By: Bill Webster, firstname.lastname@example.org, Startup entrepreneur and Blogger at Suitless, Inc.
5 min. read
Bill Webster was a startup client of Suitless Inc. before he joined the team in October 2020. As a client, he engaged Suitless to walk his startup through the process of setting up benefits, bookkeeping, and an HR portal to ensure he had all his bases covered. Now, as Head of Business Development at Suitless, he works to ensure other startups and business owners understand the value of these services and receive the guidance and support they need.
I’d wanted to get serious about rock-climbing for a long time, so I took a trip to Hueco State Park in west Texas to free climb. I looked forward to the fun 3-day weekend. I already knew some of the basics, like tying a square knot and the importance of edging. However, when I thought of all the other skills I needed to learn — how to tie a bowline, create and clean an anchor, etc. — I became kind of paralyzed.
It seemed like a lot, but fortunately, I had experienced rock climbers with me to teach me the ropes (pun intended).
When I was creating my first startup, my cofounders and I were similarly paralyzed. We knew some of the basics regarding how to set up benefits and manage bookkeeping and HR. However, when it came to acronyms and number mixtures — W-2s, ACA, FLSA, 1099s — the world started to look a little foggier. It was a lot to manage.
Categories of Founders
Generally speaking, when it comes to managing HR and Finance, there are three types of startup founders:
- DIY – These founders tend to be perfectionists. They want to be sure they know it all, and they want to do it all. However, to learn all the ropes in HR and Finance (or alone grasping GAAP vs. IFRS), they end up needing a long learning curve. And usually to the detriment of their business’s development. They’ll get it eventually, but they’ll need the cash runway to get them there, which may not please investors.
- Dabble and Pretend – These are the founders who are interested in learning more but they don’t find the time to be the DIYs. They’ll usually “wing-it” and try their best to dodge all the legal and financial landmines scattered on the horizon. It ends up being more work than they expected. They usually need to find an expert quickly to organize the chaos that develops.
- Ignore and Proceed – These are the founders who could care less about this stuff. They want the business to grow, and they are hyped about their product. They see HR and Finance as “bureaucratic mumbo jumbo” that can be handled later. These founders find themselves in deep water rather quickly. They spend a lot of money getting things fixed and keeping an HR and/or Finance professional on staff to manage all the problems once they become too big to ignore any longer.
Courage and a Strong Partner go a Long Way
Regardless of what type of founder you are, I’m writing this to you. To every current founder, small business owner, and even to those who are just thinking about creating a startup: Don’t be afraid to get your feet wet. Get a partner you can trust to walk you through things. Just as you wouldn’t risk your life by climbing the side of a mountain with no experience and no one there to guide you, you shouldn’t risk your business by trying to manage complex legal processes with no support.
Types of HR & Finance Partners
Nobody’s perfect, and all of us have a learning curve. But you can shorten it and save resources by understanding the various kinds of partnerships out there that can help you.
- HROs – Human Resource Outsourcing can be a massive help in many ways, as they are a one-stop-shop for benefits and HR questions. Engaging them can save you a lot of money, as an HRO typically costs half as much as a full-time employee. However, since they just share and teach you their knowledge, there is still quite a bit of DIY involved. And you’ll still need to pay someone to do your finances, since HROs don’t typically cover this.
- PEOs – Professional Employer Organizations are a great way to grow a team quickly. They essentially employ your employees on your behalf, offering them the benefits you select and charging you a base fee plus monthly fee per head. Usually, you’ll get okay customer service, a hotline to call, and maybe a dedicated account manager. However, you can’t survive on one of these forever, as they’ll get too expensive. Your employees are also kind of held captive by the PEO, and they usually don’t provide the hands-on learning you’ll want as a founder. As a result, there will be a sizable amount of DIY needed to round everything off.
- Flat-fee services – I stumbled across a fantastic concept with Suitless.com (who we are). Suitless is a tech-savvy expert team that uses the latest technologies to provide businesses with solid HR and Finance setups. They use an affordable subscription model, so you can pay as you grow. This keeps costs down as you start out, and it gives you all the expertise needed to navigate uncharted territories. When I engaged this team, it was like having an experienced climber next to me. They could tie the knots or teach me how to tie them if I’d need to do so in the future. It was like having them take the step ahead of me when I wasn’t sure of things. I loved it so much that I joined the team!
As you stand before the seemingly endless abyss of HR and Finance needs, make sure you can work more on building your startup and less on setting up your startup. Find a partner like Suitless.com to get you an affordable solution to meet all your HR and Finance needs.