and moved to Joburg.
Start-ups, mistakes & finding success
“I had R37 000, which was a small window. I needed to start earning before my money ran out, so the most urgent need was a client — just one client.”
Marnus’s vision was simple. He wanted to take the boring out of accounting. He wanted to give business owners real information from their financial data that would help them to assess which business units were working, which products or services were higher earners with better margins, and where the opportunities for greater growth or cost savings lay.
The problem was that he was a very fresh-faced 22 year old. So much so that when he arrived at his first client — a referral from a client he’d serviced in Harrismith — the husband and wife team looked past him and asked if his father was joining them.
“They actually said to me, ‘are you Marnus? Is your dad also Marnus? Is he coming?’” he laughs. “I had to convince them to let me in and give me a chance.
“If I opened the business today I’d have online advertising in my corner; clients would find and come to me. I wouldn’t be this kid knocking on doors.”
But that’s what Marnus had to work with, and so he single-mindedly went out and networked until his shoes were worn down.
“I always felt awkward — you’re networking with people you don’t know — but I did it. I recognised how important networking events were, and even though I was uncomfortable, I pushed myself out of my comfort zone and did it.”
Slowly, Marnus built up his business, and The Beancounter started gaining traction — which is of course when the young entrepreneur started taking his eye off the ball, as so many business owners do when they get their first taste of success.
Delegate, you can’t do everything yourself
“At first I thought I could do everything myself,” says Marnus. “It’s a pretty normal problem with entrepreneurs I think. You hire juniors because you do need employees, but you always feel you can do everything better.
“You eventually realise you can trust your employees to get things done, but that brings a different problem — you take your eye off the ball.
"By 2010 I was hiring properly. All of my employees were millennials — I’m a millennial and I didn’t feel comfortable hiring people older than myself, I didn’t see how I could manage them, plus I understood millennials.
“That was all fine. The problem was that I was in my early 20s, I’d had some success with The Beancounter, and I started to think that I could solve the world’s problems. I started feeling invincible. And so I left my employees to run The Beancounter, checking in through once-a-week status updates, and spent four years focusing on other projects.”
Those projects included designing an app and then launching an app company, starting an IT consulting business and becoming a Sage Pastel reseller, and launching a tech start-up called Virtual ID, designed to digitally capture all personal details in one place so that individuals could Rica and Fica themselves once, instead of with each individual company or bank.
Too many fingers in too many pies
“I also got involved in a frameless glass company, a construction company, and bought a vegan restaurant,” he adds.
“It was a good experience, and I was particularly proud of some of the individuals I’d helped during those years. I lent one construction worker R20 000 to start his own business, for example. Today he employs 200 people and has the biggest road maintenance contract on the N3.”
But by 2014 Marnus realised that although he was now involved in a number of companies that were doing reasonably well, were cash generative and turning a profit, none of them were shooting the lights out.
“The whole experience taught me that you can build five to ten average companies, but you can’t build a R1 billion business simultaneously with others — that takes focus and dedication.”
It was an interesting position to find himself in. Marnus had reached a position of personal wealth and success because he was patient and willing to take a long-term view on his investments, and yet he’d jumped around and lost focus in his business dealings.
Finding your biggest opportunity
“I knew that I wanted to build something big, and I was never going to do it like this, with my focus spread across so many different businesses.
“I sat down and asked myself, ‘where’s my biggest opportunity?’ The answer was clear. The Beancounter.
“We’d made progress, had the right foundations, could drive it — and the market was ready. In 2008, when I launched the business, cloud technology didn’t exist yet, but we had a vision.
“By 2014, real-time information was now possible because of the cloud, and it was affordable and accessible for SMEs.
“I’ve had more success here in the last two years with proper focus than in the six years prior to that. Success with The Beancounter really only started two years ago.”
Interestingly, The Beancounter isn’t the biggest accounting firm in South Africa — but it is the most profitable. Marnus and his team have figured out how to offer an affordable solution to SMEs that is also profitable and highly scalable.
Strategic wealth building, keep it lean
“Youngsters and entrepreneurs spend too much in the early stages of their businesses on lifestyle, and this is all funded through debt.
“I’ve never been the guy who had to have the best of everything. I’ve never splurged. While I was building my business I kept my costs down and invested back into the business, and into property and a shares portfolio.
“Even today, with wealth in the bank, I’m not driving a Ferrari. I invest in some luxuries, but I’m not excessive.
“I believe it’s a crucial foundation to a successful business. During the Shark Tank promos M-Net called me a self-made millionaire at 24.
“It was because on the 26th of July, the day after my birthday, I had R1 million in my business bank account, and I’d done it within two years by bootstrapping my business. I had zero debt, and I’d taken out no bank loans or funding.”
