How Fractional Executives Save You Time, Money, and Effort
Books & The Biz
| Dan Paulson and Richard Veltre | Rating 0 (0) (0) |
| Launched: Dec 05, 2025 | |
| dan@invisionbusinessdevelopment.com | Season: 3 Episode: 42 |
In today's fast-paced business world, it is essential to have the right talent on your team in order to scale and grow successfully. However, hiring a full-time executive can be costly and may not be necessary for all companies.
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In today's fast-paced business world, it is essential to have the right talent on your team in order to scale and grow successfully. However, hiring a full-time executive can be costly and may not be necessary for all companies.
Business is growing. You are getting bogged down with too much, but you lack the experience on your team to get what you need done. Maybe it's time to go out and hire that talent you need to scale.
Not so fast.
Many companies don't need, nor can afford, a full-time executive to lead growth. So what do you do when you need help?
Think Fractional. When you look at the costs of hiring a full time, executive caliber leader, the costs can be substantial. In many cases that person will be upwards of six figures before benefits and incentives. Our research has shown that an executive with more than 10 years experience can run well into a quarter of a million dollars. Then you still need to kick in for retirement, insurance, and taxes. Not to mention performance incentives such as bonuses, or stocks that could drive the price higher.
Today we talk about why XCXO was formed and explain how you can invest in the help you need for far less.
Tune in, and be sure to like, share, and subscribe.
[00:00:00.00] - Alice
Hello. Welcome to Books in the Biz, a podcast that looks at both the financial and operational sides of success. Please welcome our hosts, Dan Paulson and Richard Veltre. Dan is the CEO of Envision Development International, and he works with leaders to increase sales sales and profits through great cultures with solid operations. Rich is CEO of the Veltre Group and a financial strategist working with companies to manage their money more effectively. Now on to the podcast.
[00:00:44.01] - Dan Paulson
Good afternoon. Welcome to Books in the Biz. Rich, how are you doing?
[00:00:48.04] - Rich Veltre
I am doing well. Dan, how are you?
[00:00:50.22] - Dan Paulson
I am doing great. I am in my flannel today because at the time of this recording, it is damn cold here in Wisconsin. It is just downright frigid. Not used to that weather anymore. Gosh, darn it. I need to move somewhere warm, somewhere with a beach. Let's snow.
[00:01:07.12] - Rich Veltre
I like that idea. I can't get my wife to go with me, though.
[00:01:12.19] - Dan Paulson
You need to talk nice to her then. Anyway, we'll jump right into it today. So the subject of our show is really about fractional executives and the value they can bring to certain companies, because this is the whole reason for the podcast. This is the whole reason why we started XCXO. So I think we're each going to give a little bit in our perspective of where the value is at here, especially for those companies in that, I'd say 10 to 50 million dollar range. There's tremendous benefit over hiring a fractional person versus a full-time. Let's hit the way back machine for a while. So you and I have known each other for approximately 15 years. We met through a mutual connection in New York City, of all places, because that's where you're from. And I just happen to be out there visiting and doing some business work out there. And we got connected, and we've stayed connected ever since. But what led to the discussion that eventually got us where we're at today, I'll turn it over to you because you are working with the client, and you're the financial guy. So take it from there.
[00:02:24.11] - Dan Paulson
Tell me a little bit more about the company and what led to us eventually getting here.
[00:02:30.00] - Rich Veltre
So I have the one example that's in my head. I don't know if it's the same one that you're thinking of, but hopefully it is. But I had one that's a really good example of why fractional can really work. And it was a guy that had this vision for consolidating a market. So he's looking at this market, and he's saying there are 600 individuals or I forget what the number was, but that was just in Manhattan alone. There were 600 individuals that had their individual practices. And all we had to do was buy a certain number of them. And you would have a big single entity that would allow you to get a lot of advantage as far as pricing goes, as far as equipment goes, sharing things goes. He had a really good idea for that market. And so the first thing that he does is he goes out and he says, okay, and it was a medical practice, by the way. So he had to go out and he had to get a medical officer. Then he had to go get an operations officer. And he went to go get a financial officer, which was me.
[00:03:42.17] - Rich Veltre
And then he turned around and he's like, well, we're going to do marketing. And I'm the CEO. And I start looking at the list of all the people he's putting on, not one of them doing any medical work at all. But he's got this whole list of all these people. And he's got this plan that he put together with the CFO that was there before me. And he puts it together. And it says that in order for that to work, he had to buy, I forget how many practices in the first year of operations. And you start looking at that list and you're like, they're not going to be doing anything. If you only have one practice, which at that point, he was closing on his first one. He had already been two years in business. He had all these people sitting there saying, are you going to get this off the ground? Because I need to get paid. I need work. I need benefits. I need all these things. And it becomes a great example because you sit there and you go, these guys were only going to be working maybe a day a week, but you had it in your model to pay them full-time.
[00:04:43.28] - Rich Veltre
Because you wanted their attention at any given point. So when I added up the model, I had to quit because I'm like, you're never going to get this off the ground to actually understand because you're trying to do this all on a full-time basis. These are people at a high level of expertise that you were going to pay a $250,000 salary plus the burden of the taxes, plus the burden of the benefits, plus stock options, bonuses. I mean, you're going to give them something else. By the And by the time you were done, each one of those executives was looking for $350, $400, $1,000 of overall compensation expense. You add that up and you say you're never getting off the ground because they're working for one day a week and you're paying them full-time.
[00:05:32.04] - Dan Paulson
Yeah. And that's a startup situation, where you probably need that talent to help get you going. In my experience, I'll just take a manufacturing example. I'll just take a manufacturing example. I'll take a manufacturing example. Company I was working with, and in the end, we both shared work with them. They were in a situation where they were good, they were growing, but they weren't too big. And here in the Midwest, to hire somebody, for example, of your caliber or even mine with the operations or with the finance, same thing. Here's a situation where they have employees. For the most part, the employees can handle the load of work. They really just need guidance. They don't need somebody there to step in and do everything. And I think that's where people get confused between executive level versus more managerial or direct operations, where they're actually hands on with it. You need somebody there that just make sure the ship is going the right direction. And to hire that person full-time, even here in the Midwest, to hire a good COO, for example. We won't even get into CFO, but just COO you're probably somewhere between $150,000 to $180,000 just in salary.
[00:06:50.10] - Dan Paulson
And as you pointed out, now that's not including benefits. So if they need health insurance, there's health insurance. They're probably going to get some bonus over and above that. There could, as you said, be potential where in order to secure them, you need to give them some level of equity in the company so that there's something to put a set of golden handcuffs on them. And for me to just do the math on that, you're at about $250,000 conservatively at that point for a $10 million company. That's a pretty big hit, especially for, as you pointed out, somebody you're going to have their full-time. But really, they're probably doing 10 hours a week worth of work directly to what they should be doing. And to me, that's where many of these companies are going to struggle, on top of the fact that how do you find that level of talent with somebody with that much experience that's willing to take a pay cut, essentially, to come in for a lower amount, and you know you're not going to be able to keep them busy full-time. So similar to your story, but these are established companies, too, that really struggle with this issue.
