If you just started a business, or you’re looking to expand your small business, you might feel overwhelmed by the number of office responsibilities in front of you. Your front office will generate sales and profits, but it needs support to do so. The heart of your business relies on proper accounting, bookkeeping, data entry, and more. Though these functions don’t relate to your core business model, they serve a vital role in overall business functions. Your back office the lifeblood of your business. Your business can’t operate if these functions don’t run smoothly. As you grow, there will soon be no feasible way for you to manage everything yourself, and hiring full-time employees is an arduous (and expensive) process. The solution to this dilemma is finding back office tasks and responsibilities to outsource. Lotus Analytics understands what it’s like to run a business and prioritizes your back office needs. Lotus also understand that the more time you spend on administrative tasks means the less time you have to focus on generating income and growing your business. Lotus Analytics offers a wide range of back office services tailored to your needs, your business, and your budget.
Companies of all sizes must decide how to manage back-office tasks, and they do it in a variety of ways. For larger companies, there may be enough resources to dedicate entire teams to accounting and all its different categories of work. A head of operations or finance is likely responsible for accounting, HR, compliance, and IT support teams. For smaller companies, back-office work falls on the shoulders of employees who are managing other responsibilities. There may be two office managers who split the accounting work between themselves, or one accountant who handles it all with oversight from the business owner. And in many cases, staff are spread so thin that the CEO or founder is left to manage this necessary (and also time-consuming) work alone.
With everything on their plates, it’s all business owners can do to keep up with the reactive work required for back-office management. That leaves no room for proactive planning and forecasting with financial metrics that could support the growth of the business. Staying on top of back-office work can be the difference in a new infusion of cash and zero funding for a business. And, over three-quarters of businesses fail due to cash flow issues. If no one is proactively paying bills and expenses, collecting on invoices, and monitoring the flow both ways, a company could go under quickly.
At the same time, two-thirds of business leaders are responsible for three or more major areas of the business (finance and accounting included), and over half say that finance and accounting work is a distraction. That’s a big disconnect for small businesses: a key area that can determine the success or failure of the company is frequently deprioritized and pushed aside.
You can think of your front office as the face of your company. This is where your business meets and serves the public. In contrast, the back office typically concerns itself with more administrative functions. This may include the following:
• Accounting and Bookkeeping: Accounting and bookkeeping are two sides of the same coin: your company’s financials. Bookkeeping refers to the day-to-day process of tracking expenditures and income, while accounting refers to more high-level number crunching and strategic planning. Sometimes, tax planning is considered as a financial responsibility separate from (but related to) these two areas. There are a few reasons why accounting and bookkeeping are important to outsource, even more so than some of the other back office tasks on this list. For starters, finances are high stakes. Making a single mistake on your taxes could result in a significant penalty, and failing to keep accurate tabs on your cash flow could ultimately result in the collapse of your business. There are people more reliable and more experienced than you in this field, so it’s important to trust them—rather than risk committing a grievous error. Second, accounting and bookkeeping take up a lot of time. Bookkeeping, especially, can be tedious, occupying hours of your day that could be better spent on higher priorities.
• Marketing and Advertising: Marketing and advertising are also vital to the success of your business; without marketing, you’ll be relying entirely on natural word-of-mouth and firsthand efforts to increase your brand visibility and grow your customer base. The trouble is, marketing can be both expensive and complicated. If you don’t have much marketing experience or knowledge in your own right, there’s no guarantee you’ll be able to craft a campaign that aligns with your brand values and cultivates a profitable return on investment (ROI). In fact, if your work is shoddy, or if your brand isn’t presented in a favorable light, a low-skill effort could actually have negative effects on your brand. Outsourcing your marketing and advertising is also beneficial because it can help you discover marketing techniques you might not have considered; this is especially useful if you’re trying to save money.
