“Today’s reality…just makes it more logical to attach support facilities like health and retirement to an individual and not to a place of work.”

Interview by Mike Sullivan of Sully’s Blog

Erik Vonk is CEO of BOTH-USA, LLC, also known as Back Of The House.  Erik Vonk is an internationally recognized thought leader and expert in the field of flexible work arrangements, contingent workforce strategies and HR outsourcing.  He has established and profitably grown the operations of Randstad Staffing Services in North America from a greenfield start to reach $1.5 Billion in 8 years. As Chairman and CEO of Gevity HR, Inc he has strategically repositioned the company from a traditional PEO insurance arbitrage business to a recurring fee based HR outsourcing market leader, substantially increasing revenues and profitability in the process.  Erik is a passionate advocate of new, equitable engagement platforms for organizations and contract talent. He is a frequent speaker and successful consultant.

Back Of The House provides supporting services for self-employed professionals, freelancers and independent contractors.  This includes bookkeeping, tax services, financial reporting, health insurance, retirement options and more. BOTH handles all of the administrative hassles that consume the valuable time of self-employed professionals, allowing them to focus on what they do best.  BOTH simply and cost-effectively transforms self-employment into a professionally configured “Company of One” by setting up and/or maintaining a Limited Liability Company for each client, assigning a Personal Adviser, establishing hosting and supporting an individual I.T. infrastructure, and beyond.

MO:
BOTH is practically a business in a box.  You provide all supporting areas that a sole business owner could need.  The administration of these necessary areas is a large area of struggle for many entrepreneurs.  How did you identify this need and realize there was business here?

Erik:
Right! BOTH is indeed a ‘business in a box’! Back Of The House is your 1 stop, turnkey pathway to an exciting and rewarding future as an autonomous, professionally configured and fully supported Company of One! Whether you currently work as a consultant, a freelancer, or on a 1099 basis, (self) incorporation offers a host of advantages and benefits. However, the perceived burdens of business ownership and fear of the unknown are either seen as obstacles or lead to unnecessary mistakes by many independent professionals.

Years ago, when I ran Randstad Staffing Services, there was a growing cadre of Independent Professionals who told me that we had replaced ‘Job Security’ by ‘Income Security’ for them. That was a fantastic compliment! ‘But’, they said, ‘can’t you put all the support you provide as our temporary employer, in a “rucksack”, so that our lives aren’t interrupted every time when we move from project to project?’. Self-incorporation was technically the answer, but that essentially moved the support burden from us to them. So, the challenge was to find a way to let someone enjoy the advantages of business ownership, but without the burdens. It wasn’t until 2007, long after leaving Randstad, that the answers were found. That’s when the ‘Company of One’ concept was developed – a completely unburdened and fully resourced mini company with Fortune 500 support.

MO:
Obviously most entrepreneurs are not professionals in the areas of HR, Taxes, Business Structures, Health Benefits and the other areas you support.  How much time and money do you estimate the average sole professional spends trying to get their arms around these things when they could be focusing on delivering for their customers?

Erik:
We estimate that on average 12 to 15 hours per month are ‘sunk’ into non-core support activities. For professionals who serve multiple clients, that number is higher. Overall, approximately 8% – 10% of valuable time that could otherwise be billed, evaporates!  That is a terrible opportunity cost! Plus, while doing all this ‘non core’ work, lots of money is spent on advisors – tax, legal, accounting, health, retirement, liability insurance, etc. – that don’t know of each other what they know about you. Expensive, inefficient and risky. Our services have been designed to a) reduce or eliminate direct expenses and opportunity cost, b) improve efficiency through a single point of contact approach and c) eliminate risk by providing support AND oversight.

MO:
One service among the many offered by both is a personal office manager.  Explain how this works.

Erik:
Our Personal Advisor is core to our concept. An experienced, highly educated (CPA, Law degree, etc.) dedicated professional is assigned to each client as a single point of contact. This pro-active, tailored 1 stop service has been designed as the antithesis of ‘self help’. The Personal Advisor runs your back office for you, manages your IT support and monitors your receivables, bank balances, due dates, filings, taxes, insurances, etc. No help desks or call centers to hassle with; just one number in your cell phone for any question about any aspect of your business. Personal ‘Chief Operating Officer’ would be a better title….

MO:
Your website, backofthehouse.com, encourages independent professionals to sign the BOTH Declaration of Independence.  Just what is this declaration and what does it represent?

Erik:
By signing the Declaration of IndependenTS, you join a rapidly growing pool of independent professionals who want to stay informed of important developments in the world of work. After signing receive a short monthly newsletter called the ‘Un-Job Post’. Once the community is large enough, we will offer communication and collaboration facilities, free of charge.

MO:
Is there a threshold where it makes sense for an independent professional to leverage BOTH?  That is, is there a minimum amount of revenue a person should be generating before considering your service?

Erik:
Yes, there is, but it is fairly low. A bill rate of $20,- to $25,- per hour or an annual billings of $40,000.- to $50,000.- begin to justify the use our services. Our fees start at $149,- per month for a basic support package and are only $399,- a month for our all-in, full service level. When I say ‘only’, it is because the sum of the components, if bought individually, represents a market value of triple that amount. Further, the Company of One status make our fees tax deductible. The full service level is by far the most used option because it covers all the common needs of a business owner, including billing, collections, bookkeeping, banking, a hosted IT environment, a website, wellness benefits and a personal advisor. The only expenses not included in this amount are premiums for individually underwritten health plans and liability insurance – which are also tax deductible, by the way.

Our hosted IT environment is a turnkey, fully managed, cloud computing service. Our clients access all of their applications, files, email, calendar, contacts and collaboration tools through our Portal Desktop. Whether working from headquarters, a remote office, at home or from the road, all you need is Internet access. PC, Mac, iPad, iPhone it doesn’t matter, we are hardware, OS and browser agnostic. Work from anywhere – at anytime – on any device. This is a truly unique composite of Software as a Service (SaaS) and genuine, personal support.

With BOTH you can really be in business for yourself, not by yourself.

MO:
You have an impressive history with your time and accomplishments at Ranstand and Gevity, not to mention authoring a Book, Don’t Get a Job, Get a Life!  What has been the most important lesson you have learned in business?

Erik:
Thank you! The most important lesson is that work needs a new platform. An employment contract is no longer an efficient instrument to connect people with work. Today’s reality is that the dynamism in the employment market just makes it more logical to attach support facilities like health and retirement to an individual and not to a place of work. That is what is now accomplished through BOTH: being employer and employee at the same time. As your own employer you provide yourself with benefits, retirement plans, protection and support. Perhaps we should call that the employou instead of employee! And, your legal status as a Company allows you to sell your competencies or services as a Vendor, not as a Worker. As a Vendor you are subjected to different, more attractive legal and tax regimes than as a worker. The lesson is that work needs a new platform and it is very gratifying to be providing the solution!