Making Creative Business Managers Succeed
I talk to business managers every day. When they are a sales prospect and they hear that we do outsourcing, the first question is often: if we hire you then doesn’t that put me out of a job?
The answer is a resounding NO.
What does a business manager do?
The Business Manager of a creative firm is a woefully misunderstood creature. They do the job of at least three people (accountant, HR pro, operations manager) and often many more. They typically have been with a firm a long time and they inevitably have touched every part of it. The business manager somehow ends up doing everything that nobody else wants to do, or that is too tricky or risky or boring for anyone else to take up. They help with the books, they pay bills, they make sure invoices go out so the business has cash. They onboard new hires, administer benefits, do the payroll, sign contracts, settle co-worker disputes, act as psychiatrists… they pretty much run the place.
Having a dedicated business manager is a big step in the growth of a firm. When you’re starting out, anyone who’s not doing something that can be billed for seems like a luxury (and probably is). Many times, a business manager worked in the discipline of the firm but naturally started to take on administrative work either because of experience doing it, interest in it or simply a desire to help. Owners see this initiative, know the person already (so there’s a level of trust) and say “Jane, great job handling this payroll. I’m promoting you to Business Manager!” Jane may or may not be happy about this (since she’s a designer) but dutifully does the job to help the firm.
Fast forward twenty hires and many more contracts and Jane is busy. She probably has help: a part time bookkeeper, a CPA doing taxes, maybe an HR consultant she brings in from time to time. But largely she keeps the trains running on time through sheer force of will. The owners start to ask her for financial projections and what-if scenarios. The state audits your payroll.
Things get real. Jane probably works sixty hours a week but would deny it if you asked her. She does it without complaining because that’s the job of the business manager: keep the firm moving. But the reality is that Jane can’t be an expert in everything she has to touch.
Outsourcing for Business Manager Success
Let’s imagine a firm in California with nineteen designers, a business manager, a sales manager, an owner-president and an admin assistant, bringing in 4M in revenue. That’s 211K per designer or 160K per employee, which is across the professional services sector is pretty good. It’s so good that the owner decides to bring on another designer and thus a 25th employee.
The business manager reaches into the filing cabinet (maybe even the Dropbox!) and hands the new hire the start paperwork that HR consultant put together sometime in the past. What the business manager probably doesn’t realize is that as soon as the new hire signs their offer letter (assuming they have an offer letter), our firm has just become responsible for:
Offering drug & alcohol rehabilitation as part of its benefit package
Having a COBRA program (so employees can keep their health coverage when they leave)
Offering leave for medical treatment for domestic violence, sexual assault and stalking victims
Offering leave to military spouses
Of course, the likelihood that any or all of these will be a problem on the first day is low, but that’s the thing about compliance: if you wait until there’s a problem, then you’re not compliant.
This is where outsourcing helps.
For a fixed monthly price, someone keeps track of this type of compliance and warns you when changes are necessary. They also can handle the paperwork and admin side of the onboarding so that the business manager can focus on the human element of the hiring process: culture onboard, workspace set up, team introductions, welcome doughnuts (just a suggestion), you get the idea...
These days, a dusty folder (or even a dusty Dropbox) with forms compliant with last year’s laws doesn’t cut it and it shouldn’t be up to the business manager to stay on the bleeding edge of every issue.
Now let’s look at accounting.
Let’s say our firm is using an app to track time and expenses. They’re already on the right track! Problem is, some of the designers are hourly employees. Now they need to track time in the app AND fill out a timecard for the payroll system. Hopefully that time ties off, but if it doesn’t it can have consequences for your project profitability. And if the business manager just takes the hours worked from Harvest to run the payroll, there may not be a record of clock-in and clock-out times for hourly employees and that means your payroll is out of compliance.
Let’s say our firm also makes AP purchases to complete some of its projects. Now the project’s total cost information doesn’t live in Harvest. Now we’re tracking the project’s all-up cost in a spreadsheet.
The business manager works with the design leads to make sure the spreadsheets are always up to date, but expense reports don’t always come in on time, and even when they do, sometimes approvals get stuck on someone’s desk or in their inbox. The bookkeeper helps but doesn’t really understand what the projects are or know when the contracts close and he might not really be empowered to care. Once in a while Jane calls up the CPA to ask a question but he takes forever to get back to her and always sends a bill for their call.
If Jane worked with Tee Lex, for a fixed monthly price, she can meet regularly with a finance director who has 20+ years working with creative firms. They have a team tracking Jane’s project accounting and corporate accounting every week, combining time, payroll, expenses, AP, AR, project profitability and general ledger accounting in real time, in a single system of record. Jane can get up to date insights from a customized dashboard about project and corporate financials, HR insights and more.
Rather than spend time cross-referencing spreadsheets and checking the bookkeeper’s work, Jane can work with the project leads on adding value for customers, optimizing employee output and service quality, maximizing profitability and creating insightful reports and forecasts for the owner.
Rather than spending an hour making the check run and another hour fighting with the printer, Jane gets a queue sent to her email with images of all the invoices to paid, and all the relevant information that might not be on the invoice like the project number and who approved it before her. She approves with the touch of a button and electronic payments go out at a fraction of the cost of a check and a stamp.
The time she saves adds up fast. It time she can spend managing vendor relationships and running down transactions that don’t look quite right without holding up other payments.
There’s so much a business manager does that no one else can – wouldn’t it be great if Jane had time to do it? Learn more about the benefits of outsourcing here.
But how much does it cost?
A business manager is probably thinking “we could never afford this.”
It’s true, a lower-end mid-market business can’t hire its way out of every jam. If Jane sits down to scratch out a hiring budget for the help she needs, she might come up with something like this:
Finance Manager: $137,383 plus taxes, benefits, etc.
Project Accountant: $85,731 plus taxes, benefits, etc.
HR manager (one with the goods): $98,565 plus taxes, benefits, etc.
And no, 400K is not in the budget. But does Jane really need three full time people? No, what Jane really needs is a fraction of each of them. And with good process analysis, the workload can be reduced. And with the right financial management system, Jane can get all the information she needs about cash flow, project status and firm profitability for a lot less money than hiring a CFO or an Operations Director.