What is Back Office and How Does It Help My Business Succeed?

A blessed day, leader! This article is a summary of a video podcast by Pastor Ron Bayron and Michael discussing the importance of the back office and explaining how it contributes to the success of organizations. We hope that this episode gives you a better understanding of what the back office is, why it’s essential to your business, and how it can contribute to the success of your company.

You can listen to the podcast for free on Spotify here.

Pastor Ron Bayron is a CPA by profession and the CEO of The ABBA Initiative and its subsidiary, YAHSHUA Outsourcing Worldwide. His passion is helping businesses like yours grow and achieve stability. He also believes that helping entrepreneurs like you is a means of indirectly blessing the community, as businesses influence and build up the economy.

Taken for Granted, Yet Critical to Stability

What is the Back Office and why is it critical to your company’s stability and progress?

The back office is typically taken for granted by the majority of business owners. They frequently miss out on opportunities or, if they don’t, are unable to develop a stable back office.

But what exactly is the back office?

The back office consists of your bookkeeping, your records, your human resources, including the hiring process, your employee policies, and of course, payroll and employee benefits. In addition, you also have there your tax regulations and other government regulatory compliances.

In other words, it’s called back office because it is very critical to the organization’s stability and progress. It’s a required component of a business, yet it does not generate income or revenue. In contrast, the front office focuses on creating revenue and income, such as extending the market, attracting customers, and growing the business.

Both the front office and the back office are essential business components.

The majority of businesses and entrepreneurs are only focused on front-office operations, or they are only equipped in terms of identifying their target market and clients or customers, as well as marketing and sales; however, they also need to address back-office concerns about recording, accounting, and all that was mentioned.

Why is this important?

Consider this analogy: If your face is the front office, the back office is your internal organs. You won’t be able to smile or talk to people properly if your internal organs, backbone, and everything else is malfunctioning. So your smile is likely distorted if everything inside is crumbling.

“If you have the face as the front office in your analogy of a person, the back office is your internal organs…”

The Important Question Every Entrepreneur Should Ask

Why is the back office important?

Imagine something like this.

You go out and sell to customers, who then purchase your products. You collect their money, go home to your office, and then you put it there somewhere. And then you find out or realize later that the money you brought into the business through your hard work of selling and acquiring clients or customers has been lost, and you have no record of where the money went. But you already know you made a sale.

And yet, when you look at your books — probably your passbook or your bank account balance — you don’t find your money. How disastrous that will be! This is a simple but common experience for entrepreneurs. They are unaware of what is happening in their company.

“But you know you had a sale. And yet, when you look at your books — probably your passbook or your bank account balance — you don’t find your money.”

Make Sure That Your Business Will Continue to Exist

How does the back office help businesses succeed? Why should you focus on the back office?

1. Monitor Your Progress

“So, the back office actually helps you understand the health of your organization. It helps you monitor your progress.”

The back office helps you understand the health of your organization. It helps you monitor your progress. It helps you to implement policies, procedures, and even train people.

Training is part of the back office. You need to equip your people in terms of how they’re growing and doing their jobs. Training is essential and it’s a back-office role.

In other words, if you really want to be able to make sure that you will continue to exist in the next five to ten years, you need to have:

1. a strong, stable back office,
2. records,
3. processes that are properly installed,
4. policies that are properly implemented and being followed, and
5. employees who are trained well and continuously being trained for growth and improvement.

2. Stay Compliant

You cannot pause them (government requirements). They will continue to be a requirement. They will continue to be complied with.”

Government requirements, taxes, and remittances, among other things, have to be complied with. This is very important. Having a hard time in your business is never an acceptable excuse for noncompliance. Don’t think that the government will understand. They are not going to.

Even during the pandemic, which affected many businesses, the BIR continued to collect taxes. Of course, they had programs to soften the impact of the pandemic. But, even with the programs that they provided to soften the impact of the pandemic, they still collected. Certainly, this is understandable. If they don’t collect, what will sustain our government?

These are critical responsibilities or accountabilities of an organization or a business that you cannot take for granted. You can’t just pause them for a minute because you’re having problems with your customers or clients. There’s no way you can pause them. They will continue to be a requirement. They will continue to be complied with.

For the Department of Labor and Employment (DOLE), even if your sales were negatively impacted by the pandemic, it is never a valid reason not to remit employee benefits like SSS, PhilHealth, and Pag-ibig. If you have employed people, you will have to comply with the monthly submission of reports and government remittances including BIR taxes. You will have to follow the laws and regulations with regard to labor. You must adhere to this even when preparing documentation such as official receipts or invoices. You cannot say, “I don’t have an accountant or a bookkeeper; that’s why I cannot comply with this. So, sorry, BIR.” That’s never going to be accepted.

Don’t let a lack of support in your back office cause the government to find loopholes in your operations and records that may, in turn, weaken your business.

3. Support and Maintain Your Growth

“…if you take for granted your back office, and it’s very unstable, and it’s very irregular in terms of doing back-office activities, it will eat up all your efforts or destroy all your efforts in the front office.”

If you take your back office for granted and it’s very unstable and very irregular in terms of doing back-office activities, it will eat up all your efforts or destroy all your efforts in the front office.

In other words, even if you say, for example, that I am increasing my client base because that is what I do, I expand. I reach out to more markets and bring in more clients. Even if you grow your market, if your back office is not stable, it cannot support the growth in your market. Later on, you will discover that there are many things that you will not be able to do to support and maintain your growth.

Let’s say, for example, that you have increased your number of customers, but you have not trained your people to handle more clients. Eventually, you will destroy that market growth. Or, if you say that you have more demands or that you have an increasing demand for your product, but in your back office — let’s say, for example, your inventory is not properly monitored, your purchasing team is not, your purchasing person is not, or your purchasing activity does not keep up — because the lack of records and monitoring and the policies in terms of purchasing are not implemented, even if you have a high demand for your product, you will not be able to provide it because your back office does not function well.

The back office is like your basket, while the front office is the person who brings in the fish. The back office’s purpose is to keep the fish. However, if you continue fishing but your basket isn’t strong enough to handle the number of fish or opportunities coming in and has a hole in it, you’ll lose the opportunities you’ve gathered. As a result, you are passing up opportunities. You’re missing the fish you’re supposed to keep. You keep losing because of a lack of support from the back office.

“Even if you grow your market, if your back office is not stable, it cannot support the growth in your market. Later on, you will discover that there are many things that you will not be able to do to support and maintain your growth.”

Finally, as an analogy, if your back office, which is your internal organs or the engine in your body, isn’t working properly, no matter how good-looking you are, you’ll eventually distort that good look on your face because you’re having problems internally. That’s how vital the back office is. Its significance to every business and entrepreneur cannot be overemphasized. That’s why YAHSHUA and ABBA are here to assist businesses and make sure that entrepreneurs can continue growing their businesses. ABBA and YAHSHUA are here to help them have a stable, organized, and sustainable back office.

Key Takeaways

After learning the back office’s critical role in ensuring the long-term health, growth, and success of your company, you can now see why it deserves your attention and why you should make it a priority.

• The back office is very critical to the organization’s stability and progress. If your face is the front office, the back office is your internal organs. You won’t be able to smile or talk to people properly if your internal organs malfunction.
• The back office assists you in understanding the health of your organization so that you can determine which policies to implement and how to train your employees for continuous growth.
• To make sure that you will continue to exist in the next five to ten years, you need to have a strong, stable back office.
• The lack of support in your back office may cause the government to find loopholes in your operations and records that may, in turn, weaken your business.
• If your back office does not function well, you will not be able to handle business growth, and you will keep on losing opportunities.