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Many small businesses, thinking about their future growth, have considered hiring a fractional team to support their everyday business functions as an option. Fractional models offer many benefits to business owners who choose to go that route. These models can allow your company to get expert assistance at a lower price point. Outsourced services are meant to assist and support your company as you grow and expand your business. How can your small to medium-sized business benefit from fractional services? Keep reading to find out!
What Is a Fractional Role?
A fractional role is a job where someone works part-time or for a set number of hours each week for a company. Instead of being a permanent, full-time employee, a fractional role fills an important position on a limited basis. Fractional roles are often filled by experienced professionals, such as CFOs, marketers, or IT specialists, who provide the necessary expertise while working for several clients. Fractional roles benefit companies by providing flexibility and cost savings. They allow businesses to access skilled talent for specific tasks or projects without the long-term commitment of hiring a full-time employee.
What Is a Fractional Staffing Model?
A fractional staffing model is a way for businesses to hire skilled professionals on a part-time or limited basis instead of full-time. This model allows companies to access high-level expertise without paying for a full-time salary and benefits. It is common for businesses that need specialized skills, like finance, marketing, or human resources, but don’t have enough work to justify hiring someone full-time.
In a fractional staffing model, fractional staff members often work for multiple companies at once, offering their services only for the hours or projects needed. This model helps small or growing businesses save money while still getting access to expert talent.
Differences between Fractional Roles vs Freelancers & Consultants
What are fractional roles compared to freelancers and consultants?
Fractional roles are part-time, specialized positions within a company. These professionals work consistently, integrating into the team, attending meetings, and contributing to long-term goals. They usually commit to a set number of hours weekly and focus on strategic execution.
Freelancers are hired for short-term tasks or specific projects, like designing or writing. They work independently, usually juggling multiple clients, with limited involvement in company operations or strategy.
Consultants provide expert advice to address specific challenges. They typically work on a project basis, focusing on recommendations rather than hands-on implementation. Unlike fractional roles, Consultants offer guidance but aren’t involved in ongoing operations.
The Benefits for Beginning Stage Companies
Companies that are in the beginning stages of growth receive quite a few advantages to utilizing the fractional model. Fractional accounting services offer three main benefits for beginning stage companies:
- A fractional team helps new companies prepare for fundraising efforts, with accurate reporting and realistic projections. Having a trusted, outsourced accounting department will give your company more credibility as you look for funding to expand your business.
- Fractional services also offer a large network of existing contacts that can also come into your company and advise your business through the growth stages.
- Outsourced departments can consult on corporate governance and create advisory boards to lead your company forward.
The Benefits for Established Companies
For businesses that have been through their growth stages, have become a bit more established and are looking to hire a fractional team, there are still quite a few advantages as well. For existing companies the benefits are:
- A fractional team can help an existing company maximize cash flow forecasting, both short term and long term.
- They can also help organize your management team and set initiatives that assist in your companies growth.
- These teams also have the research done to implement financial benchmarks that help your company succeed.
- They assist with capital planning, as well as crisis management programs.
- A fractional team can help you explore new opportunities with educated risk-taking and a proper understanding of your company’s financial information.
Key Takeaways
- For beginning stage companies, a fractional model can help you with fundraising efforts through accurate reporting and realistic projections. They can also help with using existing contacts to bring in the best advisors early in your company’s lifecycle, consult on corporate governance and create advisory committees and boards.
- For existing or more established companies, a fractional model can benefit you by maximizing cash flow forecasting in both the short and long term. They can organize your management team, set company growth initiatives and research & implement financial benchmarks. There are also the added benefits of capital planning and crisis management & exploration of new opportunities.
Frequently Asked Questions About Fractional Benefits
What are the advantages of offering fractional roles to my business?
Fractional roles allow businesses to access high-level expertise without the cost of full-time salaries and benefits. They offer flexibility and help fill skill gaps for short-term projects or specific business needs.
What are the benefits of hiring a fractional CFO?
Hiring a fractional CFO provides high-level financial expertise on a part-time basis, allowing businesses to access strategic insights without the cost of a full-time CFO. This flexible approach helps manage cash flow, optimize growth, and improve financial planning for long-term stability.
How do fractional roles help with cost savings?
By hiring workers part-time or on an as-needed basis, companies can save on salaries, benefits, and overhead costs. Employers only pay for the hours or services required, making it more efficient than full-time hiring.
What types of roles are best suited for a fractional model?
Executive positions like CFOs, CMOs, or HR leaders, as well as marketing, finance, and IT roles, are commonly hired on a fractional basis. Any role that requires specialized skills but doesn’t demand full-time work can benefit from this model.
How do I determine the right hours for a fractional worker?
Assess the workload and business needs to determine how many hours are required. Many employers start with a few hours per week or month and adjust based on performance and project demands.
Should I classify fractional workers as employees or contractors?
This depends on the role and level of control you exert. If the worker follows company schedules and procedures, they may need to be classified as an employee. Contractors offer more flexibility but come with fewer compliance requirements.
Do I need to provide benefits to fractional employees?
This depends on local labor laws and company policies. While offering prorated benefits can attract talent, it’s not always required for part-time or contractor roles.
How can I attract top talent for fractional roles?
Offering competitive hourly rates, flexible schedules, remote work options, and some prorated benefits can help attract skilled professionals. Networking and posting on specialized job boards can also improve recruitment efforts.
What challenges might I face with fractional employees?
Communication and coordination can be more challenging with part-time workers. It’s important to set clear expectations and ensure regular updates to keep them aligned with business goals.
How do I manage fractional workers alongside full-time employees?
Establish clear communication channels and expectations for both groups. Use collaboration tools, schedule regular meetings, and ensure fractional workers are informed of important updates.
How can I measure the performance of fractional employees?
Set specific goals, deadlines, and performance metrics upfront. Regular check-ins and project reviews help ensure accountability and track progress effectively.
Can fractional roles become full-time positions?
Yes, if business needs grow, many companies transition successful fractional workers into full-time roles. This can also be a way to assess talent before making a long-term hiring decision.
What legal considerations should I keep in mind when hiring fractionally?
Make sure contracts are clear about roles, hours, and responsibilities. Ensure compliance with labor laws, especially regarding classification, benefits, and termination policies.
How do I manage scheduling conflicts with fractional workers?
Use shared calendars and scheduling tools to avoid conflicts. Clear communication about availability and deadlines will help ensure smoother operations.
Is it harder to keep fractional workers engaged with company goals?
Fractional workers may not feel as connected as full-time employees, so it’s important to involve them in meetings and provide context on how their work aligns with the company’s mission.
Can fractional roles improve business flexibility?
Yes, fractional roles allow businesses to scale up or down quickly based on needs. This flexibility is particularly useful during periods of growth or economic uncertainty.
Sources:
- https://www.inc.com/entrepreneurs-organization/game-changer-benefits-of-outsourcing-business-functions.html
- https://cfohub.com/a-deeper-dive-into-fractional-accounting-what-it-is-and-why-use-it/
- https://kranz.consulting/why-fractional-accounting-three-benefits-that-will-rejuvenate-your-startups-financial-processes/
This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.
This post contains trusted sources. All references are hyperlinked at the end of the article to take readers directly to the source.
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Matt Garrett is the Founder and Chief Executive Officer of TGG. He is a regular speaker across the country on behalf of Vistage educating business owners on the need for sound financial practices, and is Vice President of the Board of Directors of FINACA. Under Matt’s leadership, TGG has received the following recognition: INC. 5000 top companies in the U.S. five years in a row; one of “San Diego’s Fastest Growing Companies” the past four years; and is among San Diego’s “Best Places to Work.”
