Allen Baler: Two Departments Startups Should Outsource

Allen Baler Blog Outsourcing

When you’re in the beginning stages of growing your company, every dollar counts – each one you bring in, and each one going out. While you are in “hustle mode” getting your enterprise off the ground, there are strategies that will help you strike a balance between investing where you must and not breaking the bank. In other words, it’s best to heed the advice given to business owners from time immemorial: “Better to be pound-wise than penny-foolish.”

 

It’s probably safe to say most startups begin on a shoestring budget, even if there are angel investors involved and the business climate is warm and balmy. You may be in fast growth mode, but with that acceleration comes complications. Your inner circle that you’ve started with – maybe just a handful of people in core roles – will not usually have the specific skills to protect your business legally and financially as you make a bigger splash in your given market. The key is to ascertain which areas could be your Achilles heel, and strategize accordingly to prevent bumps in the road that might derail your progress.

 

Regardless of your business model, there are two major departments you’ll need to outsource, due to their complexity and potential land mines when your business fails to be compliant.

According to David Ehrenberg in an article from Forbes.com:

“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.”

Here are the two departments that are my choices for aggressive-growth startups:

 

Human Resources. Gaining an edge over the competition isn’t just about products, services, or marketing; it’s about the people who become your organization. Contracting the services of a sharp HR firm that understands not only the skills your business requires to thrive, but also grasps your vision and company culture is crucial to long-term growth. There’s also that pesky matter of staying compliant with the moving target that is HR law, and avoidance of pitfalls that you may have no idea are taking place. By outsourcing your HR department, the legal burden falls on your contractor, not your fledgling business.

 

Legal Services: This one should really be a no-brainer. Unless you are an attorney specializing in corporate law who’s suddenly felt the itch to branch out and add “entrepreneur” to your resume, it’s best to leave the “legalese” interpretations to the people with a “J.D.” after their last name. By using a legal consultant instead of hiring a full time legal counsel you don’t need (yet), you only pay for the time and services for things such as incorporation paperwork, contract reviews, partnerships, and trademark/copyright issues.

 

As with any business decision, vet your professional service providers carefully and be sure to get references from active, existing clients of theirs, where possible. Ask tough questions and only work with firms who seem to care about your business’ success. Also, think small. Many veteran HR and legal professionals have left big company gigs to hang their own shingle out, and inherently understand the entrepreneurial journey (because they are on it themselves). Their rates are usually a bit lower, yet their knowledge and expertise are second to none.

 

Outsourcing important departments is like taking a vaccine against potentially deadly infections – of a financial or legal nature, which could ruin your prospects. Think of them as partners in your business growth strategy, looking out for potentially hazardous conditions and paving the way to unfettered success.

Allen Baler is a leading entrepreneur and Harvard grad. Allen Baler is a Partner in 4Patriots LLC, based in Nashville.

Disclaimer: This blog post is not a substitute for the sound advice of a business professional with expertise in the subject matter discussed. Please seek appropriate counsel on what strategies make sense for your business.