For most businesses, there are no angel investors. No venture capital funding. No series A financing. Many of today’s smartest entrepreneurs have built their businesses without the luxury of investors.
The truth is that operating a business these days is ultimately a catch-22: to be successful, businesses rely on growth to increase cash flow and in turn, cash flow is needed to facilitate growth. It’s a dizzying carousel ride that can make or break a business. So how do they do it?
With competition at a historical high, how can the average business compete with the alpha dogs of their industry? For many small and midsize businesses, the answer could be as simple as utilizing fractional hiring.
What is fractional hiring?
Fractional, or part-time, employees are exceptionally qualified professionals who share their time and services among various companies. A fractional employee may work in-house, like an internal employee, but for a fraction of the time of a full-time, in-house employee.
Fractional vs in-house employees
Hiring internal employees has many benefits. Working solely for one company enables employees to have extensive knowledge of the brand and the technologies they use. Internal employees are more likely to be loyal to the business and have established a rapport with other team members.
However, depending on the current stage of the business, many small and midsize companies may not need to carry a full-time staff within specific departments or roles.
Fractional hiring enables businesses, who wouldn’t otherwise have the budget, to get the expertise of experienced professionals at a fraction of the price of hiring full-time employees. Because companies do not have to provide training or take on the cost of additional employee expenses like benefits, leave pay, or holidays for fractional hires, they have more resources which allow them to invest in other areas of the business.
Fractional employees can fill the roles essential to helping your business grow and achieve its goals, including developing strategy and providing support to your current team until it makes sense to bring that position on full-time.
When should a business utilize fractional employees?
For example, many small businesses may currently be utilizing their bookkeeper or a generalized manager to oversee and maintain the accounting. As a short-term solution, this isn’t a bad thing. However, as the business grows, the more susceptible it becomes to regulatory, environmental, and human capital risks. This is when hiring an experienced CFO, who has the knowledge and experience to help protect and provide insight into these complex risks, becomes vital to ensuring the health of the company.
The average CFO can earn an annual salary between $200-300 thousand per year, which means that and for many businesses hiring a full-time C level executive is an unaffordable luxury. However, as clear, rapid growth becomes evident, having access to a full-time, in-house CFO, who knows the ins and outs of your business, is crucial to help navigate and guide your business through the ever-changing financial waters.
Fortunately, most small and midsize businesses don’t need a full-time, in-house CFO while they are still developing growth. However, many of those same businesses would benefit from having access to a resource who has experience overseeing compliance issues and developing reliable benchmarking data crucial for the growth of a business. This is when fractional hiring (such as a fractional CFO) becomes an ideal option. And as the business continues to grow, it will make sense to onboard this role and others in-house on a full-time basis.
Why the fractional model makes sense
Fractional hiring is more than just finding someone who can keep the company’s books in order. When it comes to the financial health and stability of your business, it’s essential to hire someone with the knowledge and expertise of the role you want to fill. With fractional employees, small businesses can leverage the playing field and bring better management skills to a company at various levels rather than what would otherwise be available with a limited budget.
Is it time to try the fractional model?
The decision to hire is a critical step for any business. Fractional hiring gives your company the perks of having top talent fill the critical roles necessary to take your business to the next phase of success. You can start benefiting from our finance and accounting fractional model at a fraction of the cost of hiring a full, in-house team by requesting a consultation today.
To learn more about whether the fractional hiring model is a fit for your company, read more about why organizations should utilize fractional hiring here.