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How to Build an Efficient Back Office on a Startup Budget

Written by Cameron Ward, BizWealthBuilder,  for Optima Office.

When a startup succeeds, it’s usually the front office that gets the credit. However, the back office is the true lifeblood of any business. While the front office makes sales and interfaces with clients, it’s the back office that handles the critical business functions a company’s success relies on.

In many small and new businesses, back office responsibilities fall on top of employees’ existing workloads, stretching staff thin and making a proactive approach to operational efficiencies impossible. Is there a better way to build a strong back office while keeping costs low? At Optima Office, we believe there is.

What Does the Back Office Do?

The back office contains a company’s essential infrastructure, including:

  • Finance and accounting
  • Bookkeeping
  • Information technology
  • Human resources
  • Payroll
  • Recruitment and hiring
  • Legal
  • Compliance and risk management

A back office may also include industry-specific functions such as:

  • Order fulfillment
  • Client services
  • Claims processing
  • Dispute resolution
  • Underwriting

Why Outsource Back Office Operations

That’s a lot of jobs for a start-up company’s back office to manage. Most new and small businesses can’t justify the cost of in-house support staff to manage all these various tasks that may only take a few hours per month.

Outsourcing frees up time and resources with less effort and expense than hiring back-office staff. Instead of taking on full- or part-time employees and the expenses and challenges that come with them, companies can use professional services to deliver the talent they need, when they need it. The simplicity and scalability of outsourcing means less time spent hiring and onboarding and more time focusing on a brand’s core competencies.

Outsourcing to Freelancers vs. Agencies

Deciding to outsource is only the first step. Businesses also have to decide when to hire an agency and when to recruit a freelancer for back-office tasks.

When to hire freelancers

Freelancers are a flexible and affordable outsourcing solution, making them an easy entry point into outsourcing. Freelancers are well-suited to data entry, administration, legal services, and other tasks that can tolerate occasional lapses in staffing.

Because working with freelancers leaves companies vulnerable to high turnover in critical areas, a rigorous interview process for freelance talent is essential. Following remote hiring best practices like clearly stating expectations, skills, and budget in job descriptions and establishing communication standards to avoid confusion when working across geographic and time barriers is critical.

When to use an agency

Most back-office tasks rely on year-round staffing to keep business operations running smoothly. Agencies are the best choice for jobs that can’t afford downtime. Outsourcing firms like Optima Office are also a better pick for back-office responsibilities that require coordination between team members, such as bookkeeping, accounting, HR and finance.

Successful partnerships with agencies, firms and other third-party vendors starts with a clear picture of the business’s goals and budget. The best firms take time to understand a company’s needs before settling on a service package and will also place only fully vetted personnel into your company, set their expectations, train them and manage any issues related to that person so don’t have to.

Essential Components of an Outsourced Back Office

It’s hard to know where to start with back office outsourcing when a business is still early in its growth. These are the domains where a limited back office budget will make the most impact.

Outsourced HR and HR managers

Human resource functions are one of the first things a growing business outsources. As a company hires employees, it needs experienced professionals to manage everyday HR tasks and keep company policies and practices in line with federal, state, and local laws. Outsourced HR also expands a business’s capacity for recruitment, training, and employee relations. Since CA law is very complicated, you should always have a professional handling those tasks in order to minimize risks and maximize compliance.

The HR manager is the backbone of an outsourced HR team. Other HR professionals include HR directors, benefits specialists, recruiting managers, and employee relations managers. Learn more about the types of HR professionals available to businesses.

Outsourced accounting and bookkeeping

Accurate financials are critical to a company’s success, so it’s no surprise that accounting and bookkeeping also rank high on a business owner’s list of jobs to outsource. Outsourced accounting gives business owners access to a higher caliber of professionals than they could afford to hire in-house. Rather than hire financial professionals on an individual basis, companies should work with outsourced accounting firms like Optima Office that provide fully-integrated financial services. With a bookkeeper, accountant, controller, and fractional CFO all working side-by-side, business owners can feel confident in their company’s financial stability.

What is a fractional CFO?

Chief Financial Officers provide high-level financial oversight and drive strategic business decisions. They’re a critical part of any high-growth company’s team, yet many new companies operate without a CFO. Fractional or part-time CFOs fill this critical gap on a retainer or contractual basis. A good CFO should be the captain of the accounting and finance department and ensure that financials are on time and accurate, but they should also be strategic and forward looking. A CFO will also handle merger and acquisition responsibilities, be the quarterback with the CPA firm and other high-level advisors of the company and be the right hand person to the CEO. Once your business hits around $5 million in annual revenues, it is always a good idea to engage a strong CFO, even if for just a day a month. This is why fractional CFO services are continually growing. Most companies do not have the funds or the need to hire a full-time CFO, so they hire a part-time CFO that can advice them as needed.

Outsourced IT

Outsourced IT services are the best way for new businesses to guarantee 24/7 IT coverage and avoid problems related to high turnover. Beyond consistent staffing, Accent Computer Solutions explains that managed IT services deliver a wide variety of skills so businesses aren’t limited by the knowledge of a small IT team. The ideal outsourced IT vendor has prior experience in a company’s industry and technology environment.

Automate routine tasks

Supplementary to outsourcing is automation, and the more your business can automate behind the scenes, the better. Examine routine tasks, like how you process payroll, pay taxes, and manage team schedules. With robust software to streamline these processes, you can have your whole company working more efficiently and productively.

Too many businesses think of the back office as nothing more than a cost center. However, an effective back office is far more than a necessary evil. When the back office runs efficiently, it empowers the entire organization to grow.

An effective back office doesn’t need to be cost-prohibitive. By outsourcing with firms like Optima Office, business owners can focus on building their business trusting that their operations are in trusted hands. Want to learn more about how Optima Office can solve your unique business needs? We would love to schedule a meeting with you. Give us a call at 858.283.1234.

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