[00:07:57.04] - Rich Veltre
Yeah, it's across the board, right? I mean, it's very difficult when you're talking to an executive who's been running their company a certain way for however many years, right? It could be 20, it could be 30 years. They run it this way all along. And back 20, 30 years ago, You didn't use the word fractional. You didn't have the part-time executive. It wasn't defined yet. I can tell you that because I remember when I started looking at doing this type of work, there were two major companies. That was it. It'll come to me. But anyway, there was only two major companies. And I remember it specifically because there were two major companies that were doing it in two completely different ways. One of them was more of a recruiting firm, where if you had a need, they would go find you someone. And the other one was, we are the professionals, almost like it was a CPA practice, or it was a professional practice of just those people that were doing that work. And so you look at it now and you say, 20, 30 years ago, they would just say, well, I just need a CFO.
[00:09:09.24] - Rich Veltre
Just go find me a CFO. Go find me a COO. Go find me somebody to fit that bill. And I'm looking at it now. And my suggestion to people is stop looking at the title and look at the task, because if you just need a project done and you bring in somebody who's got that CFO-level experience and they can get it done in 10 hours, where you're going to hire somebody and they're going to sit around for 40 hours a week doing that same task that somebody just said, I could do it in 10 hours. Now you're going to weigh the difference between, do I want a full-time employee at that level? Or because you're evaluating it based on the task. You're evaluating it based on the project. And I use CFO because I'm used to CFO, so I apologize for that. We'll call it the CXO, right? Any level of... That level of person, that expertise level that is at that chief table, that's the one that I'm trying to get across to people that look at the task that you want that person to do. Do they have the experience to do it?
[00:10:21.18] - Rich Veltre
How much does it cost to get it done? Work it that way. It might sound easier to just hire the executive, and he's there all the time, but then There's take Solitaire off his computer because you know he's going to be playing in the middle.
[00:10:35.19] - Dan Paulson
Well, and here's the other thing. You've obviously done the fractional CFO work for quite some time. I remember several years back when We were talking about some of these companies, and they're still an investment you have to make, even with a fractional person, right? But what that person essentially, and don't take this the wrong way, is a one-trick pony. And And you've even brought this up where they would pay you this money to come in and do a specific task, but then they're trying to add other stuff onto it, which led to our conversation, which is they were asking you to do things that were operational-based in your CFO role. And basically, I think that's what led to you calling me is because they were asking you operational questions that you didn't have the answer for, and they really needed more than just one person in there. And I think That's where some of these, if you're looking at plugging somebody in again at that high six-figure salary, and you have more needs than just that one person, what are you doing with them? Especially if you know that you're not filling their time with 40 hours, where you're trying to give them stuff that's not within their wheelhouse.
[00:11:47.05] - Dan Paulson
Here's to me where the fractional part really makes sense, because now you can get your financial person, you can get your operations person, you can get your marketing person, and you can even start swapping these in or swapping them out based off of where your needs are at the time. And if you're working with a cohesive team that knows that I pretty much got done what I needed to do, you really need more help in this area. Let me step back, let somebody else step in. To me, that's powerful, where now you're getting a group of people instead of one person. And that's what led to the whole CXO idea was we can help bring those people in, and then we can swap people out as needed.
[00:12:30.00] - Rich Veltre
Yeah, I totally agree. I mean, if you think back to the example I just had, the first one, where I talked about the startup, right? He had eight people on that list, that $250,000 a piece, let's say. That's What? Two million bucks?
[00:12:46.00] - Dan Paulson
Two million bucks. And you haven't even made a dollar yet.
[00:12:49.04] - Rich Veltre
So now if you sit down and you say, you find a fractional person that has done this work before, is at that level, has the expertise, maybe they're going to work for you one day a week or something to that effect. Whatever it's laying out to be, now take those eight people times the one day, as opposed to eight people times five days. And suddenly, I think at that point, those eight people, you could probably get on the payroll for the $250,000 because they're going to be working for you for the time frame that you need them, and not for full-time. So the model becomes, well, now I have the eight people to sit around a table for the day that I need everybody to come together and create the strategy, or put together the model, or have the discussions that we need to have. And then that person goes off and works on somebody else for tomorrow. And I realize it's not perfect. You're not going to get somebody to just be available on a Monday. It's a little bit of a... What do you call it?
[00:13:55.19] - Dan Paulson
Herding cats is what I call it.. We have to have meetings with other people. You got to coordinate multiple schedules to get there. But at the same point, I think that, again, is the advantage of what we're doing with XCXO is we do the herding of the cats. So if there is a need for somebody to be on a specific, I won't say location, because a lot of the work that we do can be done virtually. But if we have to have a specific meeting at a specific time, it's our responsibility to coordinate getting the team around the table. But back to your point of what you were about there, how powerful is it if you're a company that's looking to scale? And this is where I see the XCXO being the huge advantage. If you're a company that's looking to grow, but you don't want to invest $2 million to make that growth happen, and you can invest a small portion of that and still fill up your boardroom with high caliber executive level people, that to me is pretty powerful. And that'll get you a lot further, a lot faster than, again, hiring all these people to just have them on your website by name and show how big of a team you got.
[00:15:08.01] - Dan Paulson
Because you see these companies as I do that get really top heavy, and all of a sudden, their margins go south. They're eating it all up in payroll and benefits and incentives, and they're not able to actually take advantage of that growth for several years, maybe. And the question is, how long do you hold on to that caliber of team at full-time prices to get what you want done?
[00:15:35.04] - Rich Veltre
Yeah, it's definitely a... It's a dance. It's a, but like you said, we'll do the dance. But to me, the word I was looking for that I wasn't getting to was actualarial, right? It's almost not everybody is going to be needed on a Monday. So if I have five clients, then I can say everybody is going to pay for one day, right? So now that five clients covers my week. But it's not you get Monday, you get Friday. It's the actuarial part comes in and allows everything to blend so that everybody's getting their day. But it might be in chunks over the course of those five days. So again, like you were saying, that's our job. That's what we're trying to accomplish. We'll make sure that it's covered. If that person is the one person that gets three people all call for Wednesday, then we're sitting there saying, hey, we know enough that we can sit on the meeting and fill that hole, make sure that it's covered so that you get what you're supposed to get. It's not that we overbooked. Everybody overbooks. It happens.
[00:16:46.15] - Dan Paulson
Well, and to me, here's another difference that maybe people don't think about. Let's just say you find all these individual fractional executives, and now they're all working within their silos and not necessarily communicating each other. So we'll just use our name. So Rich, you're working on the financial side. You're working in your bubble of financial, and you're doing what you need to do. And I'm doing my bubble in operations. I'm doing what I believe I need to do. And I'm starting to go, okay, we need to spend this capital on this item, and you know nothing about it. You just see somebody coming in with a request for a $250,000 piece of equipment. We'll use as an example. And you might go, wait a minute, what the heck are we doing here? So So now where we have that advantage is we create that cross-pollination to make sure that the team is working with each other to communicate what they're doing. So if I have a need, I can talk to you directly about it. I know What needs to happen? And I can communicate why we need to make this decision. Now you can push back and say, well, can we do it this way or can we do it that way?
