Executive-Level Expertise, Fraction of the Cost

As a business owner, you’re no stranger to the myriad challenges of running a company. From financial management to marketing strategies, it can often feel like a juggling act to keep your head above water. That’s where expert support becomes invaluable, and fractional executives step in to provide precisely that.

We all hit the realization.

Most of us get hit with it, to be honest.

Sure, a few business owners have the leadership ability to see their gaps quickly. There are certainly those of us who are very self-aware and surround ourselves with people who have strengths we lack (or who are willing to do the work we detest).

These proactive types invest in themselves and their businesses early and consistently, and they reap the benefits of this skill.

But many of us get bogged down with lean teams, worry about excess spending and need to be more proactive. Yet, we still end up realizing it! A trigger will make a decision necessary, and we’ll finally look at our organizational structure and where we are desperate to get help and invest.

People

We have ambitious goals, and to hit those stars, we all need people. People create processes. They lead automation. They are the heart of the relationships with clients or customers, partners, vendors, investors, lenders, and so much more. They are behind the creative ideas, the operations, and the brand.

It has to start with people.

Fractional Leadership

Thankfully, Fractional Leadership has become plentiful, and most Fractional Leaders are ready to help, either way. They’ll be super inspired to get on early and proactive. But, they’ll be accustomed to putting out fires and cleaning up some mess.

What Are Fractional Executives?

Fractional executives are seasoned professionals who offer cost-effective, part-time, or interim support for growing businesses.

They bring expertise in various areas, including:

  1. Strategic Planning: Crafting a roadmap for sustainable growth.
  2. Operational Streamlining: Optimizing processes and workflows.
  3. Revenue Operations: Maximizing revenue generation.
  4. Marketing: Developing effective marketing strategies.
  5. Finance: Managing financial aspects efficiently.
  6. Sales: Enhancing sales processes.

They are passionate about your growth – or at least, the ones you should hire.

When you look at a classic organization design, you’ll see executive leadership covering many areas with a few basics:

  • CEO
  • CFO
  • COO

Along with the bare-bone C-Suite, leadership will be necessary in areas such as:

  • Technology
  • Human Resources
  • Marketing
  • Sales
  • And more

If each of these positions is six figures and many $200k++, it takes quite the entity to support leadership alone. Hence, we need to work on the investment. It is not practical or possible in the early days, and for many small and medium businesses, it would be overkill even after they are successful and growing.

Have Your Cake and Eat it, Too.

Now, with Fractional Leadership, you can afford it! And it’s practical, too. In summary, a Fractional Leader is a resource that costs a fraction of the payroll and is available a fraction of the time.

There are various structures and designs of Fractional Leadership. Generally, the team member works with you during growth until they’ve set you up to afford a permanent and full-time resource, or the processes and automation will carry you independently.

You have access to a true leader who makes an executive contribution to your team.

Generally, it will not be a consultant approach, an interim solution, or an employee model. It will combine the best of each and solve your problems.

Signs You May Need a Fractional Executive

Consider engaging a fractional executive if:

  1. You require expertise in a specific area.
  2. Ambitious growth goals are on your horizon.
  3. Critical business challenges need navigation and resolution.
  4. Your rapidly growing business needs the structure to support its expansion.
  5. Leadership support is crucial during transitions or restructuring.
  6. You find yourself working in the business rather than on it.
  7. Implementing new technologies or processes requires specialized resources.
  8. Staying current with industry trends feels like a challenge.
  9. You aim to improve leadership practices and company culture.

Benefits of a Fractional Executive

  1. Cost Savings: Unlike hiring a full-time executive, fractional executives provide flexibility. You can tap into their expertise without committing to a long-term, high-cost arrangement.
  2. Customized Support: Fractional executives tailor their services to your specific stage and scale, ensuring efficient infrastructure for your business.
  3. Efficiency: By addressing critical needs promptly, fractional executives empower your business to succeed efficiently.

Unlocking Success with Fractional Leadership

In summary, fractional leadership offers executive-level guidance without breaking the bank. Whether you’re navigating growth, facing challenges, or seeking specialized expertise, consider the transformative power of fractional executives.

Remember, success isn’t about doing it alone—it’s about assembling the right team, even if they’re only there for a fraction of the journey.

Fractional leadership is shaping the future of work. As more professionals embrace flexible arrangements, the gig economy thrives, and businesses benefit from diverse expertise without employee commitments or costs.

Fractional executives empower businesses to succeed efficiently by offering high-level support at a fraction of the cost, time, and effort. So, consider leveraging fractional leadership to propel your business forward, whether you’re a startup founder or a seasoned entrepreneur.

