PEOs: The Lean Startup’s Best Friend
Time is money.
For most entrepreneurs and startup founders, both come in limited quantities that must be wisely and strategically allocated in order to ensure success. Yet the realities of starting and running a business necessarily include dealing with such tedious tasks as payroll, compliance, and benefits management just to name a few. These critical yet mundane tasks often suck up an inordinate amount of valuable working time. What’s a startup looking to stay lean to do? Consider hiring a Professional Employer Organization (PEO). As any entrepreneur will tell you: if you can’t do it (or just don’t have the time), find someone who can!
1. Create and Maintain HR Infrastructure
Look at a PEO as a ready-made, plug-and-play solution to a huge problem every business owner faces: how to set up the infrastructure, the bureaucratic nuts-and-bolts of a business, that allow a business to operate smoothly. This infrastructure includes a host of administrative tasks such as employee benefits, payroll and workers’ compensation, recruiting, risk/safety management, and training and development. As an entrepreneur, you could try and become a consummate expert at each and every single one of those tasks, hire your very own (and expensive) HR department, or outsource all the paperwork to a third party!
2. Attract and Retain Talent
An important component of the holistic HR infrastructure, many PEOs offer, includes hiring, onboarding, retaining, and if need be, firing, employees. PEOs can provide the resources and expertise to discover, screen, and put the best job candidates in front of you. And should things not work out as planned, they can also carry out the less savory aspects of managing employees, including tricky terminations while still maintaining compliance with employment law.
3. Reduce Costs
One of the obvious benefits of partnering with a PEO are the comparative potential cost savings versus hiring in-house staff. Rather than paying full salaries and benefits to HR professionals, lean startups can pick and choose what services they need, a la carte style, from a PEO for a fraction of the cost. Better yet, by leveraging their client base through a process called “PEO pooling,” PEOs can often negotiate better rates and expanded benefits on your behalf.
4. Ensure Compliance
One of the biggest mistakes startups and small businesses make is ignoring compliance issues. This is doubly true for lean startups still in the early stages when an audit or noncompliance fee could not only ruin a company’s finances, but also it’s reputation. As most entrepreneurs know, reputation is everything when it comes to raising funds from investors. As it turns out, winging it may make for a good story, but it certainly isn’t a winning strategy.
5. Save Time, Energy, and Focus
Time is money. As a leader, a business owner, and an entrepreneur you know when to take calculated risks, and when to bear those risks in partnership with others. In this case, partnering with a PEO can dramatically reduce your startup’s legal exposure, ensure compliance, and more importantly, save you time. This is time better spent in pursuit of mission-critical objectives, raising funds, and vision casting. Don’t waste your time on the paperwork when you can be leading the company to success.
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