[00:17:52.25] - Dan Paulson
But there is this discussion that happens where typically when I see different fractional executives or different consultants come in, They all work within their bubble, and they typically don't spread out beyond that. They basically expect everyone to jump in on their plan without communicating it to anybody else. This isn't true all the time, obviously. There's some good examples where you do have people that work well together. But I have seen too many times where somebody hires either multiple consultants or multiple people, and they're all doing different things simultaneously in a company, but they're not sharing bringing that information back and forth. And sometimes that stuff gets contradictory to each other. So what one person wants to do is different than what another one believes they should do. And because the two don't cross paths, now you're doubling down on spending the money that's taking you two different directions which now is just even more increased cost.
[00:18:48.26] - Rich Veltre
Yeah, it's a great point, 100 % great point. I was brought in. You and I have talked several times. We don't use the name of the company, but I was brought in to do some work for that oil rig company, the oil rig support company, right? They put medics on oil rigs. And when I came in, I started asking about their collection process because I needed to know. We were headed for bankruptcy. And I And you need to know, where is the money coming from and how fast do we get it? And I started asking these questions, and the accountants had no idea. They didn't understand why I was asking the question. The finance department, whoever, everybody in there, was basically So looking at me like, why are you asking that question? I'm like, because we're going bankrupt. And the only way to not go bankrupt is to collect money. So how fast can we get it? So now we had to figure out, well, what's the process? So I reached out to the operations department. I said, let's have a meeting. Set up a Zoom. There had to be 16, 20 people on the Zoom.
[00:19:54.22] - Rich Veltre
And we started talking about, this is broken. How do we fix it? And one of the guys in the operations says, we haven't talked to anybody in finance in two years. A hundred % great point, because the silos were clearly working at that point. I was the first person to say, We need to break down the silo, because what was happening was we had basically 90 day terms with the oil rig companies, right? People were putting their time sheets in two months after they actually had the time or a month after they did the time. So when you start going back, you're not collecting your money for six months. And that's an operational issue. It's not really a finance issue because it was the operational procedures that were extending the time out who needed to actually have a wet signature on a time sheet in order to make it valid to get it paid for. So by the time you actually collected that money, it could be six months by the time you actually saw a dime for something that was done six months ago.
[00:21:05.25] - Dan Paulson
Yeah. And you're talking potentially hundreds of thousands of dollars, if depending upon the size of the company, could be up close to seven figures by that point before you even. It was enormous.
[00:21:15.11] - Rich Veltre
Yeah. Yeah, it was enormous. So there's your perfect example. What would have happened if they were trying to hire you, Dan, on a full-time basis, me on a full-time basis? And then we could have had that done in a heartbeat, because we've got, like I said, there were 16, 20 people on the call. And I'm going, why do we have so many people on this call? First off, who's in charge? The people in charge, the leadership is the part that the company really needed, and it didn't really have it. So don't think of this as, we just fired... Because a lot of people tend to lean towards they hear fractional, and they translate it to part-time. If you're going to call it part-time, that's But call it part-time leadership. And make sure that you understand that fractional does not a bookkeeper that's there only a couple hours a week, or a controller that's only there a couple hours a week. These are not the important parts. The important part is you bring in somebody that has that higher level of experience so they can deal with you on a leadership level.
[00:22:21.23] - Dan Paulson
That's right. And the way these are usually structured, you might get, for example, we might plan for so many hours, but the whole point is those hours aren't used on a single day. They might be spread out through that entire week. So there's still accountability. There's still follow up. There's still check-ins. They're monitoring the process, whether they're on site or not. And that, to me, is the major difference versus somebody who's there full-time. And if you are listening to this and thinking, well, that's not our company. That doesn't happen to us. The examples you got, those are other people. I suggest you go back and check again Because I've worked in a number of companies as an employee, where I can tell you, especially as those companies start getting larger, those silos start getting more prevalent, and everyone is protecting their own ground, and doing their own thing. And it might be different than what they're reporting to the boss. And it all depends on, again, how the boss is doing at being a leader, and managing his people and holding them accountable, versus getting buried in the task, which once you get to that $10 million, and again, that's $50 million range, depending upon who you are, and depending upon your level of leadership experience, there can be a number of issues that pop up, because I still see a number of owners who Act like they're the only ones in the business still, even though they've got 5, 10, 100, 150, 300 employees.
[00:23:53.09] - Dan Paulson
And it just creates more work, more stress and burnout for them. Plus, eventually, you hit a point where you can't grow anymore.
[00:24:00.03] - Rich Veltre
Yeah. Absolutely.
[00:24:03.08] - Dan Paulson
So that's a little bit about how we got all this started. And we never really told that story before. So I think we both thought it was important to get it out there because there's a lot out there going on related to fractional now. I think since the pandemic and everything else, we saw a lot of people that wanted to work remotely and didn't want to go back to a traditional job. So you hear about these people that step into the role. It doesn't work out that well, and then they go get a job somewhere. So you have been doing this for close to 20 years, I believe. I've been doing my thing for about 20 years, 20 years plus now. So we've been doing this full-time, and we're around to stay. So, yeah, that's why I thought it would be important to get this out. And also anyone who's listening, if you got any questions or thoughts that you want to pop to us, feel free to drop us a line. We'd happy to address them in future shows. Rich, anything else we need to cover? Did we get it all?
[00:25:07.19] - Rich Veltre
I think we got a good base of it. Let's put it that way.
[00:25:10.20] - Dan Paulson
All right. Well, then tell them how to get a hold of us.
[00:25:13.14] - Rich Veltre
Well, I would definitely send me an email at rich@xcxo.net.
[00:25:18.00] - Dan Paulson
And you can get a hold of me at dan@xcxo.net. And while you're at it, feel free to visit the site. And you can see a few of our colleagues who are up there and people we can tap into. But we'd love to to talk to you about this. If your goal is to scale, especially going into 2026, I think we could help you. Rich, it's always been fun, and I'm going to let Bob take us out, and we will talk to you next time, all right?
[00:25:45.15] - Bob
Want to boost your sales and profits but need the talent to help you grow? Xcxo is a one-of-a-kind platform to find skilled fractional executives to help develop your team into a high-performance powerhouse. Fractional leadership is a great choice when you consider the average executive-level candidate can cost you hundreds of thousands of dollars in salaries, benefits, and incentives. Xcxo finds you the executive and utilizes their talents to build your team's experience, all for a fraction of the cost of a full-time C-suite leader. Contact XCXO today to fill the gaps in your leadership team. Visit xcxo.net to learn more.