Pivot to purpose and phenomenal profits
Traditional accounting firms are consulting businesses that sell hours. The more hours you sell, the more money you make. Growth centres on hiring more employees who can sell their time under your branding. Human capital-intense businesses are difficult to scale.
It’s particularly difficult to increase your margins. This is the business model that The Beancounter launched with, but Marnus always had a different vision, and by 2014 cloud technology meant the vision could become a reality.
“Today we have a very different model,” he explains. “It’s a subscription base with a product. We use Xero software as well as some of our own proprietary property. It’s a much more scalable — and profitable — business model.”
To develop The Beancounter’s new growth path, Marnus drew on the various lessons he had learnt over the past six years.
Generating repeat customers
“Ultimately, we needed recurring revenue. We didn’t want to be making once-off sales. That’s just a lot of hard work every month for new sales. We also needed to move away from personal services to selling products instead. Previously we had billed by the hour. We needed to shift that to value billing.
“We came up with a subscription model that offered ‘x’ amount of value for a set fee per month. There are different packages to choose from, based on a company’s needs and budget. For SMEs, it’s an excellent solution, because it’s predictable. Companies hate per-hour billing models, because you never know what the final invoice will be. For us it’s great because we have annuity income.
“The uptake from clients has been amazing. The combination of a product, transparent pricing and adding value to each client’s decision-making process has really worked.
“Each client’s data is run through our system, which means man-hours aren’t spent capturing and processing that data. You receive monthly management accounts and have an account manager who is a fully qualified accountant to help you analyse and use that data. Our goal is to provide recommendations and real insights.
“There are different fee levels. Tech can’t solve everything; we are still a personal services firm, but your subscription level determines how much of your account manager’s time you receive.
“We are completely transparent with our fee structure, which has worked very well with our clients, and builds trust. We’re not the biggest accounting firm, but we are one of the most profitable.”
Changing the industry from within
And how has the market reacted to The Beancounter’s model? “Accountants and accounting bodies were not happy,” says Marnus.
“South Africa’s accounting body in particular said we weren’t allowed to publish our fees and we did exactly that. It made the profession as a whole feel uncomfortable. But they also realised that this was where things were moving. They had to let it go — they knew they’d be fighting a losing battle. In two years, everyone will be doing things our way.”
Marnus is already looking to that future and cementing his place in it. “One of the biggest areas for growth that we see is helping SMEs secure funding. This is such a challenge for SMEs, largely because their books aren’t in order, and it’s difficult for funders to evaluate them. We believe we can play a large role in mitigating that risk by assisting SMEs.”
Find an investor with the same goals
The Beancounter has also received investment from Transaction Capital, which approached Marnus because they saw the potential his technology offered their own business.
By purchasing a stake in the business, they are now able to deploy The Beancounter’s solution to their own funding decisions, which typically look at higher-risk SME businesses.
With a solution that focuses on South Africa’s biggest growth sector — the SME market — The Beancounter’s future looks bright.
The Beancounter’s success is built on software, but people are at the centre of the business. Here’s how Marnus is ensuring that human capital adds real value to his clients.
1. Hire the best
We’ve gone from six to 24 employees in two years, and have hired slowly. Our big challenge is that we can’t hire from other firms. We do things so differently. An accountant who’s great with people and tech is hard to find. We also need the best, so we hire slowly.
We have four interview processes before we hire, including a three to four hour assignment. In the past we hired to fill a space. It didn’t work out well.
Today we only hire a candidate if we are 100% sure they’re what we’re looking for from a skills, attitude and cultural fit. Attitude is so important. Skills we can train, but you need a good base point to begin with.
2. Tap into what Millennials care about
People think that millennials don’t care about money. That’s rubbish. I’m interested in money; my employees are interested in money. But it’s not the only factor.
We recognise that we get so busy in our work lives we end up neglecting our personal lives. As a company we’ve asked how we can help.
We work flexi hours, and you don’t need permission to work from home. We don’t want our staff to sit in traffic. They work out their own traffic schedules and spend 20 minutes in the car instead of 90 minutes. These make a big difference to quality of life, and allow our employees to work hard while maintaining personal lives.
3. Base remuneration on output
Every single person shares in the company’s revenue. Commission is based on KPIs. Remuneration varies because it is based on position and results. To get more you need to give more. It’s that simple, and the opportunity is open to everyone. We don’t clock in and out. I don’t accept anything mediocre.
When we get average work, we part ways by mutual agreement. Employees are incentivised on output, so if they aren’t producing results, they won’t earn enough, and they’ll leave. People generally realise themselves if the fit isn’t right for them. I’ve never been to court or had a labour dispute.
4. Focus on processes and systems
If you want to build a great business, processes and systems are everything. We’ve needed to put a lot of systems in place to ensure continuity. There is always more than one person on each account, and everything is documented. It’s essential that our clients know they have continuity, and that if someone leaves it will not disrupt their account.