Venture funds are clear: Given the uncertainty of the coming few years as the Fed seeks to unwind its decades-long monetary policy, the mandate for CEOs is to:
- Cut burn.
- Slow growth.
- Carefully manage towards profitability.
This is a tough pill to swallow for founders who were planning to accelerate growth this year. Open Twitter and you’ll find a cacophony of founders, investors and advisers doling out advice for what to do next: downsize your product offerings; freeze all hiring; consider mass layoffs.
The fact is, you can indeed cut burn and manage toward profitability while still defaulting to growth. In fact, that’s how the winners of this downturn will pull ahead.
To manage their huge levels of risk, large companies must freeze hiring. If you’re an entrepreneur, this is good news for you.
So what does that look like?
Fractional hiring is a growth cheat code
We’ve been operating as a bootstrapped business for close to a decade, so we’re familiar with forecasting budgets around very conservative scenarios and adjusting within 30-day or 90-day windows. This has allowed us to not only stay profitable but be nimble as well. When faced with economic chaos in March 2020, we maintained our growth rate by quickly adjusting budgets.
Instead of pausing hiring and delaying our team’s ability to execute, we employ a fractional model for hiring. As we’ve scaled headcount over the years, we’ve always tried to bring on key people first as (typically, part-time) contractors, and then convert them to full-time employees.
This strategy has allowed us to ramp up our team to serve a network of 50,000 developers while remaining profitable almost every month since inception.
How small companies can win
We believe that the coming years will see a contractor-first strategy become even more prevalent, and small companies will have an opportunity to employ this strategy effectively.
To manage their huge levels of risk, large companies must freeze hiring. If you’re an entrepreneur, this is good news for you. There is now way less competition for the talent you’re hiring, and you may be able to lock in a hire who was unaffordable a few months ago.
Moreover, professionals increasingly prefer the working arrangement that being a contractor affords them. That means higher-impact professionals will more likely take on contract work rather than full-time salaried people.
How to assemble a fractional team you can trust
We’re often led to believe that the only way to get the maximum value out of our team is to be sure we “own” all of their working hours. In reality, contractors bring an incredible amount of value. Context-switching allows them to see the challenges of our business with fresh eyes each day.
This is our magic formula for identifying, prioritizing and hiring for key fractional roles:
Decide what outcomes you need most, then figure out who can drive them
Before you hire, get to bedrock on what your business needs. Is it cheaper leads? A product that converts? Higher retention? Then, determine what kind of person you need to drive this metric. If you could summon them out of thin air, what would they be able to do, and how would they do it?
This process will not only write your job description for you, it’s also insurance against making a poor hire.
Share success metrics up front
Fractional employees should know from the jump what they need to achieve (and by when) to continue the engagement. This key metric should write itself if you do the above step well and should drive a bottom-line result that has outsized ROI.
Having a shared understanding of what success looks like is absolutely critical for fractional teams, especially when resources are tight.
Work with experts to find experts
If you aren’t a world-class marketer, you probably can’t identify one, and that applies to any key role.
If you don’t have the expertise required to hire well in-house, work with external partners who do. For example, when hiring marketers, we work with an agency that specializes in high-impact marketers.
This is especially important for fractional hires. Unlike the typical ramp for salaried employees, key fractional employees should be able to deliver value almost immediately. Spending resources to ensure this happens will pay off in spades.
Keep calm and hire on
As a growing startup, prudence makes sense. It extends our runways and allows us to adjust to market conditions.
That said, we believe it should be balanced with the right level of aggression. While others are wary of hiring during economic uncertainty, it does not make sense to stop innovating and building. We believe that working with fractional talent is the best way to do that while mitigating risk.