[00:00:00.00] - Alice
Hello. Welcome to Books in the Biz, a podcast that looks at both the financial and operational sides of success. Please welcome our hosts, Dan Paulson and Richard Veltre. Dan is the CEO of Envision Development International, and he works with leaders to increase sales sales and profits through great cultures with solid operations. Rich is CEO of the Veltre Group and a financial strategist working with companies to manage their money more effectively. Now on to the podcast.
[00:00:44.01] - Dan Paulson
Good afternoon. Welcome to Books in the Biz. Rich, how are you doing?
[00:00:48.04] - Rich Veltre
I am doing well. Dan, how are you?
[00:00:50.22] - Dan Paulson
I am doing great. I am in my flannel today because at the time of this recording, it is damn cold here in Wisconsin. It is just downright frigid. Not used to that weather anymore. Gosh, darn it. I need to move somewhere warm, somewhere with a beach. Let's snow.
[00:01:07.12] - Rich Veltre
I like that idea. I can't get my wife to go with me, though.
[00:01:12.19] - Dan Paulson
You need to talk nice to her then. Anyway, we'll jump right into it today. So the subject of our show is really about fractional executives and the value they can bring to certain companies, because this is the whole reason for the podcast. This is the whole reason why we started XCXO. So I think we're each going to give a little bit in our perspective of where the value is at here, especially for those companies in that, I'd say 10 to 50 million dollar range. There's tremendous benefit over hiring a fractional person versus a full-time. Let's hit the way back machine for a while. So you and I have known each other for approximately 15 years. We met through a mutual connection in New York City, of all places, because that's where you're from. And I just happen to be out there visiting and doing some business work out there. And we got connected, and we've stayed connected ever since. But what led to the discussion that eventually got us where we're at today, I'll turn it over to you because you are working with the client, and you're the financial guy. So take it from there.
[00:02:24.11] - Dan Paulson
Tell me a little bit more about the company and what led to us eventually getting here.
[00:02:30.00] - Rich Veltre
So I have the one example that's in my head. I don't know if it's the same one that you're thinking of, but hopefully it is. But I had one that's a really good example of why fractional can really work. And it was a guy that had this vision for consolidating a market. So he's looking at this market, and he's saying there are 600 individuals or I forget what the number was, but that was just in Manhattan alone. There were 600 individuals that had their individual practices. And all we had to do was buy a certain number of them. And you would have a big single entity that would allow you to get a lot of advantage as far as pricing goes, as far as equipment goes, sharing things goes. He had a really good idea for that market. And so the first thing that he does is he goes out and he says, okay, and it was a medical practice, by the way. So he had to go out and he had to get a medical officer. Then he had to go get an operations officer. And he went to go get a financial officer, which was me.
[00:03:42.17] - Rich Veltre
And then he turned around and he's like, well, we're going to do marketing. And I'm the CEO. And I start looking at the list of all the people he's putting on, not one of them doing any medical work at all. But he's got this whole list of all these people. And he's got this plan that he put together with the CFO that was there before me. And he puts it together. And it says that in order for that to work, he had to buy, I forget how many practices in the first year of operations. And you start looking at that list and you're like, they're not going to be doing anything. If you only have one practice, which at that point, he was closing on his first one. He had already been two years in business. He had all these people sitting there saying, are you going to get this off the ground? Because I need to get paid. I need work. I need benefits. I need all these things. And it becomes a great example because you sit there and you go, these guys were only going to be working maybe a day a week, but you had it in your model to pay them full-time.
[00:04:43.28] - Rich Veltre
Because you wanted their attention at any given point. So when I added up the model, I had to quit because I'm like, you're never going to get this off the ground to actually understand because you're trying to do this all on a full-time basis. These are people at a high level of expertise that you were going to pay a $250,000 salary plus the burden of the taxes, plus the burden of the benefits, plus stock options, bonuses. I mean, you're going to give them something else. By the And by the time you were done, each one of those executives was looking for $350, $400, $1,000 of overall compensation expense. You add that up and you say you're never getting off the ground because they're working for one day a week and you're paying them full-time.
[00:05:32.04] - Dan Paulson
Yeah. And that's a startup situation, where you probably need that talent to help get you going. In my experience, I'll just take a manufacturing example. I'll just take a manufacturing example. I'll take a manufacturing example. Company I was working with, and in the end, we both shared work with them. They were in a situation where they were good, they were growing, but they weren't too big. And here in the Midwest, to hire somebody, for example, of your caliber or even mine with the operations or with the finance, same thing. Here's a situation where they have employees. For the most part, the employees can handle the load of work. They really just need guidance. They don't need somebody there to step in and do everything. And I think that's where people get confused between executive level versus more managerial or direct operations, where they're actually hands on with it. You need somebody there that just make sure the ship is going the right direction. And to hire that person full-time, even here in the Midwest, to hire a good COO, for example. We won't even get into CFO, but just COO you're probably somewhere between $150,000 to $180,000 just in salary.
[00:06:50.10] - Dan Paulson
And as you pointed out, now that's not including benefits. So if they need health insurance, there's health insurance. They're probably going to get some bonus over and above that. There could, as you said, be potential where in order to secure them, you need to give them some level of equity in the company so that there's something to put a set of golden handcuffs on them. And for me to just do the math on that, you're at about $250,000 conservatively at that point for a $10 million company. That's a pretty big hit, especially for, as you pointed out, somebody you're going to have their full-time. But really, they're probably doing 10 hours a week worth of work directly to what they should be doing. And to me, that's where many of these companies are going to struggle, on top of the fact that how do you find that level of talent with somebody with that much experience that's willing to take a pay cut, essentially, to come in for a lower amount, and you know you're not going to be able to keep them busy full-time. So similar to your story, but these are established companies, too, that really struggle with this issue.
[00:07:57.04] - Rich Veltre
Yeah, it's across the board, right? I mean, it's very difficult when you're talking to an executive who's been running their company a certain way for however many years, right? It could be 20, it could be 30 years. They run it this way all along. And back 20, 30 years ago, You didn't use the word fractional. You didn't have the part-time executive. It wasn't defined yet. I can tell you that because I remember when I started looking at doing this type of work, there were two major companies. That was it. It'll come to me. But anyway, there was only two major companies. And I remember it specifically because there were two major companies that were doing it in two completely different ways. One of them was more of a recruiting firm, where if you had a need, they would go find you someone. And the other one was, we are the professionals, almost like it was a CPA practice, or it was a professional practice of just those people that were doing that work. And so you look at it now and you say, 20, 30 years ago, they would just say, well, I just need a CFO.
[00:09:09.24] - Rich Veltre
Just go find me a CFO. Go find me a COO. Go find me somebody to fit that bill. And I'm looking at it now. And my suggestion to people is stop looking at the title and look at the task, because if you just need a project done and you bring in somebody who's got that CFO-level experience and they can get it done in 10 hours, where you're going to hire somebody and they're going to sit around for 40 hours a week doing that same task that somebody just said, I could do it in 10 hours. Now you're going to weigh the difference between, do I want a full-time employee at that level? Or because you're evaluating it based on the task. You're evaluating it based on the project. And I use CFO because I'm used to CFO, so I apologize for that. We'll call it the CXO, right? Any level of... That level of person, that expertise level that is at that chief table, that's the one that I'm trying to get across to people that look at the task that you want that person to do. Do they have the experience to do it?
