Fractional Executives: The Cost-Effective Solution for Small Businesses in Need of Expertise

Fractional Executives: The Cost-Effective Solution for Small Businesses in Need of Expertise

by soshaughnesseyNo Comments

Fractional executives are experienced professionals who work part-time or on a project basis, providing expertise and guidance to help businesses achieve their goals. Often, small businesses need more resources and expertise, making it difficult for them to achieve growth and success. While hiring a full-time executive may not be feasible due to the costs involved, fractional executives can provide a cost-effective solution to this problem. 

A fractional executive differs from a consultant, but the difference may confuse some. Typically, a consultant will provide advice and guidance, but they are separate from your company. A fractional executive works alongside your team, helps in company operations, and is responsible for the outcomes of those operations. They are an extension of your existing leadership team. In most instances, a fractional executive provides all of the responsibilities to your company as a full-time executive.

Cost-effective Expertise

One of the most significant benefits of using fractional executives is cost savings compared to a full-time employee with a similar amount of experience. Hiring a full-time executive can be expensive. Fractional executives work on a part-time or project basis, meaning companies can save money by only paying for the services they need. Additionally, businesses can avoid the costs of recruiting, hiring, and training a full-time executive.

As explained in the FRACTIONALS UNITED BLOG, it is essential to explore the cost of an FTE (full-time employee) compensation plan compared to fractional monthly retainers. The data is eye-opening!

According to data gathered (March 2023) by Salary.com, the median (50th percentile) core compensation (salary+benefits*) for the following C-Suite leaders is as follows:

  • Chief Financial Officer (CFO)- $558,999 ($46,583/mo) + 22% bonus
  • Chief Operating Officer (COO)- $622,672 ($51,889/mo) + 23% bonus
  • Chief Marketing Officer (CMO)- $464,651 ($38,720/mo) + 25% bonus
  • Chief Revenue Officer (CRO)- $408,619 ($34,051/mo) + 12% bonus
  • Chief Technology Officer (CTO)- $387,001 ($32,250/mo) + 15% bonus
  • Chief Human Resources Officer (CHRO)- $449,340 ($37,445/mo) + 25% bonus
  • Chief Talent Officer (CTAO)- $337,197 ($28,099/mo) + 20% bonus

Bonus comp and equity cash totals were excluded from this comparison since both are variable compensation, only sometimes guaranteed. The average percentage offered was noted instead.

The average monthly retainer for fractional executives starts at around $5,000 and goes upwards to $15,000 per month. Retainers vary depending on the experience, scope of work, and level of hourly commitment per month (i.e., 25%, 50%, or 75% commitment to the team/company). The retainer may be higher if the professional has more years of experience, is in high demand, or if the organization is in a large metropolitan area.

If we assume that any given fractional executive discipline is $10,000 per month, then:

  • Fractional CFO – 21% of an FTE
  • Fractional COO – 19% of an FTE
  • Fractional CMO – 26% of an FTE
  • Fractional CRO – 29% of an FTE
  • Fractional CTO – 31% of an FTE
  • Fractional CHRO – 27% of an FTE
  • Fractional CTAO – 26% of an FTE

Flexibility

Fractional executives offer businesses a high degree of flexibility. As part-time or project-based professionals, they can be engaged as needed, providing their expertise and guidance without the long-term commitment of a full-time employee. In particular, this flexibility is valuable for small businesses that may not need an executive full-time. Fractional executives can help companies to address specific challenges or opportunities as they arise without the need for a long-term commitment.

Experience and Expertise

Some projects require a subject matter expert — someone proficient in an area of expertise beyond your team’s knowledge and skillset. Bringing in a fractional expert with previous knowledge and experience on a specific deliverable will save internal resources while simultaneously providing internal training for your team. They have worked with many companies and industries, giving them a broad perspective on business operations and management. This experience and expertise can be valuable for small businesses needing more resources or knowledge to address specific challenges or opportunities. Fractional executives can provide guidance and support, helping companies to achieve their goals and grow their operations.

Fractional executives are experienced professionals who have spent years working in different companies and industries, gaining knowledge and expertise in various areas of business operations and management. They are experts in their field and deeply understand what works and what doesn’t work in different industries. They can bring their wealth of knowledge and expertise to small businesses, providing guidance and support on various aspects of the company.

Strategic Guidance

Fractional executives provide strategic guidance to small and medium businesses. They help companies develop and implement strategic plans, identify new opportunities, and overcome challenges. Fractional executives also offer insights into industry trends and best practices, which helps businesses stay competitive and relevant. Their strategic guidance is valuable for small businesses that need more resources or expertise to develop and execute a comprehensive strategy.

