9 Ways to Cut Back Office Costs
A back office in most corporations is where work that supports front office work is done. The front office is the “face” of the company and is all the company’s resources that are used to make sales and interact with customers and clients. [Wikipedia] In accounting terms, it would exist within General and Administrative Expense.
The term “back office” comes from the ways buildings were laid out in early companies. The front office would contain the sales and other customer-facing staff, and the back office would be those manufacturing goods or recording the transactions. The two were kept carefully together for communication and logistical needs.
As a small business owner (or freelancer) today, the back office is more of a concept than a physical reality. You have probably already identified with being the back and the front office at the same time. The idea of a back office was born out of the need for efficiency to facilitate revenue generation. That concept is still critical even if the tangible people aspects of it have changed.
Over the years, the back office’s role has continued to evolve from an actual space to remote work, outsourced, or the small business owner taking it on entirely.
In today’s challenges, such as the COVID 19 Pandemic, and many small businesses failing, making the ‘back office’ as efficient as possible to focus entirely on your customers generating revenue has never been more critical. Let’s look at nine ways you can reduce costs to make your back office as efficient as possible.
1. Outsource tasks
Focus on your core business. What does it do? If you are a restaurant, is your core competency in accounting or marketing? Other companies do those specific tasks for a living. They are up to date on the current practices, technologies, and regulations. In other words, it is their core business. Consider moving your non-core tasks to a provider who can focus on them for you. Moving these tasks will likely save you costs since you will not have to hire full-time staff (with benefits) when you can purchase a fraction of one dedicated to your work.
2. Don’t go it alone
A lot of your day to day stress may come from trying to be everything for your business. In the modern world of super structure, speed, and compliance, not being on top of your game could be quite expensive. Your focus is still on your customer, but taking shortcuts to do work yourself that your competitors have likely outsourced is a substantial personal risk.
3. Don’t have other employees multitask
This includes you and relates to wage to task value. You know the work that has to get done, there are not enough people to do it, so you end up using resources from the front office to perform administrative tasks. As time goes by, you will increase the cost of performing your back office needs by staffing with more expensive front office employees, while having to hire more front office staff to work with your clients (your real priority). By not using higher wage employees to perform lower value work, you can reduce costs.
4. Eliminate non-value-add activities
The best way to save money is not to spend it at all. Review your back office tasks and consider if they could be consolidated, done in another way, or are not necessary today.
5. Build a continuous improvement culture
Large corporations have programs like TQM, Six-Sigma, and Lean. These are all the same in that they look at processes and thoughtfully find ways to improve them incrementally. You can do the same for your small business. By putting the work in the right place, with the right people, you can take the time to look at how the work is done and improve it.
6. Capitalize on Remote work
All companies have discovered this cost savings technique in the last few months. We have learned how to smartly work remote. Communication with the back office is no longer the issue it was in the early days. Employees can now efficiently work virtually using technology.
7. Relocate the back office
If your back office team needs to stay together, does it need to be where it is now? You located your business where you can be in proximity to your customers. Your back office does not interface with your customers, therefore this space can be repurposed for the front office. Consider moving your back office to a lower cost neighborhood. In some areas of the country, there are office parks set aside for this type of operation.
8. Go Green & Go Paperless
Moving to paperless invoices, proposals, and HR Records helps the environment, but they also enhance your ability to find the things you need when you need them. A customer needs to see their history or order what they did in the past. By going green, you can save time (which is money) servicing your boss, the customer.
9. Invest in Technology
Communication has changed. Not only internally, but with your customer as well. It has become more productive, quicker, and cheaper to stay in contact with a customer who wants to talk to you anyplace and at any time. Several technologies specialize in connecting you both internally and to your customer. Consider looking at platforms such as Microsoft teams or Google G-Suite. Even Facebook Messenger, WhatsApp, and Zoom can be point solutions for you. Many of these technologies have affordable plans for small businesses.