[00:10:21.18] - Rich Veltre
How much does it cost to get it done? Work it that way. It might sound easier to just hire the executive, and he's there all the time, but then There's take Solitaire off his computer because you know he's going to be playing in the middle.
[00:10:35.19] - Dan Paulson
Well, and here's the other thing. You've obviously done the fractional CFO work for quite some time. I remember several years back when We were talking about some of these companies, and they're still an investment you have to make, even with a fractional person, right? But what that person essentially, and don't take this the wrong way, is a one-trick pony. And And you've even brought this up where they would pay you this money to come in and do a specific task, but then they're trying to add other stuff onto it, which led to our conversation, which is they were asking you to do things that were operational-based in your CFO role. And basically, I think that's what led to you calling me is because they were asking you operational questions that you didn't have the answer for, and they really needed more than just one person in there. And I think That's where some of these, if you're looking at plugging somebody in again at that high six-figure salary, and you have more needs than just that one person, what are you doing with them? Especially if you know that you're not filling their time with 40 hours, where you're trying to give them stuff that's not within their wheelhouse.
[00:11:47.05] - Dan Paulson
Here's to me where the fractional part really makes sense, because now you can get your financial person, you can get your operations person, you can get your marketing person, and you can even start swapping these in or swapping them out based off of where your needs are at the time. And if you're working with a cohesive team that knows that I pretty much got done what I needed to do, you really need more help in this area. Let me step back, let somebody else step in. To me, that's powerful, where now you're getting a group of people instead of one person. And that's what led to the whole CXO idea was we can help bring those people in, and then we can swap people out as needed.
[00:12:30.00] - Rich Veltre
Yeah, I totally agree. I mean, if you think back to the example I just had, the first one, where I talked about the startup, right? He had eight people on that list, that $250,000 a piece, let's say. That's What? Two million bucks?
[00:12:46.00] - Dan Paulson
Two million bucks. And you haven't even made a dollar yet.
[00:12:49.04] - Rich Veltre
So now if you sit down and you say, you find a fractional person that has done this work before, is at that level, has the expertise, maybe they're going to work for you one day a week or something to that effect. Whatever it's laying out to be, now take those eight people times the one day, as opposed to eight people times five days. And suddenly, I think at that point, those eight people, you could probably get on the payroll for the $250,000 because they're going to be working for you for the time frame that you need them, and not for full-time. So the model becomes, well, now I have the eight people to sit around a table for the day that I need everybody to come together and create the strategy, or put together the model, or have the discussions that we need to have. And then that person goes off and works on somebody else for tomorrow. And I realize it's not perfect. You're not going to get somebody to just be available on a Monday. It's a little bit of a... What do you call it?
[00:13:55.19] - Dan Paulson
Herding cats is what I call it.. We have to have meetings with other people. You got to coordinate multiple schedules to get there. But at the same point, I think that, again, is the advantage of what we're doing with XCXO is we do the herding of the cats. So if there is a need for somebody to be on a specific, I won't say location, because a lot of the work that we do can be done virtually. But if we have to have a specific meeting at a specific time, it's our responsibility to coordinate getting the team around the table. But back to your point of what you were about there, how powerful is it if you're a company that's looking to scale? And this is where I see the XCXO being the huge advantage. If you're a company that's looking to grow, but you don't want to invest $2 million to make that growth happen, and you can invest a small portion of that and still fill up your boardroom with high caliber executive level people, that to me is pretty powerful. And that'll get you a lot further, a lot faster than, again, hiring all these people to just have them on your website by name and show how big of a team you got.
[00:15:08.01] - Dan Paulson
Because you see these companies as I do that get really top heavy, and all of a sudden, their margins go south. They're eating it all up in payroll and benefits and incentives, and they're not able to actually take advantage of that growth for several years, maybe. And the question is, how long do you hold on to that caliber of team at full-time prices to get what you want done?
[00:15:35.04] - Rich Veltre
Yeah, it's definitely a... It's a dance. It's a, but like you said, we'll do the dance. But to me, the word I was looking for that I wasn't getting to was actualarial, right? It's almost not everybody is going to be needed on a Monday. So if I have five clients, then I can say everybody is going to pay for one day, right? So now that five clients covers my week. But it's not you get Monday, you get Friday. It's the actuarial part comes in and allows everything to blend so that everybody's getting their day. But it might be in chunks over the course of those five days. So again, like you were saying, that's our job. That's what we're trying to accomplish. We'll make sure that it's covered. If that person is the one person that gets three people all call for Wednesday, then we're sitting there saying, hey, we know enough that we can sit on the meeting and fill that hole, make sure that it's covered so that you get what you're supposed to get. It's not that we overbooked. Everybody overbooks. It happens.
[00:16:46.15] - Dan Paulson
Well, and to me, here's another difference that maybe people don't think about. Let's just say you find all these individual fractional executives, and now they're all working within their silos and not necessarily communicating each other. So we'll just use our name. So Rich, you're working on the financial side. You're working in your bubble of financial, and you're doing what you need to do. And I'm doing my bubble in operations. I'm doing what I believe I need to do. And I'm starting to go, okay, we need to spend this capital on this item, and you know nothing about it. You just see somebody coming in with a request for a $250,000 piece of equipment. We'll use as an example. And you might go, wait a minute, what the heck are we doing here? So So now where we have that advantage is we create that cross-pollination to make sure that the team is working with each other to communicate what they're doing. So if I have a need, I can talk to you directly about it. I know What needs to happen? And I can communicate why we need to make this decision. Now you can push back and say, well, can we do it this way or can we do it that way?
[00:17:52.25] - Dan Paulson
But there is this discussion that happens where typically when I see different fractional executives or different consultants come in, They all work within their bubble, and they typically don't spread out beyond that. They basically expect everyone to jump in on their plan without communicating it to anybody else. This isn't true all the time, obviously. There's some good examples where you do have people that work well together. But I have seen too many times where somebody hires either multiple consultants or multiple people, and they're all doing different things simultaneously in a company, but they're not sharing bringing that information back and forth. And sometimes that stuff gets contradictory to each other. So what one person wants to do is different than what another one believes they should do. And because the two don't cross paths, now you're doubling down on spending the money that's taking you two different directions which now is just even more increased cost.
