Staying Competitive and Profitable

Every start up, small business, for-profit or nonprofit, faces the challenge of staying competitive in the marketplace and turning a profit.  Businesses must sell products and services at prices high enough to exceed direct and administrative indirect costs.  At the same time, customers and clients continually seek more cost-effective ways to buy products and services.  In the nonprofit sector, donors are demanding greater efficiency from the charitable organizations they fund.  So how can supply and demand unite to create a win-win situation?

Businesses must be creative to meet market and profit objectives. New technology has a lot to offer, and not only to big businesses; however, most of start-ups and small businesses do not use one of the most “obvious” choices:  going virtual on the majority of non-core functions – by outsourcing.  Exceptional consulting services are often considered to be pricy, and unavailable for the smallest businesses. A two-person small business does not have a highly trained accountant, tax person, HR specialist and general counsel available at all times. As needs arise, such small businesses try to find “someone” to do the work on a contract basis.

Virtual corporate service providers are a newer breed of consulting services. These consulting firms can perform a business’ entire back-office functions: accounting, finance, project management, government contract management, human resources, payroll, and taxes.  Some may even offer legal services. Utilizing these services allows the business to save on space, wages, taxes, furniture, equipment, and supplies.   It also saves time – there is no need to advertise, interview, or look for a part time person to do the smaller tasks, nor is there the need to have to deal with work hours and schedules, vacation or sick day coverage or temporarily replacing a departed employee. 

Some virtual service providers offer their services as a fixed price “package”. The business client may not need all the services in the package, but the package is structured and priced in a predetermined way.  It may result in choosing a higher priced package just to make sure that all needs are met, even if it also means that there are services in the package the business would not fully utilize.

Some consulting companies offer services on an “a-la-carte” basis. The business client can pick and choose what is needed, and the price is set accordingly.  Still, the price offered could be a fixed price or as an hourly rate – either way, the cost is much lower than it would be in traditional consulting settings, when the consulting professional is visiting the business in person.

In a virtual corporate service environment, all work is done using the internet in a secure, protected environment. All ledgers and documents can be seen by both client and provider at all times. The virtual office can take care of day-to-day accounting and bookkeeping, payroll processing, bank reconciliations, and also can assist with every HR matter, from looking for candidates to assisting the business to set up a benefits package.

As the business grows and its needs change, so can the services provided. This flexibility is probably easier to achieve in an “a-la-carte” type of service offering, it is easier to add, change and modify service needs tied to the precise requirements rather than trying to fit a growing business into an already set package. 

The result of taking advantage of these services is multi-fold:

(1) significant savings on overhead costs, up to about 25%-50%

(2) higher net income,

(3) increased business mobility (e.g. a new subsidiary can be opened anywhere in the world without worrying about staffing the back-office),

(4) flexibility to add “ad hoc” or short-term services, like assistance with development and submission of an incurred cost agreement, or costing a proposal,

 (5) no additional costs incurred to find a specialist

(6) significant reduction in the risk of financial fraud (i.e. check tampering,  just to mention one),  

(7) flexibility in the structure of the service agreement, (e.g., it is often an option to switch or mix virtual and traditional consulting services),

(8) increased access to consultants; there is a way to reach someone during the weekend or late in the evening to talk in person, should there be a need.

Still, the great majority of start-ups, small businesses, sole proprietors, private schools, and non-profits do not know that such complex virtually available services are out there.  Some assume that these services are too expensive for a very small business, or that they are too small for a virtual service to be interested in helping them. Some company leaders also want to “see” their consultant every day to ensure “accessibility”.

As client expectations for pricing is changing, all have to find a way to do more with less – while at the same time, trying to stay competitive and profitable. Businesses are looking for new solutions and want to find less traditional, more innovative ways to take care of business. Getting all or most of the non-core functions handled virtually will be the answer for most start-ups and small businesses in meeting their market and profit objectives.

About the Author: Ms. Pacher is a Managing Director at Corvinus Consulting Group LLC. She is managing Virtual Corporate Services offering back-office support to start-ups, small businesses, non-profits, schools, sole proprietors virtually. For more details on the services, please click http://myvirtualcorporate.com.