It’s fascinating what is occurring with the gig economy. I nerd out on this stuff; I can’t help it — I was an economics major in business school. Before this type of work hit a magnitude to justify an entire economy, I knew it as the fractional workforce. 

Fractional executives fill an executive position in a part-time or short-term capacity. They are typically former executives or consultants and can be a great option for small businesses and startups. 

I have been a fractional executive for the past five years. My fractional journey actually started with a full-time job when I oversaw a U.S. expansion project for a Scottish craft beer company called BrewDog. I set up all of their operations in North America. It was a lot of beer and a lot of fun — until I worked myself out of the job.

After everything was set up and the U.S. executive team hired, there was no place for me anymore. It was a tough thing to experience, but then I realized I hadn’t done anything wrong. The job should have been contract from the start. That’s when I decided to start my company Expansion Group and find similar fractional work and help companies avoid the mistake of bringing on a full-time hire for a fractional job.

When should you hire a fractional executive? 

If you have a complex strategic initiative with an end date like the one I oversaw, this is the perfect fit for a fractional executive. Here are some situations when fractional executives might come in handy:

• You’ve outgrown your operating model and need to level up.

• You have a great operations manager, but he or she may be missing the strategic skills of a COO — the same goes for finance and marketing.

• You’re looking to delegate financial, operational or marketing duties you have managed to date, but it doesn’t require a full-time role. 

• To fill a vacancy while you search for the best long-term fit.

I constantly work with entrepreneurs who are hiring an operational leader for the first time. A fractional executive is a great choice for this. Chances are, some improvements need to be made in the business that only a former COO can handle. But, after those improvements have been made, you won’t need that level of executive. 

This is exactly what happened with one of my clients, a national law firm. After about six months, I was able to hand off the new, streamlined operations to an attorney at the firm who had great business instincts. I ended up staying on for many months afterward, to maintain, but in a very reduced capacity. The firm benefited from massive cost savings and also avoided turnover in the role. 

Hiring fractional executives comes with other benefits too:

• You can adjust their capacity to match your business needs.

• They come with vetted relationships with service providers like bookkeeping, technology and HR. 

• No need to worry about benefits or a lengthy equity negotiation.

• They typically have cross-industry experience, which can lead to innovative solutions for your business.

And if this is a brand new position, it’s a great low-risk option to test role design. Contract terms are typically at least three months, but some fractional executives may require six months. A 30-day cancellation policy is a minimum expectation, if not 60 days. 

Potential drawbacks to consider

There are some potential drawbacks you should be mindful of. Fractional executives can be hard to find, as many are independent consultants. Referrals are the best way to find a good fit, so first try your network. You can also do a search on LinkedIn, as they should have that service listed somewhere on their profile.

Initially, they may be more expensive than what you had budgeted for the position. If your needs are daily, I recommend budgeting at least $10,000 per month. However, if they are good, they will likely pay for themselves over time through the implementation of cost-saving initiatives or increased revenue generation. Plus, as I mentioned earlier, the higher fees should only be for a short period. To do the job right, expect a six-month commitment.

As professionals, fractional executives should have a template statement of work and consulting contract that includes an NDA. Try to be as detailed as possible in the statement of work. List the initiatives they will be overseeing, any day-to-day responsibilities, deliverables and also include a phrase like “and other duties as directed by the CEO.”

Bringing on a fractional executive can also be confusing to your team. Be open with them from the start and explain the benefits. If it’s an interim position, be sure to explain that and why. Have a kickoff with your entire team when the fractional executive starts and recommend the fractional executive meet with each team member one-on-one to answer any questions and build rapport. 

Overall, fractional executives are a fantastic option for small businesses and startups. They can oversee high-stakes initiatives, fill a vacancy or help you define the role for the first time. 

The post How a Fractional Executive Can Take Your Business to the Next Level appeared first on Entrepreneur

Original source: Entrepreneur