[00:18:48.26] - Rich Veltre
Yeah, it's a great point, 100 % great point. I was brought in. You and I have talked several times. We don't use the name of the company, but I was brought in to do some work for that oil rig company, the oil rig support company, right? They put medics on oil rigs. And when I came in, I started asking about their collection process because I needed to know. We were headed for bankruptcy. And I And you need to know, where is the money coming from and how fast do we get it? And I started asking these questions, and the accountants had no idea. They didn't understand why I was asking the question. The finance department, whoever, everybody in there, was basically So looking at me like, why are you asking that question? I'm like, because we're going bankrupt. And the only way to not go bankrupt is to collect money. So how fast can we get it? So now we had to figure out, well, what's the process? So I reached out to the operations department. I said, let's have a meeting. Set up a Zoom. There had to be 16, 20 people on the Zoom.
[00:19:54.22] - Rich Veltre
And we started talking about, this is broken. How do we fix it? And one of the guys in the operations says, we haven't talked to anybody in finance in two years. A hundred % great point, because the silos were clearly working at that point. I was the first person to say, We need to break down the silo, because what was happening was we had basically 90 day terms with the oil rig companies, right? People were putting their time sheets in two months after they actually had the time or a month after they did the time. So when you start going back, you're not collecting your money for six months. And that's an operational issue. It's not really a finance issue because it was the operational procedures that were extending the time out who needed to actually have a wet signature on a time sheet in order to make it valid to get it paid for. So by the time you actually collected that money, it could be six months by the time you actually saw a dime for something that was done six months ago.
[00:21:05.25] - Dan Paulson
Yeah. And you're talking potentially hundreds of thousands of dollars, if depending upon the size of the company, could be up close to seven figures by that point before you even. It was enormous.
[00:21:15.11] - Rich Veltre
Yeah. Yeah, it was enormous. So there's your perfect example. What would have happened if they were trying to hire you, Dan, on a full-time basis, me on a full-time basis? And then we could have had that done in a heartbeat, because we've got, like I said, there were 16, 20 people on the call. And I'm going, why do we have so many people on this call? First off, who's in charge? The people in charge, the leadership is the part that the company really needed, and it didn't really have it. So don't think of this as, we just fired... Because a lot of people tend to lean towards they hear fractional, and they translate it to part-time. If you're going to call it part-time, that's But call it part-time leadership. And make sure that you understand that fractional does not a bookkeeper that's there only a couple hours a week, or a controller that's only there a couple hours a week. These are not the important parts. The important part is you bring in somebody that has that higher level of experience so they can deal with you on a leadership level.
[00:22:21.23] - Dan Paulson
That's right. And the way these are usually structured, you might get, for example, we might plan for so many hours, but the whole point is those hours aren't used on a single day. They might be spread out through that entire week. So there's still accountability. There's still follow up. There's still check-ins. They're monitoring the process, whether they're on site or not. And that, to me, is the major difference versus somebody who's there full-time. And if you are listening to this and thinking, well, that's not our company. That doesn't happen to us. The examples you got, those are other people. I suggest you go back and check again Because I've worked in a number of companies as an employee, where I can tell you, especially as those companies start getting larger, those silos start getting more prevalent, and everyone is protecting their own ground, and doing their own thing. And it might be different than what they're reporting to the boss. And it all depends on, again, how the boss is doing at being a leader, and managing his people and holding them accountable, versus getting buried in the task, which once you get to that $10 million, and again, that's $50 million range, depending upon who you are, and depending upon your level of leadership experience, there can be a number of issues that pop up, because I still see a number of owners who Act like they're the only ones in the business still, even though they've got 5, 10, 100, 150, 300 employees.
[00:23:53.09] - Dan Paulson
And it just creates more work, more stress and burnout for them. Plus, eventually, you hit a point where you can't grow anymore.
[00:24:00.03] - Rich Veltre
Yeah. Absolutely.
[00:24:03.08] - Dan Paulson
So that's a little bit about how we got all this started. And we never really told that story before. So I think we both thought it was important to get it out there because there's a lot out there going on related to fractional now. I think since the pandemic and everything else, we saw a lot of people that wanted to work remotely and didn't want to go back to a traditional job. So you hear about these people that step into the role. It doesn't work out that well, and then they go get a job somewhere. So you have been doing this for close to 20 years, I believe. I've been doing my thing for about 20 years, 20 years plus now. So we've been doing this full-time, and we're around to stay. So, yeah, that's why I thought it would be important to get this out. And also anyone who's listening, if you got any questions or thoughts that you want to pop to us, feel free to drop us a line. We'd happy to address them in future shows. Rich, anything else we need to cover? Did we get it all?
[00:25:07.19] - Rich Veltre
I think we got a good base of it. Let's put it that way.
[00:25:10.20] - Dan Paulson
All right. Well, then tell them how to get a hold of us.
[00:25:13.14] - Rich Veltre
Well, I would definitely send me an email at rich@xcxo.net.
[00:25:18.00] - Dan Paulson
And you can get a hold of me at dan@xcxo.net. And while you're at it, feel free to visit the site. And you can see a few of our colleagues who are up there and people we can tap into. But we'd love to to talk to you about this. If your goal is to scale, especially going into 2026, I think we could help you. Rich, it's always been fun, and I'm going to let Bob take us out, and we will talk to you next time, all right?
[00:25:45.15] - Bob
Want to boost your sales and profits but need the talent to help you grow? Xcxo is a one-of-a-kind platform to find skilled fractional executives to help develop your team into a high-performance powerhouse. Fractional leadership is a great choice when you consider the average executive-level candidate can cost you hundreds of thousands of dollars in salaries, benefits, and incentives. Xcxo finds you the executive and utilizes their talents to build your team's experience, all for a fraction of the cost of a full-time C-suite leader. Contact XCXO today to fill the gaps in your leadership team. Visit xcxo.net to learn more.
[00:00:00.00] - Alice
Hello. Welcome to Books in the Biz, a podcast that looks at both the financial and operational sides of success. Please welcome our hosts, Dan Paulson and Richard Veltre. Dan is the CEO of Envision Development International, and he works with leaders to increase sales sales and profits through great cultures with solid operations. Rich is CEO of the Veltre Group and a financial strategist working with companies to manage their money more effectively. Now on to the podcast.
[00:00:44.01] - Dan Paulson
Good afternoon. Welcome to Books in the Biz. Rich, how are you doing?
[00:00:48.04] - Rich Veltre
I am doing well. Dan, how are you?
[00:00:50.22] - Dan Paulson
I am doing great. I am in my flannel today because at the time of this recording, it is damn cold here in Wisconsin. It is just downright frigid. Not used to that weather anymore. Gosh, darn it. I need to move somewhere warm, somewhere with a beach. Let's snow.
[00:01:07.12] - Rich Veltre
I like that idea. I can't get my wife to go with me, though.
[00:01:12.19] - Dan Paulson
You need to talk nice to her then. Anyway, we'll jump right into it today. So the subject of our show is really about fractional executives and the value they can bring to certain companies, because this is the whole reason for the podcast. This is the whole reason why we started XCXO. So I think we're each going to give a little bit in our perspective of where the value is at here, especially for those companies in that, I'd say 10 to 50 million dollar range. There's tremendous benefit over hiring a fractional person versus a full-time. Let's hit the way back machine for a while. So you and I have known each other for approximately 15 years. We met through a mutual connection in New York City, of all places, because that's where you're from. And I just happen to be out there visiting and doing some business work out there. And we got connected, and we've stayed connected ever since. But what led to the discussion that eventually got us where we're at today, I'll turn it over to you because you are working with the client, and you're the financial guy. So take it from there.
