You’re the best in the business, but you never went to business school… Many business owners “fell into it” because they turned their passion into a business. After all, if you were the best plumber at your previous employer, why wouldn’t you go out and do it on your own, cutting out the middleman altogether? Often the business administrative activities are the last thing on your mind when you’re planning on getting your business off the ground. You’re probably thinking about the end-product or service you’ll be offering to your clients, not the back-office operations! While it’s obviously important to offer the best product or service, it’s equally important to ensure you think about how you’ll manage the “business” side of running your business.
Let’s think about our friend, the plumber, who started his own plumbing business after realizing he could increase his margins by doing it on his own. Mr. Plumber has gone out and purchased the tools he needs to get the job done right. He’s got inventory on hand so he can service his customers faster than his former employer (now competitor). Mr. Plumber has even been attending plumbing conventions so he can learn even more about the trade to be the most trusted expert in the field. He’s ready to go out and make that money!
Day one, he gets a call from his first customer, who is located just 5 miles from his office, but is in a different city than his physical location. He happily drives his truck over to the customer and completes the job in half the time that his competitors can do it. The customer is thrilled, and Mr. Plumber is already seeing the referrals flood in! A few months later, he’s done work in cities all around the metro area. Someone from his previous employer isn’t happy about the increased competition, so they start trying to figure out where Mr. Plumber’s weak spots are. Something they know that he may not know, is that some cities require a business license to perform work in those city boundaries. The competitor calls the city to request confirmation that Mr. Plumber is licensed to perform work there. Turns out, they don’t have a license filed with that city… that means he could be hit with fines and could be required to stop doing business until he’s got the license. This could be detrimental to his company, especially if he can’t get that license quick enough to continue working all the scheduled plumbing jobs in his pipeline (no pun intended!).
Mr. Plumber has never registered for a business license in another city, so he wonders where does he even begin? He’s also got a full schedule booked out, so where will he find the time to start calling all the cities to get the process started? This is one of the benefits of outsourcing back-office operations. An outsourced back-office will know about business licenses (and by the way, the corresponding sales taxes in each city!), they will file for the business licenses, track the due dates for renewals, and ensure the business is in compliance.
In addition, an outsourced back-office can help with invoicing, calling on past-due accounts, paying your bills, managing your cash flow, and more! You started your business to do the work that you’re good at, not to spend your time on all of the administrative tasks required to keep a business running successfully.