Back Office Operations and Why They Are the Foundation of a Sustainable Business

In business today, a good sustainability strategy is key to longevity in the ever-competitive market. Incorporating business sustainability into your startup’s strategy contributes significantly to its long-term success.

However, business sustainability is built on various factors. Several of which make up the functions and components of back office operations. They are broadly grouped into financial, social, and environmental factors.

That you don’t get to see back office operations doesn’t mean they are not vital. Source: Unsplash.

Back office operations are the unseen part of businesses. They are the behind-the-scenes actors in your startup that ensure the smooth running of other business activities. Back office operations serve as one of the pillars of business sustainability, and as such, they influence the long-term success of your business.

Understanding sustainability in business, back office operations, how to run them effectively, and developing regulations that keep them in check is essential.

Back Office Operations for Startups: What are they

Back-office operations are activities run by the back-office of your startup. The back-office operation of businesses is the portion of the work-force with minimal or no client contact.

They are responsible for record maintenance, accounting, regulatory compliance, clearances, settlements, etc. They are primarily made up of the administration and support personnel whose responsibilities facilitate the function of the front office with their client-facing duties.

Let’s examine some major back office operations startups should focus on to ensure sustainability.

Legal and regulatory framework

The contract between an employer and employee is a legal one that should have the force of law. The same applies to the relationship existing between a business and its customers. All these are what make having a business legal and regulatory framework essential to the effective running of a business.

You have to ensure a legal and regulatory framework is in place that defines in clear times how these contractual obligations are to be carried out. This legal framework should also provide a remedy for a breach of any provision in it.

With a legal and regulatory framework, the business and everyone in it knows what lines they can and cannot cross, which helps prevent everyone in the business from making costly mistakes.

Legal operations are as important as every other back office operation. Source: Unsplash.

Human Resources

The hiring, onboarding, training, and promotion of employees in a business are largely carried out by the HR department. Ignoring the activities or importance of the HR department to any business can be detrimental to its productivity.

However, what is more dangerous than not having this department is failing to invest in it. The quality of employees of a business is only to the degree to which the HR department is quality. HR is the interface between the business and its employees. As such, it is a back office operation that plays a key role in business sustainability.

Financial operations

Many of the things that will be done to advance a business will require money. Putting in place a comprehensive and viable financial operation is not just a plus in today’s business world; it is a necessity.

Financial operations, here, go beyond the management of cash flow. It also has to do with preparing the right financial documents, creating compensation bands for employees, and sourcing profitable investments for the business.

Despite being invincible and working behind the scenes, the back-office personnel provide some essential operations needed by the business.

The functions of the back office significantly influence the longevity, sustainability, and success of your startup. Therefore, the effective running of these operations is paramount, as they serve as the backbone of your startup.

Why Back Office Operations are Important to Your Startup

There are numerous reasons why back-office operations are important to your startup. A few of these include:

They are the bedrock of business sustainability.

Back office operations may not necessarily be those you get to see in the everyday running of the business, but lack of it has visible consequences.

They are responsible for operational tasks, information management, and organization. They ensure the effective running of other aspects such as quality recruitment process, legal security, and financial stability of the business. To be more direct, they are responsible for functions that help to ensure a healthy and effective workflow.

They increase employee productivity.

Back office operations are systems designed primarily for effectiveness. When these systems are in place, it makes it easy for employees to function at their best.

For example, an effective HR department will provide training programs for employees that helps to improve their knowledge of a task. With more knowledge comes increased productivity.

The back office personnel and systems focus on time-consuming activities and give the front-office room to function without interruption. They provide them with the necessary data and information needed to maintain an efficient workflow.

Back office operations also reduce the workload of the front office, allowing them to work better, attend to clients, and improve the overall productivity and performance of your startup. 

They ensure data security.

The back office is responsible for the management, organization, and safety of important data and information.

Although handling voluminous amounts of data and information is challenging, back-office employees are specially trained for this. They create a system that allows them process the data acquired daily, thereby enhancing efficiency and productivity in your startup. 

While back-office operations are crucial, building a back-office team may be financially tasking and challenging, especially for startups. To save cost, these operations can be outsourced to talented professionals who will provide outstanding services at a cost-effective price. 

How Back Office Operations Influence Business Sustainability

Building effective systems are vital to your startup’s success. Also, ensuring that these systems are not just effective but consistent is essential. Well-run back office operations are invaluable to your business. They can affect your overall business operations and significantly affect valuation.

Inconsistent back office operations and practices result in compliance issues, unwarranted risks, inaccurate data and financials, and reduced employee morale. This ultimately leads to limited business growth and business failure.

Conclusion

Back office operations can take different forms depending on the business type and size. However, while there may be variations with these operations, one thing is certain, every business needs them. They help to avoid downstream, making a costly mistake, or creating an atmosphere that affects employee productivity.

References

HBS Online: Business Insights

Verint: The Definitive Guide to Back Office Operations

Universal Class: Business Commerce: Legal and Regulatory Requirements

Software Techniques: 7 SIGNS OF AN EFFECTIVE HUMAN RESOURCE DEPARTMENT

About AbstractOps

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We understand that ops can be painful. If you have any questions or need assistance with your ops, drop us a note at hello@abstractops.com. We’ll do our best to help.