[00:02:24.11] - Dan Paulson
Tell me a little bit more about the company and what led to us eventually getting here.
[00:02:30.00] - Rich Veltre
So I have the one example that's in my head. I don't know if it's the same one that you're thinking of, but hopefully it is. But I had one that's a really good example of why fractional can really work. And it was a guy that had this vision for consolidating a market. So he's looking at this market, and he's saying there are 600 individuals or I forget what the number was, but that was just in Manhattan alone. There were 600 individuals that had their individual practices. And all we had to do was buy a certain number of them. And you would have a big single entity that would allow you to get a lot of advantage as far as pricing goes, as far as equipment goes, sharing things goes. He had a really good idea for that market. And so the first thing that he does is he goes out and he says, okay, and it was a medical practice, by the way. So he had to go out and he had to get a medical officer. Then he had to go get an operations officer. And he went to go get a financial officer, which was me.
[00:03:42.17] - Rich Veltre
And then he turned around and he's like, well, we're going to do marketing. And I'm the CEO. And I start looking at the list of all the people he's putting on, not one of them doing any medical work at all. But he's got this whole list of all these people. And he's got this plan that he put together with the CFO that was there before me. And he puts it together. And it says that in order for that to work, he had to buy, I forget how many practices in the first year of operations. And you start looking at that list and you're like, they're not going to be doing anything. If you only have one practice, which at that point, he was closing on his first one. He had already been two years in business. He had all these people sitting there saying, are you going to get this off the ground? Because I need to get paid. I need work. I need benefits. I need all these things. And it becomes a great example because you sit there and you go, these guys were only going to be working maybe a day a week, but you had it in your model to pay them full-time.
[00:04:43.28] - Rich Veltre
Because you wanted their attention at any given point. So when I added up the model, I had to quit because I'm like, you're never going to get this off the ground to actually understand because you're trying to do this all on a full-time basis. These are people at a high level of expertise that you were going to pay a $250,000 salary plus the burden of the taxes, plus the burden of the benefits, plus stock options, bonuses. I mean, you're going to give them something else. By the And by the time you were done, each one of those executives was looking for $350, $400, $1,000 of overall compensation expense. You add that up and you say you're never getting off the ground because they're working for one day a week and you're paying them full-time.
[00:05:32.04] - Dan Paulson
Yeah. And that's a startup situation, where you probably need that talent to help get you going. In my experience, I'll just take a manufacturing example. I'll just take a manufacturing example. I'll take a manufacturing example. Company I was working with, and in the end, we both shared work with them. They were in a situation where they were good, they were growing, but they weren't too big. And here in the Midwest, to hire somebody, for example, of your caliber or even mine with the operations or with the finance, same thing. Here's a situation where they have employees. For the most part, the employees can handle the load of work. They really just need guidance. They don't need somebody there to step in and do everything. And I think that's where people get confused between executive level versus more managerial or direct operations, where they're actually hands on with it. You need somebody there that just make sure the ship is going the right direction. And to hire that person full-time, even here in the Midwest, to hire a good COO, for example. We won't even get into CFO, but just COO you're probably somewhere between $150,000 to $180,000 just in salary.
[00:06:50.10] - Dan Paulson
And as you pointed out, now that's not including benefits. So if they need health insurance, there's health insurance. They're probably going to get some bonus over and above that. There could, as you said, be potential where in order to secure them, you need to give them some level of equity in the company so that there's something to put a set of golden handcuffs on them. And for me to just do the math on that, you're at about $250,000 conservatively at that point for a $10 million company. That's a pretty big hit, especially for, as you pointed out, somebody you're going to have their full-time. But really, they're probably doing 10 hours a week worth of work directly to what they should be doing. And to me, that's where many of these companies are going to struggle, on top of the fact that how do you find that level of talent with somebody with that much experience that's willing to take a pay cut, essentially, to come in for a lower amount, and you know you're not going to be able to keep them busy full-time. So similar to your story, but these are established companies, too, that really struggle with this issue.
[00:07:57.04] - Rich Veltre
Yeah, it's across the board, right? I mean, it's very difficult when you're talking to an executive who's been running their company a certain way for however many years, right? It could be 20, it could be 30 years. They run it this way all along. And back 20, 30 years ago, You didn't use the word fractional. You didn't have the part-time executive. It wasn't defined yet. I can tell you that because I remember when I started looking at doing this type of work, there were two major companies. That was it. It'll come to me. But anyway, there was only two major companies. And I remember it specifically because there were two major companies that were doing it in two completely different ways. One of them was more of a recruiting firm, where if you had a need, they would go find you someone. And the other one was, we are the professionals, almost like it was a CPA practice, or it was a professional practice of just those people that were doing that work. And so you look at it now and you say, 20, 30 years ago, they would just say, well, I just need a CFO.
[00:09:09.24] - Rich Veltre
Just go find me a CFO. Go find me a COO. Go find me somebody to fit that bill. And I'm looking at it now. And my suggestion to people is stop looking at the title and look at the task, because if you just need a project done and you bring in somebody who's got that CFO-level experience and they can get it done in 10 hours, where you're going to hire somebody and they're going to sit around for 40 hours a week doing that same task that somebody just said, I could do it in 10 hours. Now you're going to weigh the difference between, do I want a full-time employee at that level? Or because you're evaluating it based on the task. You're evaluating it based on the project. And I use CFO because I'm used to CFO, so I apologize for that. We'll call it the CXO, right? Any level of... That level of person, that expertise level that is at that chief table, that's the one that I'm trying to get across to people that look at the task that you want that person to do. Do they have the experience to do it?
[00:10:21.18] - Rich Veltre
How much does it cost to get it done? Work it that way. It might sound easier to just hire the executive, and he's there all the time, but then There's take Solitaire off his computer because you know he's going to be playing in the middle.
[00:10:35.19] - Dan Paulson
Well, and here's the other thing. You've obviously done the fractional CFO work for quite some time. I remember several years back when We were talking about some of these companies, and they're still an investment you have to make, even with a fractional person, right? But what that person essentially, and don't take this the wrong way, is a one-trick pony. And And you've even brought this up where they would pay you this money to come in and do a specific task, but then they're trying to add other stuff onto it, which led to our conversation, which is they were asking you to do things that were operational-based in your CFO role. And basically, I think that's what led to you calling me is because they were asking you operational questions that you didn't have the answer for, and they really needed more than just one person in there. And I think That's where some of these, if you're looking at plugging somebody in again at that high six-figure salary, and you have more needs than just that one person, what are you doing with them? Especially if you know that you're not filling their time with 40 hours, where you're trying to give them stuff that's not within their wheelhouse.