By providing insights into industry trends and best practices due to their years of experience, businesses stay ahead of their competitors. Fractional executives develop and implement strategic plans that align with the company’s business goals. Fractional executives also identify new opportunities and overcome challenges that may arise, providing valuable guidance and support throughout the process.

Increased Productivity

Fractional executives help small businesses increase their productivity. They provide support and guidance to help companies to streamline their operations and improve their processes. Fractional executives also offer project management support, ensuring that projects are completed on time and within budget. Small businesses achieve their goals more efficiently and effectively by increasing productivity.

Fractional executives improve their processes and streamline their operations, making them more productive and efficient. They provide project management support, ensuring projects are completed on time and within budget. This can help small businesses save time and money, enabling them to focus on their core business activities.

Improved Decision-making

Fractional executives can provide valuable insights and expertise so that their small business clients make better decisions. They guide their clients in evaluating different options to make informed decisions based on data and industry trends.

Improved decision-making is a crucial benefit to a small business owner using fractional executives with years of expertise. Engaging a fractional executive to plan the approach and execution of a task objectively can be a massive benefit due to the fractional’s exposure to various industries and companies.

Fractional executives bring a fresh perspective and objective analysis, allowing small businesses to make informed decisions that align with their business goals. They help companies to identify areas to improve their operations and guide them in achieving their desired outcomes. With their vast knowledge and years of expertise, fractional executives have seen many different organizational structures, industry-specific problems, project management, and problem-solving strategies that will help them recommend a solution that the SMB owner may not have considered without their unique viewpoint.

Fractional executives are skilled at analyzing data and market trends to help businesses make informed decisions. They provide unbiased opinions on a range of issues, from developing a marketing strategy to deciding on a new product line. They can also help small businesses evaluate the risks and benefits of different options, guiding how to minimize risks and maximize rewards.

Fractional executives can also help small businesses navigate complex legal and regulatory requirements. This can be particularly valuable for companies operating in heavily regulated industries, where the cost of non-compliance can be high. The experienced fractional executive can guide on regulation compliance and avoid potential legal pitfalls, ensuring that the business operates within the law and avoid costly fines.

Another benefit of using fractional executives is that they can help businesses access new markets and customers. Fractional executives bring a wealth of experience and expertise in different industries and markets, which can be particularly valuable for companies looking to expand into new territories. They guide how to target new customers, develop marketing strategies, and establish new business relationships.

Fractional executives can also help small businesses build strong teams. They can assist in recruiting, retaining, and developing employees, ensuring businesses have the talent they need to achieve their goals. They can also provide training and development programs to help employees build their skills and improve their performance.

In addition to these benefits, fractional executives can provide valuable networking opportunities for small businesses. They often have extensive networks in different industries and markets, which can be particularly valuable for companies looking to establish new business relationships. Fractional executives can also provide introductions to potential investors, partners, or customers, helping businesses grow and expand their operations.

Finally, fractional executives can help small businesses develop a culture of innovation and continuous improvement. They can create a culture that fosters creativity and innovation, encouraging employees to think outside the box and create new ideas. They can also help businesses implement systems and processes that enable them to measure and improve their performance over time.

If you’re a small business struggling to achieve your goals, hiring fractional executives can be a game changer. These executives offer an affordable solution to the everyday challenges of limited resources and expertise. By bringing in fractional executives, you can benefit from their flexibility, extensive experience and knowledge, and strategic guidance. This can lead to increased productivity, better decision-making, and access to new markets and customers. Additionally, working with fractional executives provides networking opportunities and fosters a culture of innovation and continuous improvement. By leveraging the advantages of fractional executives, your small business can position itself for long-term growth and success.

Header Photo by August de Richelieu
Leading Your Sales Team to Success: 5 Best Practices You Need to Know

Leading Your Sales Team to Success: 5 Best Practices You Need to Know

by soshaughnesseyNo Comments

In today’s highly competitive business environment, sales leaders play a crucial role in the success of their organizations. They are responsible for setting sales targets, creating effective sales strategies, and motivating their teams to achieve their goals. However, being an effective sales leader requires more than just setting targets and motivating your team. This article will explore the five best practices of effective sales leaders.

1. Set clear and achievable goals.

One of the primary responsibilities of a sales leader is to set clear and achievable goals for their team. Setting goals is critical to keeping your team focused and motivated. With clear goals, your team will know what they are working towards and may be able to achieve the results you expect.

When setting goals, it’s essential to make them SMART – specific, measurable, achievable, relevant, and time-bound. 

