Mar 16, 2020
Why Your Startup Should Be Outsourcing Critical Processes
In one of our recent blog posts, we talked about startup growth strategies and what entrepreneurs need to do in order to facilitate sustained growth. When discussing a startup’s need to scale properly, we mentioned outsourcing and how choosing and deciding which roles and processes to outsource is very important for high-growth startups who wish to sustain their upward trajectory.
Most startups strive for a leaner work model and are run by a small number of key employees who usually end up wearing several hats at the same time. With money usually being pretty tight in startups, sometimes team members want to do too much in order to cut expenses, which often leads to unmanageable workloads and, inevitably, mistakes.
So what can you do as a startup that needs help in certain areas of your business, but doesn’t have the money to hire for these positions in-house just yet? When you reach the point at which processes in your company become strained and the quality of work starts tapering off because people are spreading themselves too thin and performing tasks that they are not qualified to perform, then you know it’s the right time to look into outsourcing.
What Are the Benefits of Outsourcing for Startups?
There are some roles within startups that don’t necessarily require a full-time hire in order to be handled professionally and properly. That isn’t to say that these responsibilities aren’t important. One of the great things about operating a business in modern times is that you have a massive amount of technology and software at your disposal to help you manage just about any work process for which you may need help.
Being able to effectively outsource certain roles and administrative processes can create great advantages for startups and small businesses that know how to do so properly. According to a recent survey published by Clutch, roughly 37% of small businesses outsourced at least one important business process in 2018 and 52% reported that they planned on doing so in 2019.
Outsourcing key business processes will enable your startup to save money while also freeing up vital members of your team to focus strictly on the business processes they specialize in and are best suited to perform.
Running a startup is never cheap. You need to pay for your technology and infrastructure, software and hardware, office space, employees, staff benefits, your startup’s insurance, and a number of other things that are at the core of your business and what your startup creates and offers.
Outsourcing in order to save money and lower operational costs will put your startup in a better position to scale properly and establish itself on the market.
Processes and Roles to Consider Outsourcing
While it’s inherently true that every business is unique in its own way, it’s also correct to say that there are essential processes that every startup needs that can be outsourced. Before your company makes a decision on which processes can and should be outsourced, it’s important to perform a detailed analysis of your organization and identify what tasks make the most sense for you to outsource.
You can make this decision by identifying which of these processes fall outside the expertise of your team members and which you believe can be handled properly without having to hire someone in-house to perform them.
Let’s take a look at some of the most common business processes that growing startups should and do regularly outsource in order to stay lean but fully functional while scaling their operations effectively and thoroughly.
Most startups don’t really need to hire a full-time accounting team in-house until they see significant growth and a shift towards an increasingly complex organizational structure, which is why a variety of financial processes can be easily and effectively outsourced.
One excellent solution for your startup’s accounting and bookkeeping needs is AirCFO, a cloud-based accounting solution that specializes in working with startups and small businesses to take care of all their bookkeeping needs. The platform offers professional accounting services at a very attractive price point, enabling businesses to free themselves of these worries in order to focus on getting other, more pressing things done.
If your startup offers an equity program to employees and other key members of your organization, you should be looking into Carta as well, an industry-leading capitalization table management and valuation software. Carta will take these complex issues off your hands and make sure that your startup and its investors don’t have to worry about managing equity plans, cap tables, valuations, and investments.
Human Resources and Payroll
Here’s where choosing what you outsource could get tricky. Obviously, making the right hires and managing your growing team is an incredibly important part of scaling your startup. For this reason, many startups might prefer to hire people in-house to run these processes.
The truth is that you’re probably going to have to hire a substantially large team in order to perform every phase of hiring, onboarding, benefits management, and so on. On top of that, the fact that there are a few incredible outsourcing solutions available to you for all your human resources needs should be reason enough to give them a look and consider outsourcing these processes.
One excellent outsourcing solution is TriNet, a cloud-based professional employer organization for small and medium-sized businesses. Startups can let TriNet take care of not only the most critical aspects of human resources but also some of the most mistake-prone processes that come with the territory. TriNet can manage your payroll and health benefits. They can also provide expert advice and consulting related to employment law compliance and risk reduction.
Zenefits is another great option in this space that can help you with a huge number of vital human resources processes, including but not limited to the management of employee benefits programs, compliance, vacation tracking, health insurance, and payroll.
While we’ve already talked about some of the greatest challenges that the human resources leaders of every growing startup surely face, there’s one that probably takes the cake in terms of how chaotic it can get. We’re talking about recruiting.
Turnover is a huge issue in the startup world and the challenge of not only finding good employees but potentially having to find replacements for them several times a year can wear anyone down.
The biggest problem is that there’s very little that startups can do to remedy this problem. No matter how many great benefits you offer, how cool your office, and how relaxed your vacation policy is, the competition is so fierce that turnover is almost inevitable.
So imagine how whoever is in charge of recruiting in your startups feels when the goal for growing your team demands 50 new hires over two years, but because of turnover issues, they are actually going to have to recruit and hire closer to 75 employees in order to reach that goal.
According to a recent survey of 25 large, hyper-growth startups and companies, 25 percent of employees leave the company within a year. And that’s at billion-dollar private companies and unicorn startups!
That’s why, for smaller businesses and startups, recruiting is one of the best processes to outsource. A good recruiting and hiring solution to look into is Zoho Recruit, which helps with both applicant tracking and recruiting, making it much easier for whoever is handing these responsibilities at your company to handle and manage the workload.
Workable is another excellent online recruitment tool to check out that’s very much focused on the recruitment process and can help companies cut the time it takes them to find talent, track applicants, and hire new employees in half.
Startups need to navigate a very complex web of laws and regulations, which makes their legal expenses incredibly high. One of the main reasons for this is that when a startup’s in-house lawyers make a mistake in their work that could potentially lead to an incredibly expensive legal malpractice claim, for example, that company literally runs the risk of being financially crippled by it; especially if the startup hasn’t purchase strong lawyers professional liability coverage.
Atrium is a fantastic startup that helps other startups tackle their legal issues, and for a lot less money than it would take them to do so even if they outsourced a regular legal team. Atrium’s software takes care of a lot of the legal busy work that law firms tend to bill you for by the hour and gives your small legal team everything it needs to run efficiently. By systematically changing the entire relationship between businesses and legal teams, Atrium provides businesses with increased legal transparency and predictability while significantly decreasing their legal spend.
Customer service is not what it once was; a few people manning the phones and offering assistance to clients. Today, there are so many channels involved in customer communication and care that just thinking about answering not only calls, but also messenger apps, social media, emails, in-app notifications, and more, can cause your head to spin.
Thankfully, there exist a great number of excellent platforms that focus on making this entire process less treacherous for startups that can’t afford a customer service team that numbers in the hundreds.
The leader in this space is Zendesk, offering businesses everything they need to manage their customer support efforts within one platform, including help desks, knowledgebase management, live chats, support ticket management, and much more, helping you to decrease costs and increase the productivity of your support team.
One other great feature that Zendesk offers is that it allows you to customize the customer-facing interface of their platform and brand it according to your companies colors and logos, providing a truly seamless experience that doesn’t feel as if any of the customer service efforts are being outsourced.