One of the questions always asked about start-ups and growth stage companies is around the size a G&A function needs to be to support the business effectively. It is rather like asking "how long is a piece of string?" Well, it depends ...
It depends on the business you're in, its stage of development, its ramp up rate, its geographical coverage and factors such as the strength and depth of the management team. My rules of thumb, which I'll expand on and explain in future blogs:
- Keep it small. Duh! Same for anything that is not a core asset to the business. Core assets are the technology, the brand, the customers etc. Not G&A. But make sure its good enough for where you are now and - eventually - scalable enough for where you're going
- Outsource as much as possible of the basic transaction processing and bookkeeping
- Outsource human resources - including the benefits function
- Don't spend too much on space
- Develop a relationship with a good audit firm
- Get a good insurance broker. But not for benefits ...
- Have a good law firm - but don't use them too much
- Get good market compensation data (not for G&A, for the whole company) and develop a compensation structure early
- Make sure the systems are in place to match the business you're really running and automate wherever possible
- Make sure that G&A really reflects G&A - not a bucket of spend that belongs to Sales, Marketing, Development etc.
- The key early stage hire - the best Office Manager you can find!
- At the right time, get a good Controller or Finance Manager
- The CFO role is different ...
"Outsource" doesn't mean then hiring a bunch of contractors instead. It means using some of the great services out there that will not only support you now but scale to support you in the future. Some examples:
- Corefino, a Silicon Valley early stage company that supplies on-demand (on-line) bookkeeping services
- Trinet human resources outsourced services
More on all of this soon!
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