Remember, the fractional model isn’t just a trend; it’s a strategic advantage.

If you are becoming a Fractional Leader or hiring, exploring the various types is a good idea.

We understand this deeply for CFOs.

Our illustrative summary describes how we differentiate from the competition in our space.

There are many fractional leadership models, but there’s no right type.

Embedded Model – In this model, albeit part-time, a fractional executive becomes an integral part of the leadership team.

  • They work closely with the company, contributing their expertise to strategic decision-making and operational improvements.
  • They integrate into the culture and show up just like the others on your team (in person, hybrid, virtual, or otherwise).
  • Amplify’s Finance Leaders’ standard contracts are sold under this model.

Retainer Model – Organizations can access a fractional executive for a pre-determined number of monthly hours or days.

  • This arrangement provides flexibility while ensuring consistent support.
  • Amplify’s Finance Leaders’ standard pricing is sold under this model.

Project-Based Model – Fractional executives engage in specific projects or initiatives.

  • Companies hire them for a defined scope of work, such as launching a new product line or restructuring operations.
  • Amplify’s Consulting sells project work. Recruiting, also, places interim staff on projects, regularly.

Interim Model – Fractional leaders step in during transitions or critical periods.

  • For example, when a company experiences leadership changes or needs temporary expertise.
  • Amplify’s Recruiting places interim staff on clients, as needed.

Hybrid Model – A blend of part-time and project-based engagement.

  • Fractional executives contribute both ongoing support and targeted project work.
  • Amplify’s Finance Leaders’ standard contracts usually set priorities that reflect this model.

Advisory Model – Fractional executives serve as advisors, offering strategic guidance without direct operational involvement.

  • They provide insights, mentorship, and industry expertise.
  • Amplify’s Finance Leaders’ monthly Financial Leadership packages are light-touch and set up under this model to allow 1-3 days per month, instead of a total Fractional CFO commitment.

Virtual Model – Fractional executives serve as team members, advisors or project consultants virtually with a scalable approach, regardless of the culture or structure of the client.

As a buyer, you want to understand the value proposition, differentiation, and experience you’ll have with the various choices.

As a Fractional Leader, you’ll want to design your services to highlight your value best.

  • Why are you entering this world?
  • Is it a passion for growing businesses and small and medium organizations?
  • Is it because you’re unemployed? And, this is temporary?
  • Is it because of your unique experience that you are an ideal candidate for Fractional Leadership?

Specific Expertise – Do you have specialized knowledge in a particular area that businesses can leverage through Fractional Leadership?

Ambitious Growth Goals – Are you experienced in rapid expansion, have the experience to provide guidance, and want to shift your career toward a focus on growth?

Critical Business Challenges – When facing pivotal decisions, are you an expert who can provide advice, execute and influence others?

Structural Support – For rapidly growing businesses lacking organizational structure, are you passionate about setting up businesses to scale?

Transitions or Restructuring – During leadership changes or company reorganizations, are you a go-to for helping businesses through these challenging changes?

Strategic Focus – Are you an executive who can identify other leaders who are too immersed in day-to-day tasks and need to step back? Can you role model and help others with a practical approach to working “on the business” instead of always just in it?

At Amplify, we hire Business Leaders and expect everyone to show up as that first.

Implementing New Technologies – Can you bring tech adoption resources or expertise to help businesses scale?

We have AmplifyTech for that! And, also our Accounting Manager, Ian, who runs our tech stack for clients not yet ready for an ERP.

Staying Current – Are you an industry expert who wants to share your expertise and help businesses with trends and technological advancements?

Leadership Practices and Culture – Are you a seasoned leader and can help businesses seeking guidance on improving these aspects? Unfortunately, Amplify isn’t a training firm (yet?), as we are still too small. So, we hire CFOs and other leaders that have already ‘been there and done that’.

Aligning Outsourced Functions – Are you prepared to bring a cohesive system for outsourced roles? At Amplify, we have all the finance and accounting levels and ~ 50% of our Finance Leader clients outsource the full function to us.

Connector – Are you bringing the cumulative experience of a team, or a network that will benefit your client far more than one human employee could compete with? (Amplify does this!)

Lastly, but most importantly, you need to structure the people side of your fractional leadership.

As a business, a Fractional Leader will not be your “forever answer” (nor is any leader). However, how you outgrow the Fractional Leader depends on your chosen model and the person or entity. A clear goal will help you succeed and should be transparent and planned together.

Your strategy and goals should drive your decisions.

