Key Takeaways
- Fractional hiring enables young companies to bring in seasoned, executive-level talent on a part-time basis.
- One of the most important things you can do before hiring a fractional executive is to set the stage properly for them.
On October 26, 2022, we hosted a joint webinar with Bolster to discuss how fractional hiring can fuel growth and extend cash runway. We covered five ways the smartest founders use Bolster and SVB to achieve success. Visit our Fueling Growth and Extending Cash Runway with Fractional Hires event page to watch the entire webinar.
Too many balls in the air and not enough hands: under-resourced and over-stretched founders of early-stage startups often find themselves in a juggling act.
This often means you’re doing too much of one thing, and probably not enough of another. When everything’s a priority, then nothing really is. It becomes a major challenge to complete any task efficiently.
There is a tendency among founders to relinquish more senior-level decision-making – largely because it’s a major challenge (not to mention a major expense) to find the right person to fill the role. And every role is critical in a growing company.
Scaling a business is usually seen in terms of facilitating an incremental increase in production capabilities, market penetration, or sales. But what happens when you scale expertise? What – and how quick – is the business impact when you bring in senior talent?
Fractional staffing enables young companies to bring in seasoned, executive-level talent on a part-time basis.
Scaling capabilities incrementally is the essence of fractional staffing. It enables young companies to bring in seasoned, executive-level talent on a part-time basis, either for an ongoing or fixed period and often from a remote location.
The impact can be almost immediate.
Three disciplines where startups typically need the most support are in finance, marketing and technology.
- A CFO in a fractional role can be invaluable to ensure an early-stage growth company stays on course.
- A CMO can implement customer acquisition, sales enablement and go-to-market strategies to accelerate growth.
- A CTO can help ensure that the right decisions are made in implementing solutions that will further drive the business securely and efficiently.
“Depending on your business needs, the capacity of your existing team, and your resourcing, you might find it useful to have one or more on-demand executives in the mix at any given time,” says Matt Blumberg, co-founder and CEO of Bolster. “We’ve found this can be a great way to keep things fresh at the leadership level, and make sure new ideas are circulated with some regularity.”
Bolster is an executive talent marketplace focused on placing senior executives, board members and mentors at early-stage growth companies in fractional roles. Founded in 2020, its governing principle is that startups are not typical companies, and therefore do not have typical needs.
A startup’s need to grow quickly can be compromised by their lack of experienced leadership in functional areas such as marketing, finance and information technology, but also in operations. Because they can’t always afford top talent, startups run the risk of losing ground quickly.
An affordable, low-risk approach to drive productivity and growth
As the CEO of StormSensor, Erin Rothman experienced high turnover of tech leaders during the company's early days. Started in 2015, StormSensor provides real-time storm, sewer, and coastal system diagnostics for communities across the United States. “Our solution includes design and hardware, which is electrical engineering, mechanical engineering, embedded firmware, data science, and software development, and it’s really hard to find a skillset that matches all of that,” Erin says. “We worked with Bolster to find a fractional CTO, and that gave us the ability to cover all these areas in the interim, giving us breathing room to look for someone to fill the position full-time.”
That’s not to say there aren’t some pitfalls to consider. By definition, a fractional role is part-time, and some full-time employees may feel that a fractional employee is not really an all-in team player. “My advice is to make sure expectations are clear for both the fractional hire and the full-time team,” Erin says. “Also, even though a fractional executive hire is part-time, it’s important to consider culture fit. Will they be able to manage the full-time employees? Work with the executive team? With the investors?”
Cost reduction and capital preservation are critical during times when financing is hard to obtain.
“On the hiring side,” Matt says, “cost reduction and capital preservation are critical during times when financing is hard to obtain, VCs are clamoring for longer runways, and CEOs are looking at all opportunities to save money. Fractional executive talent is a great way to get the benefits of senior executive experience and thinking at a fraction of the expense.”
Four key steps to hiring fractional executives
A startup can properly set the stage before hiring a fractional executive by taking these four steps:
- First, do a thorough assessment of your needs beforehand. This helps ensure success on both sides.
- Consider starting with a specific project. ‘Try before you buy’ projects have the advantage of being neatly scoped and easily measurable, giving everyone enough exposure to decide whether to extend and expand the relationship.
- Get buy-in from your senior team and make sure you clarify the role internally. One of the toughest parts about bringing in senior-level talent to an organization is the uncertainty that comes with it.
- Finally, know what you are not looking for. While it’s easier to part ways with an on-demand executive than with a full-time hire, it still stings to bring someone into your company that’s not a great fit. Sometimes, knowing what you don’t want can help point you toward the right fit.
Fractional roles are essentially part-time, but long-term.
“Keep in mind there are different kinds of on-demand roles,” Matt says. “Fractional roles are essentially part-time, but long-term. But there are also interim roles that are temporary. There are also advisory or coaching roles that are fulfilled on an as-needed basis. And there are project-based roles with a fixed span of work.”
The key to a successful engagement is to define the role as specifically as possible, so that there are no surprises and that expectations can be met. It’s the combination of the flexibility and affordability that on-demand talent brings to an early-stage startup that can help propel it even further and faster toward its business goals.
Running a startup is hard. Visit our Startup Insights for more on what you need to know at different stages of your startup’s early life. And, for the latest trends in the innovation economy, check out our State of the Markets report.