related event in the past 12 months, you’ve heard talk about BPO and moving your business to becoming an Outsourced CFO. We’ve even written about it, but it has been several months so it seemed like the time was right to revisit the topic to help shed some light on the topic.
In order to write the article, I sat down with Steve Schultz of Supporting Strategies recently to get a pulse on the BPO business. We interviewed Steve back in April. You can read the full content here.
In this follow up interview I want to talk to Steve about the “build vs buy” approach to building a
IA: The last time we spoke I asked you to describe your business and you said “We provide outsourced bookkeeping and operational support, we do transactional accounting (AP/AR/Payroll/revenue recognition) and month end close and financial reporting. Think bookkeeper through controller, so not the CFO. But our services involve improving the client process, instituting best practices, and developing the workflow to include as much automation as possible, so in most ways you could think of us as more like BPO than CFO.” Is this still accurate?
SS: That’s a very good description of what we do for our clients. We currently have 15 Supporting Strategies office locations across the U.S., and each operates as a BPO practice focused on bookkeeping and controller-level services. Supporting Strategies Partners supports our franchisees with all of the tools and support services they need to run their practice.
IA: Where is BPO currently in its lifecycle? Is it crawling, walking or running?
SS: Our industry is very much in play, and many companies are positioning themselves for the rapid growth we anticipate for BPO services. Yet the market for outsourced accounting services is still in its infancy. So while I would say we are running, demonstrated with the rapid introduction of new products and new technologies, we are at the beginning of a very long race.
IA: Let’s say I am a believer in the BPO model, but not sure if franchising is the route I should take. What are the steps I would have to take in order to turn my business into a BPO business?
SS: So this question implies that you want to become a business, and not just deliver these services as a sole practitioner. To become a BPO “business” one must address the issues of scale, technology, workflow, talent acquisition, and best practices and procedures. You must bean open capacity model, and be process driven. All of your clients should experience a consistent experience.
IA: How much of that work would be eliminated if I went the franchise route?
SS: By nature, a franchise business already has all of these components built in. Once you recognize that you need those characteristics you then have to ask yourself if you want to build your own infrastructure or leverage an infrastructure and operational methodology that is proven and tested. I believe it is cheaper and more effective to use that leverage.
IA: Have the franchises you’ve sold been to people with existing practices and client bases or have any of them been ground floor startups? If startups, how long did it take for them to understand the business model?
SS: Franchisees really come to us in two main buckets. They either have an existing bookkeeping business or CPA practice offering bookkeeping services, or they have a professional services background (ie: insurance, banking, cfo…)
Either way they need to understand finance. They need to know their way around a balance sheet and P/L statement. For the financial professional, they tend understand our model rather quickly. We have seen our Franchisees really start to get traction with our BPO model within the first 6 months of operations.
IA: I’ve heard the term technology stack mentioned in many conversations when discussing an outsourced business model. What does the “stack” typically consist of and what are the must have’s in the stack vs. nice to have’s?
You need access to your Accounting Software, we use Quickbooks Enterprise hosted by Right Networks, or Quickbooks Online.
You need cloud-based Data Storage, this must be secure and highly available. For this we use Smart Vault.
You need to manage your critical client information, and work flows. We have built our own proprietary client management database called “Workplace” tm.
And you need collaboration tools to allow your team to work effectively in a remote environment. For this we utilize Microsoft office 365.
We have several web seminars that outline our offering, including the technology stack and other key elements of the business, that your audience can view on our website.
IA: What are the characteristics you’ve seen of the people who have been successful in setting up or running a BPO practice?
SS: Good People and good Systems. These are two components every BPO must have. The model that we have found successful is to hire experienced accounting professionals who seek part-time work that they can do from their home office. Of course, there are several ways to do this, but it is our opinion that hiring skilled accounting professionals as opposed to folks that may not have as strong of a background allows them to wear many hats for the client, and to work well independently.
IA: How is the proliferation of Apps changing the way Supporting Strategies does business? Are you constantly evaluating new Apps and offerings or are you pretty stable in what you have in your offerings?
SS: Once Intuit opened their API’s to the development community the amount of Apps available to us increased. The clients now benefit from increased efficiencies and capabilities. We now have out of the box options for services once requiring custom and costly solutions. Our Service Excellence team tests all of the products we use and insures they both meet our client’s requirements and that we are properly trained on how to use them,
IA: Lastly, what do you think the next “big thing” is that will impact the accounting profession?
SS: The next big thing is the cloud, but not only on how it makes many of these new products readily available, and makes outsourcing possible, but in the way it enables our community to participate in the rapid growth of our industry. This represents freedom for our clients, our employees and the BPO practices that best harness the power of the cloud in the delivery of our services.
Based on what Steve outlined above, BPO is about a lot more than keeping the books for some clients. BPO is about building a sustainable business that can you can grow and hopefully sell or pass along to your heirs.
What do you think? Does BPO offer opportunities? Could franchising be the way of the future for the profession? Do you already run your business as a BPO?