As you consider the various functions that can promote the growth of your company, you may focus on roles such as product development, marketing, or sales.
However, it’s important to recognize the value of your back office operations teams. While they may not directly generate revenue, they can contribute to establishing a foundation for faster and more sustainable growth with the appropriate approach.
what are back office operations?
First, it is essential to clearly understand the relevance and impact of the various back office operations, functions, and processes.
While the “front office” of a company, such as sales and marketing, generates revenue, the back office includes all the necessary functions for a company to operate, such as HR, Payroll, payment processing, accounting and bookkeeping, and supply chain management.
Unfortunately, because these functions typically don’t generate revenue, companies may view the back office as a mere cost center.
This can lead to the temptation to view back-office tasks, such as bookkeeping, as unimportant and only necessary to check off a box. The focus is often shifted to allocating more resources to the front office.
Of course, it’s important to keep operating costs low. However, if you view back office operations solely as an expense to be managed, you’re missing out on the opportunity to leverage high-quality back office data to empower your business.
helpful resource: annual budgeting guide for startups
understand your actual costs with your back office
Having accurate and high-quality bookkeeping has many benefits, including a better understanding of your expenses. Knowing where you are spending your money is crucial for managing your cash flow and identifying areas where you are burning cash.
It may be tempting to estimate your expenses, but it is essential to have accurate numbers. This is especially true if you are a small business trying to stay profitable or a startup trying to manage your runway.
If your estimates are incorrect, you might make different decisions that could impact your business’s success. Once you know for sure where your major sources of cash burn are, you can assess whether you’re getting the best value for your money and look into ways to reduce your cash burn.
you may also like to read: how much does it cost to start a business
decisions are driven by data you can trust
In the present day, many businesses prioritize making decisions based on data. However, it’s important to note that data can only be effective if it’s accurate. That’s where a reliable back office setup comes into play.
By providing you with precise information about your business, a good setup can help you make informed decisions.
One common scenario where this is crucial is when it comes to hiring. You may need additional assistance, but it’s essential to determine whether it’s worth the cost of a new employee. In addition to their salary, you’ll need to consider how their hiring will impact your operational costs.
To explore these scenarios, it’s essential to have a well-constructed business budget, which is only possible with trustworthy Financial records. By running the numbers through your budget, you can determine whether expanding your team makes financial sense.
Marketing is another area where reliable financial records can be incredibly helpful. For many small businesses, marketing is one of their largest expenses. Suppose you’re considering offering a promotional discount to attract new customers.
In that case, your back office can provide you with information about the costs of onboarding customers, fulfilling orders, your margins, and your expected profits. Armed with this knowledge, you can determine how much discount you can afford to offer while ensuring that your business benefits in the long run.
lay the groundwork for sustainable development
In addition to day-to-day decisions, maintaining accurate back office records, such as your company’s books, can aid in developing and achieving long-term strategies for business growth.
Timing is a crucial factor in achieving success in any endeavor, and having access to financial data can be instrumental in making informed decisions.
By analyzing your financial records, you can anticipate future expenses and plan accordingly, such as budgeting for a new product launch or cutting costs to save capital for future investments.
you also like to read: accounting for startups and small businesses a quick crash course
Expanding your business may require outside funding, such as a bank loan or investor capital. To increase your chances of securing this funding, having well-organized and transparent financial records is essential.
This not only demonstrates the health of your business but also instills confidence in potential investors or lenders that any additional funds will be used wisely.
While back office functions like bookkeeping may not be the most glamorous aspect of running a business, they provide essential tools for success. However, this does not mean you have to tackle it alone.
By utilizing services like Countick, you can receive accurate and detailed books each month, freeing up time to focus on growing your business. It is worth investing in setting up back-office operations correctly to reap the benefits in the long run.
