If you’re launching an early-stage startup, chances are there are some knowledge gaps in your core team.
For example, you may be strong on the technical side or a product whiz, but what about financial strategy, administration, and human resources? Are you prepared to manage the day-to-day operations of your startup; from recruiting new talent to bookkeeping and financial planning? If you have a knowledge gap within the ecosystem of your organization, you need to fill it.
Your in-house startup team needs to focus on developing products and services, creating partnerships, and earning revenue. Your internal resources should be focused on your core competencies, not on ancillary side tasks.
So, what should you do? Outsource supporting roles to professional consultants.
Outsourcing Essential Job Functions
Outsource whatever services you can to save on staffing costs, generally the largest business expense of them all. Most importantly, you’ll have the support you need and assurance that these functions are being taken care of by professionals.
To get started, every small business can outsource the following 3 job functions:
1. Chief Financial Officer (CFO)
If your company has closed a seed round of funding or is earning more than $250K per year, you need a CFO to handle your financial strategy and run your accounting team. Even if you’re not yet funded or earning significant revenue, you may still be in need of CFO services. For example, if you’re in high-growth mode or have a lot of activity or expenses, you definitely need a financial professional to oversee your financials.
Depending on your needs, a consulting CFO may be able to help with financial projections, cash forecasts, operating budgets, financial plans, pricing, reporting, debt management, M&A, equity and debt negotiations and liquidations.
Overall, CFOs help you with business planning, providing your business plan with essential rigor. Your business is creating a product or service; finance is not your business. Look for a professional CFO who has experience working with startups.
2. Business Accountant
If your financial status doesn’t warrant hiring a CFO, you still need financial support; at the very least, you’ll need help with your day-to-day accounting and regulatory compliance. Outsourcing your bookkeeping to the right firm will give you the support you need for cash management, AP/AR, financial close and taxes.
You can also hire a consulting group to provide accounting support on a project basis. So, whether you need help with audit preparation or generally accepted accounting principles (GAAP), your accounting partner can give your accounting issues the attention they need — so you can focus on the core of your business.
3. Human Resources (HR)
Any entrepreneur can attest to the fact that HR can be a total time suck. From recruiting to managing personnel issues, from compensation to benefits, from payroll to employee policies and procedures, human resources management can take over your entire schedule.
HR costs include much more than wages. All HR functions, while non-revenue driving, have an associated cost. Outsourcing your HR functions is definitely a cost as well, but when you calculate the per employee cost (and consider the invaluable savings of staying in compliance) it becomes clear that this is a necessary business cost.
While your company is in its early stages, it’s essential to get support, but only as you need it. To outsource doesn’t mean you should just hand over all job function and forget about them. You’ll still want to be apprised of all aspects of your startup; hiring the right consulting groups will insure that you stay informed.
Remember, you don’t outsource to make a service disappear; you outsource to reduce your cost structure and keep your internal resources focused on your business. When you outsource necessary functions on an as-needed basis, you can concentrate your internal team efforts where they are most needed: growth. And the companies you hire will help you stay on track as your company grows to the next level.
David Ehrenberg is the founder and CEO of Early Growth Financial Services, a financial services firm providing a complete suite of financial services to companies at every stage of the development process. He’s a financial expert and startup mentor, whose passion is helping businesses focus on what they do best. Follow David @EarlyGrowthFS.
© YFS Magazine. All Rights Reserved. Copying prohibited. All material is protected by U.S. and international copyright laws. Unauthorized reproduction or distribution of this material is prohibited. Sharing of this material under Attribution-NonCommercial-NoDerivatives 4.0 International terms, listed here, is permitted.