The back office of a business takes up about 15% of the operating costs. Small businesses often budget less to manage back offices. This is one of the primary reasons why one-third of small enterprises fail. Back office solutions for small businesses reduce the cash flow crisis. Your business will operate more efficiently.
However, the financial limitations of running a small firm restrict entrepreneurs from engaging in-house teams to oversee the back office. Outsourcing provides cost-effective solutions to such concerns.
Entrepreneurs are often proactive about their business growth. You no longer need to waste important time on mundane tasks if you have an outsourcing partner to help your back office.
Back Office Solutions in Five Stages of Small Business
Stage 1: Existence
The critical challenge at this point is attracting customers when your company is nearly nonexistent. Small enterprises simply aim to remain active at this stage. If you do not get sufficient customers at this stage, your business may fall steadily.
Back office service solutions at the existence stage helps organizations make product strategies, manage supply chains, and regulate accounting and IT services.
A crisis of leadership is common at this stage. Strategic planning should be the utmost priority. Outsourcing the back office relieves small business leaders of non-critical strategic duties. When you have someone to share the risk with, it is simple to plan your business ahead of time. Business outsourcing companies share the risk by taking full responsibility for your back office.
Stage 2: Survival
Congratulations! If you've made it to this point, it means that your efforts to please customers with your product strategy have been effective. Now, you have survived the competitive market. The number of competitors against a product or service is rising every day.
Also, you have to maintain your expenses and revenue.
Outsourcing back office support accelerates the sales team to perform better. Some back office solutions for small businesses can master through outsourcing are,
Quality assurance
Data management
Credit collection
Outstanding follow-ups
Quoting services
Your outsourcing partner has to understand that the surviving stage is vulnerable. If the back office does not perform well, the front office may fail too. Outsourcing back office solutions for small businesses is a supporting function to reduce costs and generate more revenue.
Stage 3: Success
According to the U.S. Bureau of Labor Statistics (BLS), 20% of new businesses fail in the first 2 years, followed by 45% in the first five years and 65% in the first ten. Only 25% of newly founded companies survive for 15 years or more.
Success is never constant. By this stage, your business has achieved the expected accomplishments, and you are ready to expand. You require experts to support your growth. Outsourcing brings you trained back-office professionals. They know how to utilize your capital resources to generate revenue.
Some businesses choose not to move further at this stage. They focus on the sustainability of whatever they have achieved. This may also lead to failure when rivals take advantage of such a slow-paced strategy. If you believe that planning expansion would be difficult for your in-house staff, you might opt to outsource the back office.
Stage 4: Take-off
Business growth is the top priority of the takeoff stage. Business owners delegate responsibilities to upper management. The departments of a business grow at this stage. The number of customers also increases. To meet the vast demands of the takeoff stage, a company needs to hire the right professionals.
Outsourcing back office solutions for small businesses bring you certain benefits at the following stages,
Outsourcing simplifies your hiring process and connects you to required talents
You will expand globally through offshoring
Back office payroll and accounting services to control cash flow
Fuel expansion sustainably with an experienced outsourcing partner
Reduce service error and increase efficiency
Make sure you do not run out of cash while planning your growth stage. Cost-effectiveness is one of the biggest advantages of outsourcing back-office support.
Stage 5: Resource Maturity
Every business matures at some point. The first sign of maturity is the rapid growth of competitors to your product or service. Businesses become vulnerable to many types of crises. Your management should be able to move quickly to eliminate the difficulties.
At this stage, a company has sufficient human and financial resources to centralize management. Back office executives support all departments in completing their tasks. Make sure that your business does not move to the ossification stage.
Note: When a business reaches a stage where it lacks creativity and innovation decisions is called ossification.
|
Common Types of Back Office Support
The back office of an organization may include many different tasks. Most of these tasks are not client-facing. Understanding the tasks of back office support helps small businesses make more strategic outsourcing decisions.
Administrative Support
A firm's operational success depends on a variety of back-office activities and responsibilities. These activities are referred to as "administrative support back office." The activities of back office administrations are data entry, bookkeeping, scheduling, and other relevant matters that are not immediately connected to interacting with customers.
Financial Support
If you don’t have accurate financial records, your business will fall behind in many aspects. Back office support ensures that all your financial transactions are well-recorded. Outsource finance back-office support and worry no more about cash flow shortages, unorganized data, and development decisions.
Human Resources Support
Human resources improve the company's core values by utilizing human capital in a systematic way. The human resources department of a company falls under the back office. It is also common for companies to outsource their entire HR process.
IT Support
In today’s digital world, it is necessary for companies to have smooth-running IT functions. This support typically includes troubleshooting, maintenance, and repair of computer systems, software, and other technology used in the organization. It may also include managing and maintaining IT infrastructure, such as servers, networks, and storage systems.
FAQ
How Many Small Businesses Fail?
According to Investopedia, "Only 25% of startup small businesses survive for 15 years or more." The rest, 75%, fail within two to ten years.
How Often do Small Businesses Fail?
Most small businesses fail because they cannot manage their finances properly. Startup firms should be very careful where they invest. You do not need luxurious offices or high-volume employees unless you are sure that your revenue will keep multiplying. Take it slow.
How to Set up an Office for a Small Business?
We recommend that small businesses first plan on setting up virtual offices. So, you will save on office-related overhead expenses. Besides, the cost of hiring remote employees is cheaper than on-site. You can also start with a small office. Then, outsource back-office employees to support the rest.
End note
The goals of every business person evolve as the business grows. Maintain accurate records of all transactions, reduce expenses, and improve service quality. As we mentioned earlier, sharing your workload and risk with a partner advances your business. Contact us to get a free small business back office planning chart.