Every business, small or large, has “back office” operations. This refers to “the part of a company responsible for providing all business functions related to its operations.” (Investopedia, Back Office
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Basically, the back office is all of the behind scenes action, and back office employees typically do not interact with clients and customers, at least in a sales or consulting type relationship. As such, they do not often directly bring in revenue. This can make back office operations seem like a real financial drain on your business, but it is important to keep in mind that these functions are still necessary to the smooth operation of the company.
You may not be able to cut costs by simply getting ready of all back office employees and the jobs they do, but you can reduce back office costs in other ways.
It’s probably no surprise that employees would make up a lot of your back office expense. Even more than just a simple salary or hourly wage, there is training and benefits to consider as well. How can you cut down on some of these costs without just slicing paychecks?
1. Outsource some of the back office tasks
We’ve discussed it on this blog before, but outsourcing is really a great way to receive quality work at a lesser expense. When you outsource tasks like accounting or human resources you are most likely outsourcing to a company with trained professionals or a highly qualified freelancer. You get all of that expertise, and the work gets done, without worrying about training, benefits, or paid vacations coming out your business.
2. Don’t be a “Jack-of-all-trades” owner
As a small business or start up owner it can be so tempting to do everything yourself. Flex Professionals describes this phenomenon, “The most common staffing structure we see in younger businesses is the jack-of-all-trades model where a single individual in the company becomes synonymous with “back-office.”
This might work for a little while, but as your business grows, the back office demands will increase, which will mean that things will start falling through the cracks. Unfortunately, this could lead to issues legally and financially—costing you money.
3. Don’t try to use other employees to complete these tasks
Just like with the “jack-of-all-trades” issue, it can be tempting to try and reduce back office costs by asking some of your other employees to take on these responsibilities. The problems are: sometimes your other employees have a higher salary or hourly rate than a back office employee would, which means you are actually paying more to have the work done, and when other employees are completing back office tasks, it takes away time and energy from the work that they were hired and trained to do. McKinsey and Company explains how this practice hurt a company, “…embedding support roles within each region’s frontline sales force meant that economies of scale were lost and best practices weren’t shared.”
Office space is a large overhead cost, and the more you can reduce it, the better it will be for your small business or startup.
4. Consider telecommuting as an option
As the name suggests, “back office” work usually happens out of sight of customers and clients. Therefore, does it need to actually happen in the office? Reduce back office costs by thinking about which of your employees could work remotely. With more employees working from home, you could have a much smaller office space to pay for.
5. Don’t stay in an expensive area if you don’t have to
You may love your office’s location because of your ability to walk to the local coffee shop, or maybe you have a great view of the ocean or mountains from your desk. For some small businesses, especially retail, the location matters. However, for many—like SaaS companies, it doesn’t. Take a good look at your office and lease. Are you paying higher rent just for a good location? Would your business be adversely affected if you rented space in a less desirable and less expensive location? It may be time to call up a realtor and see what your options are.
The back office requires a lot in regard to business supplies—especially paper. Invoices, reports, and new hire packets are just a few examples.
6. Go Paperless
Try emailing invoices instead of mailing them, and use email or programs such as Slack for interoffice communication instead of paper memos.
7. Make little changes with printer and copier settings
Play around with your printer and copies settings to make sure you aren’t wasting unnecessary money. If the printer/copier are set to print one sided in color every time, change the default to double sided black and white. Accidentally print on one side? No problem. If the document isn’t sensitive, afterwards you can cut it up for scrap paper.
Time is money, right? A lot of time is wasted during the work day on searching for information and filing documents.
7. Invest in technology
Investing in technology to automate some of these tasks can make the work happen much more efficiently. Research various accounting and HR software to learn about which would work best for your business. For accounting, we highly recommend and use Xero, Hubdoc, Gusto and FUTRLI, but there are many options out there. Investing in software will carry some costs, but most likely the pros will far outweigh the cons.
The “back office” is a vital part of your business because without it, nothing else could get done. But, that doesn’t mean you can’t find ways to reduce back office costs. For more information about cutting back office expenses, contact Lucid Books about outsourced accounting.