A fractional CEO is an experienced chief executive who leads your company part of the week, at a fraction of the cost and commitment of hiring a full-time or even part-time employee. The same model works for other roles, such as CFO and CMO. Fractional C-suite engagements give a company senior leadership without the long-term commitment of adding another employee.
Here are answers to a few common questions about fractional positions and when to use them.
What does a fractional CEO do?
It varies, but here are a few things a fractional CEO handles well:
- Keeping the business steady and moving forward during leadership changes
- Directing the strategy of a small company while helping it grow
- Providing steady leadership as the founder’s role changes
- Developing the strategy and operations to meet company goals
- Leading the company through difficulties
There are many more scenarios, but this gives you the idea.
Why would I need a fractional CEO? I’m running the business myself.
Many entrepreneurs run their own businesses and do a great job. You have the vision, and you’re on your way to growing the business. You may not feel you need a CEO at this point. But there are probably projects or plans you aren’t positioned to handle yet.
A fractional CEO can implement the strategies you’ve been trying to roll out but don’t have the time or expertise to finish. Building an AI strategy for your business may be one of them. It’s on your mind, but you don’t have the bandwidth to manage it. An experienced fractional CEO can take that off your plate and get it done.
What’s the difference between “fractional,” “part-time,” and “consultant”? Aren’t they all the same?
A part-time employee is just that, an employee. You manage them from an HR perspective, and they often handle lower-level tasks.
Consultants generally view your business from the outside and recommend how to run it or what to change. Many advise rather than do the work, and they are not part of your organization.
A fractional CEO has real authority and is fully integrated into the organization. They are there a fraction of the time, but they still lead the company and make decisions that have impact.
What makes a great fractional CEO? Who are these people?
There’s no simple answer. You want someone with strong leadership skills who can motivate a team and build a culture, your culture. They should have plenty of experience, but it doesn’t always matter whether it’s in your particular field. In my experience, great CEOs move from industry to industry because they lead well and understand people, not because they know the technical side of your business.
A great fractional CEO understands your vision but isn’t afraid to challenge you on how to get there. We all like to think our ideas are the best, but we need the counsel of others so we don’t fall into the same traps. The ideal candidate has had successes and some failures. If they can’t tell you about their failures, that’s a red flag. No one is immune from challenging times.
My own experience
When I was building a small company, I was everything: CEO, administrator, clerk, supply manager, bookkeeper, compliance manager, billing manager, garbage man, and more. That’s how small businesses run. As the business grows, each of those roles demands more time and more expertise.
I could handle the CEO role just fine, but the bookkeeper role was outgrowing me quickly. I brought in a part-time bookkeeper for a while, but part-time employees have their own challenges. The biggest one is that they usually aren’t leaders. They do a task when they’re available, often around another job, so they’re unavailable most of the time.
The demands of financial management became overwhelming. I couldn’t afford a full-time bookkeeper, and I needed someone with accounting expertise who understood the company’s tax issues. I was fortunate to find someone who came in as a fractional CFO. In just 10 to 20 hours a week, she standardized our financial reporting, overhauled our banking, got us the loans we needed for cash flow, and did all the things I had no clue how to do.
As the company grew, her role grew. She added employees below her to take on day-to-day functions. As we got larger, her time commitment increased, and we negotiated those changes in her contract along the way.
Eventually the business growth stabilized, and with her help we recruited and hired a full-time, permanent CFO. As the fractional, she stayed on for a month at reduced hours to train him and show him where everything was and how it all worked. I couldn’t have trained him without her.
So, do you need one?
I used a fractional CFO. The same model works at the CEO seat. You may be ready for a fractional CEO if:
- You are doing the work of several executives, and the CEO job keeps getting squeezed
- A leadership change or a founder’s transition is coming, or already here
- You have a strategy, an AI plan, or a growth decision on your list that no one has time to own
- You need senior judgment, but a full-time executive isn’t affordable or justified yet
If a couple of those sound familiar, it’s worth a conversation.
Start the conversation
Want a clear-eyed look at whether a fractional CEO fits your company? Thirty minutes is usually enough to know if we’re a fit. Start a conversation at d41consulting.com.