THA 044: The Importance of Back Office Operations – Part 1

Talking Points:

• Controls
  • Accountability to the cash in the business
    • This is a task that should not be delegated
  • Who has authority to sign checks or use credit cards.
  • All receipts accounted for.
  • Open Mail and Pay the bills. If owner OK. It should never be an employee that does both tasks.
  • If owner delegates check writing, they should sign every check with every receipt attached for review.
  • Systems and process hold people accountable.
  • Look at the credit card statement and bank transitions daily.
• Stages of business will impact all areas of the business.
  • Bootstrap- Doing it all yourself Focus on Sales and Marketing
    • Many techs have turned business owner.
  • Growth-Work and Sales coming in are causing overwhelm –  Focus Team with Systems and Processes.
  • Scale-Work is there, systems are working – Focus on Leadership.
    • Your team runs your business.
• Operations
  • You get consistency and improve communications, so the ball doesn’t get dropped.
    • We get our bad reputation when communications fall down.
  • The bigger you get the more important good systems are. So good systems can help you grow.
  • You need to have a bulletproof system. Done the same way every single time.
    • This is your staff’s way of being accountable which makes communication strong with each other. Customer included.
    • Your Bible.
  • Systems include Policies, Processes and Procedures:
    • Policies contain statements of intent, rules to abide by, and standards that are expected.
    • Processes put the tasks needed to satisfy the Policies in order and defines who will do the tasks and when they are to be done.
    • Procedures define how each individual task is done, and essential information to be able to complete the task without assistance.”
  • Systems and processes sound complicated but one step at a time is how you eat the elephant.
    • The work put in pays off.
  • When all systems and processes are followed, when a problem arrives, it is easy to go back and find if there was any break in the system.
  • How to get there:
    • Get the techs to buy in.
      • We get better organized and improve production
      • Create a win-win.
    • Created as a team. The person doing the job can help write exactly what they do and when they do it.
      • Easy to create the system/process off of that as a start.
    • You get a level of professionalism in your shop.
      • They will be seen as professionals as an outcome of your great systems/processes.
    • Hire part-timer. Delegate some of your job to that person. Get them to document the job and processes, then create the system.
    • Create your own system as a start. Give it to your team to improve it. The buy-in is so important.
• Accounting and Finance
  • Kim survived an IRS audit for one reason.
    • Run your business as if you are being audited.
  • Quick Books is used by the entire Academy panel.
    • Some SMS systems integrate with Quick Books.
  • Keeping good records and being organized is a pillar of a well-run business.
    • Example of an IRS audio went from 3 days to 3 hours because of the quality of the recordkeeping.
    • Run your business as if you were being audited.
  • Having an outside accountant is important. Also, they help with tax issues and to help verify the integrity of your numbers.
    • Watch for estimated tax issues.
  • A Profit & Loss statement ( P & L) is a steering wheel for your business.
  • The balance sheet shows you where your assets and liabilities
  • KPIs get created from your numbers and are critical to measures of success.
  • Do not mix personal with business.
  • If you own the property and it is a separate entity. Keep the cash and expenses separate.
  • The value of budgeting can help you through lean sales months and spending options.
  • Putting your cash away for the lean times makes budgeting an important tactic in the business.
    • Lean times vs good times.
      • If no layoffs you need cash to pay the bills during slow times.
      • Your staff should know you are sitting on your cash to support the business in the lean months.
  • Keeping great records allows you to go back to find trends and confirm your cycles so you can staff properly and control your spend.
    • Can also create marketing opportunities because you know the future trend.
  • You pay bills with margin dollars, not margin percent.
  • Blind spots:
    • Your 1040 says you made money. Where is the cash?
      • Your cash could be in capital improvements or equipment purchases, accounts receivable, missing cash because of poor cash management, or inventory loss. There are more factors that challenge your cash position.
    • Planning ahead to know your capital expenditures will be long term.
    • Projecting your goals with your business.
      • Add to staff requires past performance and where you are going.
    • Get over the fear of the numbers. Learn them and embrace them.
    • Make changes to your systems and watch the effect it has on your financial statements.
    • Charging for shop supplies or technical fees.
      • Amy adds $4 tech fee to every ticket.
      • Charge for shipping when you need to pay for a special order.
    • Stay with your core. What is your most profitable job. Stick with that and promote it Example Brakes.