Story Transcript
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
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General ledger Budgeting
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Cash management
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Risk management Financial analysis, strategy and reportin g
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Website design or redesign Ensure e-commerce capabilities are built in when requested Establish professional email Ongoing social media management Email campaigns
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Payroll processing Benefits and compensation planning, procurement and administration
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Sourcing - offic e, janitorial, travel, mail
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Negotiations Purchase order processing
Contract management (e.g., janitoria l services)
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Repairs and maintenance
Employee data management
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Supplier database management
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Lease management Utilities management
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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
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Outstanding execution of the support activity is a core competency and source of sustainable competitive advantage for the business
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Activity enables core competencies of business but does not serve a core strategic role
Ø In-house capabilities are underdeveloped relative to outside vendors
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Ø Act ivities do not expand the skill set of top talent
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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
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Efficiency Ø
Outside vendor is able to capture economies of scale or skill that the business unable to capture
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Maintaining support functions in-house is optimal for productivity and cost effectiveness
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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
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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
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Require critical mass of users to make the economics attractive
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Pilot begins with 10 businesses. ACCESS negotiates discounted pricing from service providers and businesses receive 1 year of free business support services.
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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
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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
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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