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Benefits of PEOs for Startup Companies

by Matt SchoolcraftDecember 2, 2016 8:00 AM

Creating a startup venture is no easy task. Startups come in all shapes, sizes, and industries. People often think of startups as simply tech-oriented companies, but that is not always the case. Neil Blumenthal, cofounder and co-CEO of Warby Parker summarizes it saying, “A startup is a company working to solve a problem where the solution is not obvious and success is not guaranteed.”

Image of a startup company in need of help from a Professional Employer Organization.

According to Small Business Trends, “more than 50 percent of small businesses fail in the first four years.” These companies are not in the clear after year one as Forbes estimates that the overall rate of failure is somewhere between 80 and 90 percent.

There is a myriad of reasons as to why these companies fail. Whether it’s due to putting out a product too early, not having enough capital, or simply being unable to keep up with the status quo, the statistics show that the odds are against these entrepreneurs. 

One of the often overlooked aspects of running a business is Human Resources. According to the Society for Human Resource Management, there are five common HR Challenges that startup companies must face:

Five Common HR Issues Facing Startups

  • Quality Hiring: difficulty in recruiting qualified candidates that fit your company’s culture. 
  • Policy Framing: setting up expectations through the use of HR Manuals. 
  • Office Politics: trying to avoid office cliques and bring everyone together as one. 
  • Millennial Workforce: perceived lack of responsibilities outside the office affecting commitment. 
  • High Turnover: employees may leave for a stable they see as having greater stability.  

These reasons are why many startups are looking towards Professional Employer Organizations to outsource all of their HR needs. 

Advantages a PEO Provides to Startups

  • Time: One less thing to focus on for entrepreneurs already working long hours
  • Recruiting: Growing at fast pace means hiring the right people 
  • Standards: Creates Handbooks to set employee expectations 
  • Compliance: Minimize your liability and keep up with extensive governmental regulations 
  • Costs: Save on healthcare through a PEO’s buying power 

There are so many factors in keeping up and running a successful business. Contact GMS today and lessen the variables that can negatively affect your business and see how we can make your business simpler, safer, and stronger. 

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