Recently, Ben read this article in Inc Magazine, “Startups are booming—but so are bankruptcies,” which got us thinking about the value of cash flow and maximizing the value of money as companies expand.
Ben was heavily involved in promotional and traditional marketing efforts for many funded startups during the dot-bomb era. Ben saw these startups burn through cash at an alarming rate, buying white leather couches, brand-new office furniture, expansive phone systems, wrapped vehicles for their executives, and many other things that would never equate to bottom-line success. They also spent a ton of money with me on thousands of custom promotional marketing pieces.
All these companies wanted Ben to work for equity, so Ben put them on retainer and was glad he did. They are long gone, but he is still here.
The lesson learned for businesses is that even though we may be liquid at the moment (hint: VC infusion of cash), money is designed to increase run rate and get you from proof of concept to viable product to profitability.
Yes, to do all of this, you need to grow as an organization, but you need to grow smart, and that is where fractional leadership comes in.
Companies may need high-end strategic advice and leadership to get them from where they are to where they want to be, but having all those people on salary before you are viable is like giving a Ferrari to a sixteen-year-old kid. They won’t be able to handle the power; they will be awestruck and might even wrap it around a tree or have it impounded.
Instead, having fractional leadership with decades of experience on a reasonable retainer that you can justify and who can be there to answer the questions and produce deliverables as and when needed makes way more sense.
It allows you to preserve cash for research and development, ad spending, client acquisition, and other things that will increase your bottom line.
As Nick mentioned in a previous article, having a Chief Claims Officer on staff before you have written any policies makes little sense. However, having someone with that skill set who can be available fractionally who can help you design policies and procedures and set you up for long-term success is invaluable.
Initially, you may only need their services for five to ten hours weekly. However, as your organization grows, so will your needs, and you can utilize their services as needed until you can justify the expense of having that person on staff full-time.
Fractional leaders are not forever, and most don’t want to be. They are strategic problem solvers who want to come in, understand challenges and goals, set organizations up for success, help hire and train someone full-time, and then fade into the background.
Psychologically, fractional leaders have little interest in running a business full-time and dealing with daily minutiae. They prefer to be on the sharp side of the spear, driving new initiatives, change, and programs forward, skunk-working along the way, and then moving on to the next project once they have achieved their goals.
Over the next number of weeks, we will discuss various types of fractional leaders and how their skill sets can benefit you and your organization.
About Ben Baker
Ben Baker has been a Fractional Chief Communications Officer, Chief Marketing Officer and Chief Podcast Officer for his clients for over a decade.
"The single biggest problem with communication is the illusion that it has taken place.”
- George Bernard Shaw
We help you fix that problem and make sure you are listened to, understood, valued, and engaged with by internal and external clients, prospects and stakeholders in meaningful and profitable ways.
Nick Lamparelli is a 20+ year veteran of the insurance wars. He has a unique vantage point on the insurance industry. From selling home & auto insurance, helping companies with commercial insurance, to being an underwriter with an excess & surplus lines wholesaler to catastrophe modeling Nick has wide experience in the industry. Over past 10 years, Nick has been focused on the insurance analytics of natural catastrophes and big data. Nick serves as our Chief Evangelist.
