ECONOMICS AND TRADE | Achieving growth through open markets
13 May 2008
Accounting Comes Alive Through New Approach to Teaching
Entrepreneur’s system gives small business owners financial literacy
Washington -- A South African-born accountant who devised a system of teaching accounting to the masses arrived in the United States in 2002 with a pregnant wife, several thousand dollars in savings and a conviction that he could turn the teaching system into a $100 million business.
"I was consciously aware of coming to America as an economic pioneer," Peter Frampton said. "When I figured this system out, I thought that I wanted to come to the United States, the 'mother market,' because it is so big and easy to do business here."
Frampton made it clear that Mark Robilliard of Australia and Carmen Mettler of South Africa worked with him in developing the system and hold a stake in the business.
But they did not uproot themselves to come to the United States.
Spreading out his teaching system on a table with the help of an assistant, Ann Lyttle, Frampton explained his enthusiasm for the American market. "We sit here in this basement, get online, place an order and stationary shows up. It is virtual business at its best. ... In South Africa, the deliveries would get stolen. In America, it is so easy. I can get on an Amtrak train to visit a client and gather information from a Google search. America sucks up the best talent. This is the competitive advantage of America. It will keep attracting the best because it is a virtuous loop," Frampton said.
An integral part of the “virtuous loop” is the strong protection for intellectual property (IP) in the United States. "America's appreciation for the value of IP is a huge attraction. We're in the process of patenting our system in America. I was not able to patent this in other countries, such as Germany. We mainly wanted to patent it in America. That's the main market."
Frampton's business is called "Accounting Comes Alive" (ACA), and his trademarked accounting education system is called “Color Accounting.” The system consists of five rectangles, drawn on a white sheet of paper. Two of the rectangles are green, one labeled "assets," the other "expenses." The green ones explain how a business uses funds. The other three rectangles -- labeled "liabilities," "profit/equity" and "income" -- illustrate the concepts of where a business gets its funds. Using small plastic cups and strips of green and yellow paper, he shows how the sums in the five rectangles rise and fall.
In ACA workshops, Frampton distills all the arcane and esoteric language of accounting down to a few concepts contained in those five rectangles. In so doing, he teaches people to read balance sheets and income statements and work with financial information.
"We watch their eyes and see when they get it. We think of ourselves as financial-thinking coaches," Frampton said. He gives workshops to people who are not accountants but need financial literacy, such as lawyers, small business owners and bankers.
"We've had to run this course in secret sometimes because the banker said, 'I can't have anyone know that I am doing this course.' It's a massive issue in society, accounting illiteracy," Frampton said.
Lawyers are lining up for ACA workshops because they often are tasked with drafting legal documents required for financial transactions but lack the accounting knowledge to confidently do so.
"They're scared of looking foolish, so they don't ask questions about what the terms mean. That's big with lawyers," Frampton said.
The Harvard Business School is planning to incorporate Frampton's system into its online teaching program. "ACA has the advantage of showing how accounting works visually. As such, I believe that it is of value to anyone who is interested in understanding accounting, from high school students to undergrads to [holders of master’s degrees in business] to business executives," commented Paul Healy of Harvard.
"We are in consultation with other well-known business schools, too. Higher education is a whole market in itself," Frampton said.
The Morgan Stanley investment bank, which provided Frampton with his first big corporate break, has renewed contracts with him for more ACA workshops. Word of Frampton's work has spread to other big investment banks and insurance companies, such as Lehman Brothers, UBS, QBE Insurance, Vero Insurance and UNUM, which now use ACA’s services regularly.
A large energy services company based in Houston is in negotiations with him about providing accounting literacy training to its 1,500 employees.
The first couple of years after arriving in the United States, the Frampton business and family survived on the salary of his wife, Carole. In 2004, the first full commercial year, ACA made several thousand dollars in revenue. By 2007, revenues had climbed to $127,000. Frampton expects the figure to reach $300,000 in 2008 and to double from that in 2009. The entrepreneur plans to make ACA a franchise, which he believes will enable it to grow to a $100 million business within 10 years.
