What Is Fractional Leadership and Can It Help Your Business?

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As a small business owner, have you reached the point in your journey where you’ve hit a “ceiling,” or what I call the Entrepreneurial Catch-22, in your business growth? A point where you can’t scale without bringing on an experienced C-level leader, but you also can’t afford someone like that until after your business has scaled.

Most entrepreneurs who survive the startup phase experience some variation of this. Don’t worry — there’s a solution: It’s called Fractional Leadership (FL). Working with a fractional leader can help your business break through that ceiling and escape the Entrepreneurial Catch-22.

Fractional Leadership means engaging with an experienced C-level executive who’s already scaled an organization like yours. By hiring a fractional leader and making them a part of your leadership team, you will fast-track your ability to break through the ceilings holding you back for a fraction of what it costs to hire someone like that full-time.

Why do so many founder-led businesses hit the ceiling again and again after passing through the startup phase? I believe it is usually because the people on the founding leadership team have never run a business that size before. And they certainly haven’t led a company as big as they want theirs to become.

The data backs this up. Contrary to the stereotype of entrepreneurs as experienced, savvy serial business starters, about 90 percent of startups are founded by people who never started a business before. If you’re feeling alone, like there’s something wrong with you because you don’t know how to solve the problems your business is facing now, you’re not. You’re just like 90 percent of the other small and midsize business owners out there.

Fractional Leadership Can Work for Any Small Business

My first FL client was a media company that creates ad placements on popular websites. In doing so, the media company gives their clients more revenue than they could get on their own. They grew 25 percent revenue in the first quarter I worked with them.

This was not because I have magical or mystical powers or am an ad tech guru. It was because I’d built a business from smaller than theirs to much bigger before. I knew where the pitfalls were and what challenges they were facing, and I’d already learned what to do through trial and error. I helped them skip past the learning curve.

Because they had me on board, there was no need for them to reinvent the wheel. I helped them gain the focus and discipline they needed to immediately attack some of the low-hanging fruit — the little things that were holding them back. They simply didn’t know how to do it.

Another of my clients was a cybersecurity firm that contracts with federal agencies. Their sales team had been hitting the ceiling for a while, and no matter what they tried, they couldn’t breakthrough. When I suggested they consider a fractional chief security officer (FCSO), the CEO was initially hesitant even though he had already retained me as a Fractional Leader!

I assured him he would get a lot further by trying it out than continuing to bang his head against the wall. So he bit the bullet and interviewed three FCSOs I introduced him to, each with relevant federal contracting experience.

Fast forward three months later. Kristen McGarr of Adroit Insights, the FCSO he chose, had embedded herself with the team on the days she spent there. She cost much less than the salary, bonus, benefits, and taxes they would have paid hiring someone full-time, and as a vendor, she started and ramped up in weeks, not months, as a major executive hire would have.

Kristen hit the ground running, learning how things worked and using her past success and knowledge to restructure the sales process. She knew what was important to track, coached the existing team to dramatically increase their closed sales, and hired and trained new team members to position them to grow. They grew more in the first year after retaining her than they had in the previous four.

Outsourcing Customer Service — Fine. But C-Level Leadership?

People know about outsourcing and utilizing freelancers for less-skilled activities like answering phones, data entry, and virtual assistance. In fact, the global outsourcing market for IT alone was $333.7 billion in 2019. But it sounds crazy to think of outsourcing C-level executive Leadership. Right?

But the truth is that Fractional Leadership isn’t as foreign a concept as it initially appears. There are elements of it in the way we have been using attorneys and accountants for decades, if not centuries. We consult with someone about the most sensitive parts of our business and accept their guidance and leadership in our financial, compliance, and legal decision-making even though they aren’t full-time employees and only bill us by the hour.

If your business is hitting the ceiling and you and your leadership team aren’t sure what to do about it but aren’t scaled big enough to bring the experience and expertise you need in-house, full-time, you aren’t the only one.

In the United States alone, the latest data available (2017) from the U.S. Small Business Administration Office of Advocacy shows 5.3 million businesses with 1-19 employees and nearly 6 million with up to 499 employees, with total small firms making up 99 percent of U.S. businesses.

Let me remind you, the vast majority of those business owners have never done this before either. But the fact that you’re reading this blog right now means you’re ready to explore how your business can break through that ceiling and grow!

Visit fractionalleadership.io or contact us today to learn more about how to take your business to the next level.

Ben Wolf Author
Ben Wolf, founder and CEO of Fractional Leadership, has been on both sides of the Fractional Leader search process.
As a leader in companies where he served as Fractional Integrator (outsourced COO), he has searched for and found multiple Fractional Leaders for clients. And as a Fractional Integrator, he has gone through many cycles looking for new clients at the successful conclusion of each engagement.
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