Bench Startup Faces Major Layoffs Amid Business Restructuring Challenges

Bench, an accounting and tax startup, recently underwent significant layoffs following its acquisition by Employer.com in a fire sale last December. Although the company did not disclose exact numbers, insiders estimate that dozens of positions were cut, impacting key departments such as client success and the U.S.-based tax advisory team.

Previously, Bench raised over $110 million in venture capital and more than $50 million in debt but never achieved profitability. This financial strain led to an abrupt shutdown, laying off its entire staff and leaving thousands of customers without access to their financial records.

Employer.com acquired Bench for $9 million, rehired most of its workforce, and pledged to revive the startup. However, many employees remain on short-term independent contractor contracts rather than full-time positions, a temporary measure intended to onboard staff quickly post-acquisition.

The company has also faced operational challenges, including a high churn rate of customers after the April 15 tax season deadline and delays in completing tax filings. Some customers expressed frustration over being charged for services previously paid for under former ownership, although Bench maintains it honors all pre-paid services.

Employer.com’s Chief Marketing Officer, Matt Charney, emphasized that the layoffs were necessary to address legacy issues and turn around the business, not part of a strategic outsourcing plan. The company is exploring longer-term workforce solutions and plans to grow Bench’s features and headcount in the future.

Bench’s story highlights the challenges startups face in achieving sustainable growth and profitability, especially in competitive sectors like accounting and tax services. The acquisition by Employer.com demonstrates how strategic buyouts can rescue struggling companies, but also underscores the complexities of workforce management, customer retention, and service delivery during transitions.

Key Takeaways for Tech Startups and Investors

• Significant layoffs may be necessary to address legacy financial and operational challenges post-acquisition.
• Maintaining a flexible workforce through independent contracts can facilitate rapid onboarding but may impact employee stability.
• Customer churn after critical service periods requires strategic management to balance profitability and client retention.
• Transparency with customers regarding service changes and billing is crucial to maintain trust during transitions.
• Post-acquisition growth plans should focus on enhancing product features and rebuilding workforce morale.

Bench’s journey serves as a case study for startups and investors on the importance of sustainable business models, strategic acquisitions, and adaptive workforce strategies in the tech-driven accounting sector.