• IT and Technology: IT and technology needs will vary, depending on the nature of your business and the industry in which you operate. However, no matter what, you’ll likely benefit from working with at least one technology expert. IT and technology are especially important to outsource because of the risks of not investing in the right equipment and proactive maintenance. There are several responsibilities that could fall under this category, including: buying new computers and other digital devices, setting up and maintaining your internet connection, sourcing and managing cloud services, setting up and managing local servers, improving your cybersecurity. Without a proper cybersecurity strategy, your business could be the victim of a data breach or cyberattack — and considering the average cost of a data breach is now $3.92 million, that’s likely not a risk you can accept. While it’s possible to hire a part-time IT consultant to help you set up specific systems or advice you of potential weaknesses, this is an area where monthly, weekly, or other recurring services are valuable. IT and technology require ongoing attention and maintenance, so it’s best to partner with an IT firm — assuming you have sufficient tech needs to justify the decision.
• Customer service: In the early days of your business, you’ll probably have no issue talking to your customers, helping them with their problems, and encouraging them to stick with your brand long-term. But as your business becomes bigger, with a larger customer base, this individualistic attempt will quickly become folly. The minutes and hours you spend dealing with individual customer issues will take you away from responsibilities like scouting new locations, hiring strategic partners, and negotiating deals. But outsourcing your customer service needs is about more than just freeing up time for yourself. It’s also about maximizing your customer retention in the smartest and most efficient way. Acquiring a new customer costs up to five times as much as retaining an existing customer, and an excellent customer service team can help you make the most of this natural advantage. If you have a solid customer service strategy in place, you can hire individual part-time customer service professionals, or independent contractors, to help you handle inbound requests with new and returning customers.
• HR and payroll: As you begin to work with more back office contractors and bring on both part-time and full-time employees, you’ll need to find someone to help you manage those employee records. Accordingly, you’ll need to hire an expert consultant in human resources (HR) to help you build and maintain those onboarding and management systems. Payroll is sometimes categorized as an HR responsibility, and sometimes as an accounting responsibility. Both departments will play a role in establishing and perpetuating your payroll system. Accordingly, while considering an outsourced expert for your HR needs, you’ll need to keep payroll in mind. HR is especially valuable when you start considering a transition from outsourced, contractor-dependent responsibilities to more in-house, full-time responsibilities. If you’re in need of finding a talented, experienced partner in a role like Chief Technology Officer (CTO) or Chief Marketing Officer (CMO), an HR consultant or recruiter can help you narrow down the field — and hopefully, find the perfect candidate.
• Legal support: Finally, you’ll need to consider legal support. Working with an attorney can help you tackle complex legal challenges like contract law, employment regulations, and how to limit your liabilities. They will also help you recognize and understand legal issues you might not see coming; there are likely several weak points or legal considerations in your business that you’re neglecting. Like finance, law is an area that you can’t afford to neglect. A single mistake or oversight could land your business in legal trouble, jeopardizing its future, costing you money, or even landing you in jail. Most new and growing business owners must consider retaining legal services to have ongoing access to a legal expert and advices as the business owners make new discoveries and encounter new challenges.
It’s easy to see why the back office is so important when it’s functioning poorly. When businesses prioritize back-office functions and stay ahead of the workload, they have opportunities to be proactive. By staying up-to-date on incoming and outgoing cash in any form, they can step back and view the wealth of data available to make improvements. That means taking the time to look at vendor contracts to negotiate discounts, analyzing customer invoices to incent faster payment, and even looking at ways to decrease the company’s taxes.
Managing everything required to keep a business running is a sizeable undertaking. Back-office tasks like accounts payable, accounts receivable, bookkeeping, and taxes have to be done. It’s just a matter of making the time to do them. In many cases, other critical functions like selling into new accounts, expanding the business, and fundraising win out in terms of priority. At Lotus Analytics, we are dedicated to fulfilling your accounting, operational and back office needs. One size never fits all, especially when it comes to accounting and bookkeeping, we provide a personalized and tailored approach to help you meet your business goals. When you are assured that your accounting, bookkeeping and other back office services are in good hands, you can concentrate on doing what you do best: growing your business.