Getting to the Next Level - Utilizing Fractional CXOs to Reach Your Potential
How does a CEO/Owner of a small to mid-size company maximize its potential and get to the next level? What are the key obstacles? Too often, these CEO’s point to capital; and while the company needs fuel for its engine, it is not the critical obstacle. That category is reserved for expertise and experience of the company’s management team. Years ago, I spoke with the owner/CEO of a $250 million company, and he was faced with the dilemma. “I know we can become a $1 billion company. But the people who helped me get to where we are do not have the expertise to get us where we need to go?” I need an executive team that has done this before.”
This same quandary faces nearly every owner. How many key members of the executive team have “done this before?” How is running a $10 million company different from running a $2.5 million company? Or how is running a $100 million company different from running a $20 million company? The problem is compounded by the fact the average executive salary for 2021 is $204,000. With some roles requiring around a $300,000 price tag. That doesn’t even include the executive benefits package or expected bonuses. What if this hire is not the right fit for the company?
That level of talent and the risk is often out of reach for most small businesses or start-ups, where resources are tight. There is now a way to get decades of executive-level experience, for less commitment and money. As a small business owner, the fractional executive maybe the answer.
Fractional executives are perfect for small businesses and startups, or companies that are trying to scale. These experienced resources help bridge the gap between the need for executive leadership and limited resources.
They exist for every position of the c-suite: CFO, COO, CSO, CMO, CIO These “CXO’s” will provide the expertise to propel the company to the next level. They will bring the insights, processes, metrics, and approaches these companies needs to get to the next level. They will challenge the leadership team in addition you, as the CEO and owner of the company. They can help the owner/CEO dispassionately evaluate the leadership and management teams. They will help attract more talent to the organization as it grows. They will identify opportunities your current leadership team does not see.
These resources are not full-time employees. They do not require benefits. Working limited hours each week, CXO’s bring the insights and knowledge that the current leadership team is lacking. Most important, they will help increase the value of the business.
Another benefit to using a fractional exec is their fresh, outside experience. Most fractional execs are 10 or 20-year subject matter experts and have prior experience of being a full-time executive. They have worked in that type of role in other companies and industries and can apply their learnings to your business. This experience means they can also challenge you to do things differently. And can see new opportunities for growth you may have overlooked, along with other blind spots.
Fractional CXOs are often hired during a period where founders or the top leadership are wearing too many hats and realize their time and skills are no longer sufficient to help the company achieve the next stage of growth. They may not want their role in management replaced by a full-service management team overnight but will often prefer to first employ fractional CXOs that give them a taste of what working with a management team can look like. In a few years, the fractional CXOs can be replaced by a full-time management team.
Are you ready? How would you answer these 5 questions?
1. Are you as the Founder/Owner/CEO/President ready to step back so your company can step forward to reach its potential? - Are you ready to take on the fresh perspectives of prospective CXO’s? Or are you the single point of failure in your company?
2. Do you know (deep down inside) that your leadership team does not have the experience and expertise necessary to drive growth and value in your company? - Are the members of your leadership team ready to learn to move forward or do they need to move on?
3. Does your company have the financial resources and are you ready to take on the risk hire full-time executives at the market price? - Few companies are ready. The cost of failure is sometimes too high.
4. Do you understand that now is the time and that delay may not only preclude your company from reaching its potential in a timely manner but not at all as your competition passes you by? - Perfection is the enemy of progress. Now is the right time.
5. What are the projects and needs that require a new perspective and leadership? - Do you want to guess, or do you want to know?
Bringing on fractional CXO’s will help your company generate more revenue, instill the processes necessary to function as a bigger company, and give you the financial wherewithal to get to the next level.
