BUSINESS BACK OFFICE SUPPORT PROGRAM by Access Community Capital

Three options for implementing a Shared or Outsourced Back Office Ser vice

INCUBATOR

Description

Assist early stage, high potential organizations with financial and programmatic support

Services

• • • • • • • • •

Target

Office space Program support Finance & accounting, fiscal sponsorship Technology, share some equipment Human resources , reception Purchasing Facilities management Legal? Possibly fundraising

Early stage/venture organizations

CO-LOCATION

OUTSOURCED BACK OFFICE SERVICES ONLY

Provide shared space and services for mature organizations with a similar programmatic focus and/or those with large back office needs

Provide shared non-core back office services remotely for businesses that could realize improvements in efficiency and effectiveness

• Office space • Finance & accounting • Technology, share some equipment • Human resources, reception • Purchasing • Facilities management • Legal? • Possibly fundraising

• Financial & accounting • Marketing & Social Media Managementt • Website Development • Human Resources • Purchasing • Facilities management

Any stage/size organization ; best with organizations that would not need to serve clients at the site

Any stage/size organization; best with smaller start-ups and/or growth oriented organizations

Access Community Capital – Business Back Office Support Program

Structure of an outsourced back office ser vice Outsourced functions Functions managed by ACCESS

Business ABC

Program

Finance & Accounting

Development

Administration

Human Resources

Marketing & Social Media

Purchasing

Facilities

Outsourced Subfunctions §

Reporting A/P and A/R

§

§ §

General ledger Budgeting

§

§

Cash management

§ §

Risk management Financial analysis, strategy and reportin g

§ § §

Website design or redesign Ensure e-commerce capabilities are built in when requested Establish professional email Ongoing social media management Email campaigns

§ §

§

Payroll processing Benefits and compensation planning, procurement and administration

§

Sourcing - offic e, janitorial, travel, mail

§

§ §

Negotiations Purchase order processing

Contract management (e.g., janitoria l services)

§

Repairs and maintenance

Employee data management

§

Supplier database management

§

Lease management Utilities management

§

2

Access Community Capital – Business Back Office Support Program

Criteria to deter mine which ser vices should be outsourced vs maintained inter nally Level of support function outsourcing Complete

None

Criteria

Strategic

Talent

Key elements to define outsourcing opportunities Ø Function is not critical to the strategic focus of the business

•

Outstanding execution of the support activity is a core competency and source of sustainable competitive advantage for the business

•

Activity enables core competencies of business but does not serve a core strategic role

Ø In-house capabilities are underdeveloped relative to outside vendors

•

•

Ø Act ivities do not expand the skill set of top talent

•

Activity expertise is well served by in-house resources Business leaders develop from activity

Specialist firms recruit superior talent in activity Activity expertise is primarily administrative or executional and does not support leadership development

Ø

Efficiency Ø

Outside vendor is able to capture economies of scale or skill that the business unable to capture

•

Maintaining support functions in-house is optimal for productivity and cost effectiveness

•

•

Outsourcing activity results in lower costs/same service or same cost / improved service

Quality is not diminished by outsourcing

Access Community Capital – Business Back Office Support Program

Organizations expect efficiency from outsourced back office ser vices Comments

Reallocate time from admin to program

o Believe the amount of senior management time spent on administrative issues would be significantly reduced with outsourced services o May see benefits across the organization

Higher quality services and products; access to greater expertise

o For example, few early-stage businesses need a full time CFO but if they could have ten percent of a CFO-level person's time they could greatly benefit from their strategic thinking and planning

More timely information

o Access to improved financial management systems can help early-stage businesses make better decisions in a timelier manner - ultimately leading to improved sales and service quality in their revenue lines

Increase operation flexibility

o With a more adaptive administrative structure, businesses can respond to changes in demand, scaling up or down, more readily

Minimize risk associated with staff turnover

Improve costs

o Many businesses have significant institutional knowledge stored with employees and employee turnover can be high. Maintaining critical information (e.g., financial) more formally with outsourced vendors can minimize the disruption to a business when an employee leaves o Also, an organization can reduce employee turnover if it has access to better employee benefits through outsourced vendors o Reduced costs of goods and services; not likely biggest lever because many early-stage businesses are under funded in these areas 5

Access Community Capital – Business Back Office Support Program

Requirements needed to be successful Requirements

Explanations -

Gain trust

Quality services could be provided by existing or newly created vendors A pilot could prove that businesses would realize significant benefits Develop a low-cost model that works Identify well suited organizations for participation

-

-

-

Likely concerned with confident iality and service levels Will need to ensure high quality and consistent services. Service quality gaps will drive participants out; communication is key Need to identify turnkey organizations and individual high-quality vendors Utilizing other early-stage businesses builds the ecosystem of support and recycles the investment amongst the small business community. Pilot program would define the economic value proposition to potential participants Significant benefits will create future demand

-

Require critical mass of users to make the economics attractive

-

Pilot begins with 10 businesses. ACCESS negotiates discounted pricing from service providers and businesses receive 1 year of free business support services.

-

Early stage or growth stage businesses

• The p ilot will be key in determining the po tential impa ct for organizations Need to consider which vendors would minimize risks and costs without jeopardizing the quality of services • Ultimately, we may be creating a new market in the early-stage small business sector; a market that is well established in the large for-profit sector and private equity/venture capital industry

6

Access Community Capital – Business Back Office Support Program

We apply a number of filters to identify organizations meeting our criteria for outsourcing back office ser vices

Understands early-stage business clients Understand benefits Desire for improvement

Few services

Stable management Can manage transition Understand own management limits

Organizations well suited to maximize benefits of outsourced back office services

Low resistance to change

11

Access Community Capital – Business Back Office Support Program

Par tnership Structure Outsourced functions Functions and vendors managed by ACCESS

City of Las Vegas

Access Community Capital

Finance & Accounting

VENDORS

BUSINESSES

Business #1

Business #2

Marketing & Social Media

Business #3

Business #4

Outsourced Subfunctions §

Reporting A/P and A/R

§

§ §

General ledger Budgeting

§

§

Cash management

§ §

Risk management Financial analysis, strategy and reportin g

§ § §

Website design or redesign Ensure e-commerce capabilities are built in when requested Establish professional email Ongoing social media management Email campaigns

Access Community Capital – Business Back Office Support Program

Business #5

Par tnership Structure City of Las Vegas Service Access Community Capital

VENDORS

# Vendors Hired

Cost per Business

Number of businesses

Length of Service*

Total Investment

Web Design

3

$1,500

10

1

$15,000

Bookkeeping

2

$300

10

12

$36,000

Social Media Mgmt

3

$500

10

12

$60,000

Financial & Strategic Monitoring

2

$600

10

12

$72,000

TOTAL

10

10

BUSINESSES

INVESTMENT $200,000 total $183,000 Purchasing services to be provided to Small Businesses + $17,000 Program Management

$183,000 *Length of service in months

RETURN ON INVESTMENT 10 Business Vendors Supported + 10 Businesses Receive Back Office Support and Guidance

20 Total Businesses Supported

Access Community Capital – Business Back Office Support Program