Robert A. Oliver
Let’s say you’re a prospective entrepreneur, and you have a great idea. A disruptive, innovative, problem-solving idea that hasn’t been seen before. A potentially lucrative idea.
You truly believe that this idea of yours could drive a business, so—like any entrepreneur in your shoes would do—you get to work. You build a business plan and set up meetings with potential investors. You start ironing out sell sheets, marketing materials and a strategic timeline to bring your idea to the public.
As the pieces start to come together, you’re feeling good about this project. But there’s one area of your business plan that you—like countless entrepreneurs before you—haven’t considered.
Once you get funded, and once your startup company gets off the ground and starts generating profits, who’s managing your finances?
To stay competitive in rapidly changing business climates, companies of all sizes and across all industries are constantly looking for new ways to cut costs, increase efficiency and ultimately boost profits. This is especially true for startup companies in the hyper-competitive innovation/technology space.
One tried-and-tested way of trimming fixed overhead costs is by outsourcing some of your company’s day-to-day operations that aren’t part of your primary capabilities. These can range from global manufacturing companies sending parts of their supply chains overseas, to outsourcing your payroll and HR functions. Outsourcing certain tasks goes a long way in helping organizations meet productivity goals, cut back on overhead costs, and ensure company employees are using their time and energy to focus on core competencies.
In this article, we’ll discuss the strategy of outsourcing your organization’s back office. In other words, we’ll discuss the advantages of working with a third-party advisory team rather than hiring an internal chief financial officer, controller and/or accounting team.
Here are a few key reasons you should consider hiring a third-party financial team to manage your startup organization’s back office:
You’ll save time (and sanity).
Successful entrepreneurs should only do what only they can do. By leaning on a financial services provider to complete complex, time-consuming tasks like bookkeeping; transaction and tax return processing; auditing; and year-end financial reporting, businesses can save a significant amount of time. These tasks take hours upon hours of time to complete – hours you and your internal employees can spend focused on your company’s core competencies.
You’ll save money.
Employing a full-time “back office” to manage the financial side of your business is expensive. To adequately handle the workload, you would likely need to offer full-time salaries and benefits to a team of back office employees; plus, you’d need to lead a search for a chief financial officer or controller.
By outsourcing your back office, you’ll significantly cut back on your company’s fixed overhead costs, while ensuring your accounting functions are still operating efficiently and accurately.
You’ll protect your business.
Mark Zuckerberg’s famous “Move Fast and Break Things” mantra may be good advice for innovators. But it’s terrible advice for the financial side of your business.
Keeping accurate and organized financial records is incredibly important to the long-term success of your company, and it’s crucial that you practice responsible financial habits from the very start. Back office as-a-service providers have the industry’s best technology and use the industry’s most updated accounting and financial software. They’re also seasoned experts in the world of financial services.
Many business leaders choose to outsource their financial tasks simply for the peace-of-mind of knowing their business is fully compliant with all local and federal financial rules and regulations.
You’ll gain the data, and the confidence, to create and execute an informed long-term business plan.
Financial reporting ensures businesses are complying with industry standards and tax regulations – but, perhaps more important, access to accurate, real-time financial information helps business leaders make informed, big-picture decisions related to the company’s future.
Whether you’re applying for a hard-to-get small business loan or seeking funding from angel investors or venture capital firms, accurate and up-to-date bookkeeping, along with clear and insightful financial statements, could mean the difference between getting the money you need so your business can grow or having to call it quits very early in the game.
Finally, you’ll have all the benefits of a CFO – without giving up equity.
Outsourced accounting and finance firms can provide an outsourced or fractional CFO or Controller to help provide the experience, insights and benefits of a CFO or Controller without the costs of a full-time employee. That means you’ll have a highly skilled financial professional in your corner at all times, ready to give you the counsel you need to grow your big idea into the company you’re envisioning.
You can learn more about BlumShapiro’s outsourced accounting and finance team services by clicking here.
Robert Oliver is a Director in the Consulting Practice at BlumShapiro. He can be reached at email@example.com or at 860-231-6634.
BlumShapiro is the largest regional business advisory firm based in New England, with offices in Connecticut, Massachusetts and Rhode Island. The firm, with a team of over 500, offers a diversity of services which includes auditing, accounting, tax and business advisory services. Blum serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies. To learn more visit us at blumshapiro.com.