Here are some questions to ask yourself during your decision-making:

  • What size and complexity will you need to be to hire and justify hiring the role as an FTE?
    • When will you be there?
  • How does automation reduce the costs and needs for this role (or department)?
    • Together, do you and the Fractional Leader have an automation plan to set you up for scale?
  • Similarly, how does the process reduce the costs and needs for this role (or department)?
    • Do you and the Fractional Leader have a business optimization plan (process, documentation, controls, and governance) to set you up for scale?
  • Retention and recruitment are costly. If Fractional is longer-term, do you have the commitment you need?
    • Does the organization you’re hiring cover the transition costs and have a model to reduce disruption?
  • Cultural fit is critical, especially for leadership. Is there a transition or termination opportunity if the Fractional Leader isn’t a fit?
    • Who covers that cost? (At Amplify – we do!)
    • How is the Fractional Leader working within your culture, and what are your expectations?
  • Your business will become more complex, and your automation, processes, and people will need to keep up. Is your Fractional Leader trained and experienced with entities of the size you’re growing to?
    • Will they be able to forecast and plan for your needs and keep up with your ambitions?

To spell it out:

You’ve got to have confidence that the person you’re investing in is a match. A passion for your business and growth business is usually a must. Experience with the “chaos” of small and medium enterprises will be an asset. Someone whose career ambitions are aligned with your timelines and goals will make a big difference – are they unexpectedly unemployed, and this is a temp? Do they have a growth mindset that fits your technology, industry, strategy and overall needs? Or are they trying to coast, but don’t want to spend all their time in full retirement yet? What’s a true match for you?

How do they manage their own time? If they are on their own or running lean, will the administration and sales side of running their own business, having competing priorities of various clients, plus being critical to you, be too much?

Like any hiring, it’s an important decision. At Amplify, our cumulative experience and firm approach solve many challenges. But there is no correct answer—just the right questions!

Ask yourself and ask your Fractional Leader.

Choices are endless, and while that’s fascinating and optimistic, it makes decisions hard. We get that! We hope this helps you understand what you need and what the differences could be.

Should we Crunch the Numbers?

As a Fractional Leader, what is your solution to the challenges we discussed last week?

If you’re starting a career as a Fractional Leader, you need to ask yourself these questions when designing your business model and approach:

  • Are you going to build a team?
  • Or, is this a solopreneur career path?
  • Should you join a team?
  • If you are hiring, will it be contractors, a leverage model or an employee organization?
  • If you are joining a team, is it as a contractor, a temp or an employee?

With any business, you need to sell continually. We discuss this in our start-up eBook and Lively Entrepreneurial Talks with Amplify (‘LETs’)

Navigating the World of Start-Ups

As you approach the opportunity to get involved with Growth businesses, you can easily imagine the excellent work you’ll do, the value you’ll add, and the clients you’ll have. But, the reality is you need to get your name out there and constantly work on business development, networking, and growing your own brand or business.

There’s little or no opportunity to pause, because the “pipeline” can take a long time and require continuous effort if you want to sell out at your capacity.

Pipelines Don’t Pause

For example, if you are a solopreneur, you likely need to spend 10+ business hours (and often additional evening and weekend hours) on sales and administrative tasks.

Sales and administration reduces your standard business hours to 30-40, which you can charge out. You can top up by non-traditional business hours, but at a leadership level, a lot of the work you do is with others and dependent on their hours and availability, so that will have firm limits.

Further, at a leadership level, you are helping with people (and businesses) most time-sensitive and material priorities, so to deliver, you’ll have to ensure you’re not stretched or unavailable. These businesses are nimble and fast-moving, and you need to match that. Too many commitments at home, in the community, personally, and with many clients could impact quality and responsiveness.

So, the simple math would be that if you are $200/hour chargeable and your maximum chargeable time is 40 hours a week, that’s revenue of $8k. However, with the administration and sales time you have, which will be another 10+ hours a week, it quickly dilutes down to less than $160 per working hour.

Capacity

Top that math off with the reality that you will likely be at less than 100% capacity all year. Between your vacations, the time lapse between signing clients, and other delays and challenges, most in the space operate closer to 80%.

Some will use that downtime for additional administrative, sales, or business priorities; others balance that with time off. Regardless, it will bring you down to an average of $6400/week, likely less than $150/hour with the same pricing model.

Here is the Truth

At Amplify, contractors (including solopreneurs who work with our recruiting team as independent Fractional CFOs/controllers) who charge higher hourly rates, work less. Those more cost-effective but competitive (not cheap or undervaluing themselves, as that doesn’t sell!) are in great demand.

