Founders - Don’t DIY your People Operations

For a lot of founders, People Ops feels like something they can figure out later. After all, how hard can it be to handle payroll and benefits for a small team?

This is the siren song of DIY People Ops - and it lures many founders into treacherous waters.

At airCFO, we've seen countless startups learn the hard way that throwing together HR processes in the early days can create expensive headaches down the line. Often, these issues surface at the worst possible moments - like during due diligence for your Series A or when you're racing to close a key hire before runway gets tight.

Let's break down some of the most common People Ops pitfalls that can sink your startup:

The Multi-State Compliance Maze

Think hiring that brilliant engineer in Colorado is as simple as sending them a laptop? Think again. Each state has its own particular registration requirements, tax obligations, and employment laws. Miss one filing, and you could face penalties that make your burn rate spike overnight. We recently worked with a startup that had to pay over $50,000 in penalties for operating in three states without proper registration—money that should have gone to product development.

Workers' Comp: The Coverage Catch-22

Many founders assume their general liability insurance has them covered. But workers' comp requirements vary by state, and having gaps in coverage can be catastrophic. One missed form or misclassified employee can trigger audits and fines that drain both your cash and your team's productivity.

The State Law Maze

Did you know that pay-cycle timing requirements vary by state? Or that meal break laws can differ by city? These "minor" compliance details multiply as you scale. We've seen startups forced to overhaul their entire payroll system mid-growth because their DIY approach couldn't handle multi-state requirements.

Federal Laws Don't Care About Your Size

Think being small exempts you from complex regulations? The Americans with Disabilities Act, discrimination, and other federal laws apply even to tiny teams. A poorly handled accommodation request or discrimination complaint can spiral into costly legal battles.

The Real Cost of "Figuring It Out Later"

Beyond the obvious financial risks, DIY People Ops can create:

• Inconsistent policies that lead to team confusion and resentment
• Messy compensation structures that make scaling harder
• Compliance gaps that spook potential investors
• Cultural debt that's harder to fix than technical debt

A Better Way Forward

The good news? You don't have to choose between "winging it" and hiring a full HR team. Here's what proactive founders do instead:

1. Partner with Experts Early | Getting professional People Ops guidance doesn't mean breaking the bank. Fractional support can help you lay the right foundation.
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2. Invest in Scalable Systems | Choose HR tools that can grow with you, not just handle today's needs.
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3. Document Everything | Create clear processes now to avoid "tribal knowledge" headaches later.
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4. Stay Proactive on Compliance | Regular audits are cheaper than penalties.

The bottom line? Your people are your most valuable asset. Treating People Ops as an afterthought isn't just risky—it's a missed opportunity to build the kind of workplace that attracts and retains world-class talent.

Ready to level up your People Ops? Let's talk about how airCFO can help you create a back office that's built to scale.