  • Specific goals are clear and well-defined. 
  • Measurable goals allow you to track progress and determine success.
  • Achievable goals are realistic and within reach. 
  • Relevant goals align with your organization’s overall objectives. 
  • Time-bound goals have a deadline or timeframe for completion.

Setting SMART goals gives your team a clear direction and purpose. This guidance helps them focus their efforts on the activities that will help them achieve their objectives.

2. Develop a sales strategy.

Once you have set your sales goals, the next step is to develop a sales strategy. A sales strategy outlines your team’s approach to achieving its goals. It includes the tactics and activities that your team will use to reach its targets.

Your sales strategy should be based on deeply understanding your market, customers, and competitors. It should also take into account your organization’s strengths and weaknesses. A good sales strategy is flexible and adaptable. It allows your team to adjust its approach based on the market or changes in customer needs.

When developing your sales strategy, it’s essential to involve your team. Your sales team has firsthand knowledge of your customers and their challenges. You can tap into their expertise by involving your team in the strategy development process and gain buy-in for the approach.

3. Provide ongoing training and coaching.

Sales is a dynamic and constantly evolving field. To be successful, your sales team needs ongoing training and coaching. Ongoing training helps your team stay up-to-date with the latest industry trends and best practices. It also helps them develop new skills and techniques that can help them close more deals.

Coaching is equally essential. Sales coaching helps your team identify areas for improvement and develop strategies to overcome challenges. It also gives your team feedback and support, helping them stay motivated and focused.

You must understand your team’s strengths and weaknesses to provide effective training and coaching. This requires regular communication and feedback. Regular one-on-one meetings with your team members can help you identify areas for improvement and develop tailored coaching plans.

4. Foster a positive team culture.

Sales can be a high-pressure and stressful environment. To be successful, your team needs to work well together and support each other. This requires a positive team culture.

A positive team culture is built on trust, respect, and collaboration. It’s a culture where team members feel valued and appreciated. It’s also a culture where team members feel comfortable sharing their ideas and opinions.

As a sales leader, you are critical in fostering a positive team culture. You need to lead by example and model the behaviors you want to see in your team. You also need to encourage open communication and provide opportunities for team members to collaborate and work together.

5. Use data to drive decisions.

Finally, effective sales leaders use data to drive their decisions. Data provides insights into your team’s performance and helps you identify areas for improvement. It also lets you track progress toward your goals and make informed decisions about your sales strategy.

To use data effectively, you need the right tools and systems. This includes a robust CRM system that captures and tracks critical sales metrics such as leads, opportunities, and pipeline value. It also provides analytics tools to help you analyze your data and gain insights into your team’s performance.

Data can also be used to optimize your sales process. By analyzing your sales data, you can identify bottlenecks and areas where your team struggles. This allows you to develop targeted interventions to improve performance.

Effective sales leaders use data to continuously improve their sales process and drive results. They are always looking for ways to optimize their approach and stay ahead of the competition.

Being an effective sales leader requires a combination of skills and practices. It requires setting clear and achievable goals, developing a sales strategy, providing ongoing training and coaching, fostering a positive team culture, and using data to drive decisions. By following these best practices, sales leaders can motivate their teams and drive results. They can also create a culture of continuous improvement that allows their organization to stay ahead of the competition.

Header image by Tumisu from Pixabay
95% of Small Business Say They are Below Average or Worse in Their Sales Performance

95% of Small Business Say They are Below Average or Worse in Their Sales Performance

by soshaughnessey1 Comment

We are almost done tabulating the results for the grading of small businesses. Every year, Sales Xceleration asks the CEOs and owners of small businesses to grade themselves on how well their company is running its sales operations.

Like last year, 95% of all companies couldn’t get to the “average” level of execution.

But 2022 was worse than last year since more companies graded themselves as “Poor” rather than just “Below Average.” 

It is okay that small business owners or executives at small businesses do not know how to create a great sales organization, however …

… it is not okay for them not to fix it.

The reality is that most small business owners excel at many things. That is why they started their business. Perhaps, they are experts at:

  • manufacturing
  • design
  • software creation
  • operations
  • logistics

Or any of the hundreds of essential skills required to create a great company. But even though the small business owner is best-in-class in one or many of these disciplines, they still need to be better-in-class in producing or managing a sales organization. 

It may be okay that the small business leader cannot create an excellent revenue generation machine. Still, it is not okay that they don’t address the problem. The company and all of the people working for the company (along with their families) depend on that company. The owner needs to fix this problem.

But it is very hard for the small business owner to fix this problem.

