When preparing for 2011, Nathan Beckord, principal at Venture Archetypes, a San Francisco-based start-up and small-business consulting firm, advises companies 'to hope for the best, but plan for the worst.'
He says it's essential that businesses have a firm understanding of what initiatives their finances can support so they don't end up with 'a half-completed, stalled out store development or a lot of excess inventory losing value in a warehouse.'
Instead, Doug Williams, president of Doug Williams and Associates, a small-business consulting and website marketing firm in Vancouver, Washington, recommends developing operating budgets that are more flexible to today's business environment. 'You need to be able to shrink and grow at a moment's notice,' he says.
With that, when budgeting for 2011, businesses should spend considerable time looking at their office and operations outlays to see where they should expect to invest more and where they might find opportunities to save. Here are some areas to consider.
Office & Operations Budget: Back-Office Outsourcing and Virtualization
Beckord says the biggest challenge to building out office and operations budgets for next year relates to hiring, namely, whether 2011 will be the year conditions improve enough for businesses to start adding headcount again, or 'If we're in for another period of survival mode and doing more with less.'
Adding employees introduces a wrinkle to the office and operations budget because it might mean shelling out for new office furniture, computers and phone lines.
Williams, however, expects that to be a problem relatively few businesses will have. Rather, he predicts small businesses will opt to do more with less regular staff, especially in so-called back office positions like human resources and office administration. 'It's less about having to plan a level load of work and more about planning for peaks and valleys,' he says. 'It's about having the capacity to grow and shrink as business grows and shrinks.'
For example, Williams said he contracts out writing services. 'I don't have to employ these people, but I have a number of contractors that I can use that are paid by the job,' he says. 'I'm not there to keep them going on a full time basis, but I'm able, based on how jobs come in, to be very scalable.'
Beyond workers who handle assignments on a per job basis, your might consider a virtual personal assistant (VPA). Unlike secretarial services -- which are focused on one-time, short-term project work -- virtual assistance is more about providing ongoing administrative support. Utilizing a VPA is one way to quickly add to or reduce your workforce. Services like AskSunday.com or GetFriday.com promote themselves as time and money savers for small businesses. For a fee, owners freelance out tasks like meeting organization, presentation development, data entry, or Internet and database research. Paying for this service could mean a percent of revenue from the project, or a fixed amount in the budget. GetFriday.com, for example, offers a 'pay-as-you-go' plan that charges $15 an hour. Additionally, it offers monthly plans for a certain amount of hours each month for a flat fee (40 hours of assistant work will cost you $360 a month, or $9 an hour).
You can also handle your own back-office operations with bundled software like customer relationship management programs. CRMs using cloud computing charge a monthly, like Salesforce CRM group edition for small business, which costs $25 per month. Again, you'll want to assess your available budget for using the software over hiring a live employee.
Should you become ready for a new hire, Donna Weinstock, president of Office Management Solution, a consulting firm in Northbrook, Illinois for small businesses in the healthcare industry, says you should budget for that by looking at what you're paying out now and what your projection is in terms of staffing. She says you'll also want to look at what your potential is for raises and insurance and adjust your budget to reflect that. In addition, if you think you're going to be scaling down, then budget for that, too, she said.
Office & Operations Budget: Supplies, Shipping and Rent
There are also things that are pretty much a given for any office—such as supplies, toner, rent, and equipment. So when it comes to deciding, say, how much paper you expect to use, think about securing contracts with office supply companies in advance to guarantee the best prices. However, it's important not to get complacent once the ink is dry. There could be a better offer just around the corner.
'Reviewing supply budgets should be ongoing,' Weinstock says. 'If the local store has a sale on paper or another item you need, then it is wise to buy it from there as opposed to your regular vendor. Monitoring prices can have a huge benefit to your budget.'
Similarly, when it comes to shipping and other big costs, having options is a good way to keep expenses in check.
'In an office budget, I look at where the major expenditures are,' Willimas says. 'If shipping is a major expenditure, I will never have just one source for shipping. I will always set up multiple sources to negotiate contracts with a few different carriers to try to get better rates. Basically, you're looking for control elsewhere so that you can control expenses when things are down, but you are also scalable so that you can ramp up very quickly when things are looking up.'
Another regular expenditure -- and often one of the biggest costs in your budget -- is rent. With an abundance of commercial real estate on the market, you might be able to find a new, more favorable lease or have an opportunity to renegotiate your existing terms. Again, you'll want to maintain as much flexibility as possible in case you need to expand – or contract – in a hurry.
Predictions abound for 2011. Developing a budget for your front and back office needs that adjusts to the ebb and flow of a changing business environment will help you manage your way through any conditions.