So, over a year, the two types make similar whole dollars per year.

This leaves you to ponder: Is the person charging more, worth more? Are they using the time to scramble and ‘sell’ themselves? If so, then they are likely making even less per hour worked than the less costly competition.

Or, on personal time they value? In this case, they are making more per hour worked, and it might make sense for them. However, after many years of working less, they accumulate fewer total chargeable hours and therefore less experience, which in the fast-paced world we work in can significantly impact your network and cumulative knowledge (of tech, industry, and other trends) and have consequences.

Costs of Doing Business

Next, you’ll reduce your hourly rate by insurance, marketing and business development costs, CPA firm registration or other compliance costs, cyber security costs, system costs, bad debt, annual tax compliance, and all other business costs.

Let’s say you spend $200 a week on meals, entertainment, marketing, and business development (an average of a couple of meals and/or some conferences, a website, etc.). If you find killer deals and stay lean, you can spend another $10k a year on compliance, tax, and insurance. Quickly, with low estimates, let’s balance it out with $5k in cyber security, systems, and other expenses. Annual costs are going to be at least $25k+. These costs are not variable to revenue and would be low based on what we’ve seen.

We are closer to $5900/week or $120 per hour.

Remember, that this illustration uses a $200/hour charge out:

Yet, $200/hour is high for Fractional Leadership in our community. Yes, some pay it, but nearly no one signs more extended contracts at that level.

In fact, at a higher rate like this, a reasonable goal would be closer to 60% capacity. If you still work your business hours selling and taking care of administration, you’ll be nearly $80 per hour. You’ll likely use some extra time for yourself and recreation, so your hourly rate per worked hour could stay close to $100. Keep in mind shorter contracts result in more sales cycles. Often, higher rates result in more complex, longer sales cycles, too, so extra effort in this area is expected.

Your Rate – Your Choice

If you want annuity opportunities, chances to see through your value, and longer-term clients, we’d suggest you be pressed down to closer to $150 per hour or even less, depending on your function and experience.

With a competitive and cost-effective (but, not cheap!) rate, you can plan to be busier with shorter sales cycles and fewer of them. You’ll likely run at a take-home rate closer to <$100/hour of efforts at a ~$150 per hour charge-out rate and 80-90% capacity.

Or charging at the higher $200/ hour with nearly the same earnings but with more time off, capacity sold closer to 60% and more of your hours spent selling.

Either way, when successful, consistent, and keeping costs low, the career will max out at about $200k annually.

Hybrid – Join a Team or Work under a Staffing Agency?

The arduous efforts to sell yourself can be intimidating and incompatible with your experience or expertise. That stress can push people to join teams quickly.

Or to push the administration efforts, overhead and sell to a staffing agency or recruiter.

One More Time – What are Those Administrative Matters?

Even as a simple solopreneur, you’ll need to do the following:

  • Invoicing
  • Collections
  • Taxes
  • Payables
  • Set up email and your technology
  • Marketing, website, social media and other brand development could be applicable
  • Registration and compliance as a law firm, CPA firm or otherwise could be applicable
  • Office management
  • Training and staying up to date with technology, trends and other relevant matters

Add uncertainty, risk, and liability, and soon, it can be very appealing and cost-effective to either join a team or build a team or work with a recruiter to scale the efforts and costs.

After all, if you find a job and the company gives you an opportunity that pays $170-235k with job security, no sales, no administration, no risk and the benefits of a team, employee experience and more – the math works.

Similarly, if you find a recruiter who pays you ~$80/hour for your effort, you are relieved of sales and administration and maybe even have access to a team—does the math make sense?

The Bright Side? The Dark Side?

The commitments of an employee may be the very reason you’re jumping into this game, so that’s a consideration, too!

How you spend your time, earning potential, and passions can help you face the decision. What energizes you, and why are you on this path?

Very few entrepreneurs look back with regret. Very few take another job! Many get on this path and never look back.

There’s no one story about what makes the path of business leadership and ownership attractive, and math shouldn’t be the driving reason you make such an important and impactful decision! (It should be considered, though.)

And, that is a wrap!

Several factors impact both the buyer and the Fractional Leader, and it’s critical to have an open conversation and ensure a great fit. Both want to see the value provided. And how that happens varies under various models and approaches. It’s exciting to face the opportunity!

It is thrilling to see this grow. It’s amazing to be part of a community working to help employer businesses and impact our community with authentic executive leadership. What this results in is so exciting to imagine!

Interested in learning more?

Contact Us 

Watch our LETs episode on Navigating Business.

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