They may not be able to find or afford an executive to at least get the “Excellent” rating. Let’s face it, that type of executive is in very high demand by companies that are much larger than small businesses.

The solution, of course, is to look for a Fractional Sales Vice President to help them. I am here to help. I help company owners realize the maximum value of their company by improving their revenue generation capability. ​To accomplish this, I help owners enhance their sales management, methodologies, processes, teams, and messaging. 

You can learn more about how small businesses are doing in generating revenue for their companies at two upcoming events.

If you are in Cincinnati, I will present on this topic at the Beers & Biz networking event on February 23. You can register for this event at https://www.eventbrite.com/e/beers-biz-b2b-networking-tickets-451941468097 but make sure that you arrive at 3:30 (I start on time) and sign up for the Revenue Growth breakout session.

You can also watch Kevin Lawson and me go through the study’s highlights, explain why the various grades are a problem, and then offer potential solutions to the issues. Kevin and I will be presenting at a special session of our monthly CEO Workshop on March 1, and you can register at https://www.linkedin.com/video/event/urn:li:ugcPost:7027766861027008512/

The company owner may be unable to make a best-in-class revenue generation engine within the company personally, but that doesn’t mean the owner shouldn’t create one. Fractional executives are available to fill in the gaps in the expertise that exists within the company.

Fractional Sales Leadership Increases the Value of My Client by 167%

Fractional Sales Leadership Increases the Value of My Client by 167%

by soshaughnessey2 Comments

A common question that I receive is about the value of adding fractional sales leadership to their company. I typically answer their concern with a story about one of my clients who had a fantastic experience and increased the company’s value by 167% in about 12 months.

The true benefit of the efforts of fractional sales leadership is that revenue and pipeline will increase your company’s value.

Several years ago, I was hired by a fantastic software startup company in the artificial intelligence industry. Their technology had roots in original research by one of the founders at MIT. I was connected to one of the founders, and he approached me to be his Fractional Vice President of Sales as they felt that their technology had progressed to the point that they needed to find early adopter customers.

It was a young company with a small client base and very little revenue, but it clearly understood its offering and the value it could deliver to new clients. I started the engagement with my standard discovery process to identify what value they were providing to their clients or prospective clients. We developed a target persona, and I helped them identify potential clients that fit their use cases.

As I worked with them, I learned more about their backstory. A significant chip manufacturer had wanted to buy the company just a few months earlier. The founders were eager to sell, but the parties couldn’t agree on a price and parted ways. The large chip manufacturer valued the company at about 75% of the valuation that the founders wanted. This offer reminded me of the popular TV show Shark Tank, where entrepreneurs try to arrange investments from 5 individual investors. They rarely agree at the beginning of the segment on the startup’s value; sometimes, they compromise, and sometimes they do not. In this case, the giant chip manufacturer didn’t see the value, just like the Sharks didn’t see the value of Ring.

The owners of my client did what any sound company executives would do. They pushed harder on their business to build its value. They realized that nothing drives the company’s value like revenue and pipeline, so they brought me in to help them.

Fast forward ten months after hiring me, and our pipeline, messaging, sales team, partnerships, and methodologies have improved dramatically. At this point, another chip manufacturer enters the picture and wants to acquire the company and its technology. But now everything in the company is more proven, and the risk is less for the acquiring company. The owners and the new acquiring company agreed quickly on the company’s value. The company was now worth 200% of what the founders initially thought just the previous year. The deal closed quickly and efficiently, with most employees finding great jobs at the new owner while some continued with new and exciting adventures.

New customers, pipeline growth, and team growth caused a dramatic increase in the company’s value. Undoubtedly, the software improved during that year, but much of that improvement was because of customer and prospect feedback. The new chip manufacturer thought the company was worth 267% compared to the previous suitor.

According to the Exit Planning Institute, 76 percent of business owners who sold their businesses profoundly regretted selling within a year. I contend that this is because they agreed to a Shark Tank deal which devalued their company. I think most feel they didn’t get the value out of the company they spent years, decades, or maybe a lifetime building. The solution is to have such a great sales engine that the buyer is begging you to take the offer. Small business owners need to build a sales engine that is so strong that multiple offers are coming in to buy the company. For a while in the US after COVID-19, selling a home commanded over-asking-price offers all over the nation. This seller’s market is the environment you need to create for your company if you want to exit the company in the next 3-5 years.

I help company owners realize the maximum value of their company by improving their revenue generation capability. ​​I help owners enhance their sales management, methodologies, processes, teams, and messaging to accomplish this. Reach out to me so that I can help you maximize your company’s value the way I helped my former client.

Header image by Paul Loh