[00:11:47.05] - Dan Paulson
Here's to me where the fractional part really makes sense, because now you can get your financial person, you can get your operations person, you can get your marketing person, and you can even start swapping these in or swapping them out based off of where your needs are at the time. And if you're working with a cohesive team that knows that I pretty much got done what I needed to do, you really need more help in this area. Let me step back, let somebody else step in. To me, that's powerful, where now you're getting a group of people instead of one person. And that's what led to the whole CXO idea was we can help bring those people in, and then we can swap people out as needed.
[00:12:30.00] - Rich Veltre
Yeah, I totally agree. I mean, if you think back to the example I just had, the first one, where I talked about the startup, right? He had eight people on that list, that $250,000 a piece, let's say. That's What? Two million bucks?
[00:12:46.00] - Dan Paulson
Two million bucks. And you haven't even made a dollar yet.
[00:12:49.04] - Rich Veltre
So now if you sit down and you say, you find a fractional person that has done this work before, is at that level, has the expertise, maybe they're going to work for you one day a week or something to that effect. Whatever it's laying out to be, now take those eight people times the one day, as opposed to eight people times five days. And suddenly, I think at that point, those eight people, you could probably get on the payroll for the $250,000 because they're going to be working for you for the time frame that you need them, and not for full-time. So the model becomes, well, now I have the eight people to sit around a table for the day that I need everybody to come together and create the strategy, or put together the model, or have the discussions that we need to have. And then that person goes off and works on somebody else for tomorrow. And I realize it's not perfect. You're not going to get somebody to just be available on a Monday. It's a little bit of a... What do you call it?
[00:13:55.19] - Dan Paulson
Herding cats is what I call it.. We have to have meetings with other people. You got to coordinate multiple schedules to get there. But at the same point, I think that, again, is the advantage of what we're doing with XCXO is we do the herding of the cats. So if there is a need for somebody to be on a specific, I won't say location, because a lot of the work that we do can be done virtually. But if we have to have a specific meeting at a specific time, it's our responsibility to coordinate getting the team around the table. But back to your point of what you were about there, how powerful is it if you're a company that's looking to scale? And this is where I see the XCXO being the huge advantage. If you're a company that's looking to grow, but you don't want to invest $2 million to make that growth happen, and you can invest a small portion of that and still fill up your boardroom with high caliber executive level people, that to me is pretty powerful. And that'll get you a lot further, a lot faster than, again, hiring all these people to just have them on your website by name and show how big of a team you got.
[00:15:08.01] - Dan Paulson
Because you see these companies as I do that get really top heavy, and all of a sudden, their margins go south. They're eating it all up in payroll and benefits and incentives, and they're not able to actually take advantage of that growth for several years, maybe. And the question is, how long do you hold on to that caliber of team at full-time prices to get what you want done?
[00:15:35.04] - Rich Veltre
Yeah, it's definitely a... It's a dance. It's a, but like you said, we'll do the dance. But to me, the word I was looking for that I wasn't getting to was actualarial, right? It's almost not everybody is going to be needed on a Monday. So if I have five clients, then I can say everybody is going to pay for one day, right? So now that five clients covers my week. But it's not you get Monday, you get Friday. It's the actuarial part comes in and allows everything to blend so that everybody's getting their day. But it might be in chunks over the course of those five days. So again, like you were saying, that's our job. That's what we're trying to accomplish. We'll make sure that it's covered. If that person is the one person that gets three people all call for Wednesday, then we're sitting there saying, hey, we know enough that we can sit on the meeting and fill that hole, make sure that it's covered so that you get what you're supposed to get. It's not that we overbooked. Everybody overbooks. It happens.
[00:16:46.15] - Dan Paulson
Well, and to me, here's another difference that maybe people don't think about. Let's just say you find all these individual fractional executives, and now they're all working within their silos and not necessarily communicating each other. So we'll just use our name. So Rich, you're working on the financial side. You're working in your bubble of financial, and you're doing what you need to do. And I'm doing my bubble in operations. I'm doing what I believe I need to do. And I'm starting to go, okay, we need to spend this capital on this item, and you know nothing about it. You just see somebody coming in with a request for a $250,000 piece of equipment. We'll use as an example. And you might go, wait a minute, what the heck are we doing here? So So now where we have that advantage is we create that cross-pollination to make sure that the team is working with each other to communicate what they're doing. So if I have a need, I can talk to you directly about it. I know What needs to happen? And I can communicate why we need to make this decision. Now you can push back and say, well, can we do it this way or can we do it that way?
[00:17:52.25] - Dan Paulson
But there is this discussion that happens where typically when I see different fractional executives or different consultants come in, They all work within their bubble, and they typically don't spread out beyond that. They basically expect everyone to jump in on their plan without communicating it to anybody else. This isn't true all the time, obviously. There's some good examples where you do have people that work well together. But I have seen too many times where somebody hires either multiple consultants or multiple people, and they're all doing different things simultaneously in a company, but they're not sharing bringing that information back and forth. And sometimes that stuff gets contradictory to each other. So what one person wants to do is different than what another one believes they should do. And because the two don't cross paths, now you're doubling down on spending the money that's taking you two different directions which now is just even more increased cost.
[00:18:48.26] - Rich Veltre
Yeah, it's a great point, 100 % great point. I was brought in. You and I have talked several times. We don't use the name of the company, but I was brought in to do some work for that oil rig company, the oil rig support company, right? They put medics on oil rigs. And when I came in, I started asking about their collection process because I needed to know. We were headed for bankruptcy. And I And you need to know, where is the money coming from and how fast do we get it? And I started asking these questions, and the accountants had no idea. They didn't understand why I was asking the question. The finance department, whoever, everybody in there, was basically So looking at me like, why are you asking that question? I'm like, because we're going bankrupt. And the only way to not go bankrupt is to collect money. So how fast can we get it? So now we had to figure out, well, what's the process? So I reached out to the operations department. I said, let's have a meeting. Set up a Zoom. There had to be 16, 20 people on the Zoom.
[00:19:54.22] - Rich Veltre
And we started talking about, this is broken. How do we fix it? And one of the guys in the operations says, we haven't talked to anybody in finance in two years. A hundred % great point, because the silos were clearly working at that point. I was the first person to say, We need to break down the silo, because what was happening was we had basically 90 day terms with the oil rig companies, right? People were putting their time sheets in two months after they actually had the time or a month after they did the time. So when you start going back, you're not collecting your money for six months. And that's an operational issue. It's not really a finance issue because it was the operational procedures that were extending the time out who needed to actually have a wet signature on a time sheet in order to make it valid to get it paid for. So by the time you actually collected that money, it could be six months by the time you actually saw a dime for something that was done six months ago.
[00:21:05.25] - Dan Paulson
Yeah. And you're talking potentially hundreds of thousands of dollars, if depending upon the size of the company, could be up close to seven figures by that point before you even. It was enormous.
[00:21:15.11] - Rich Veltre
Yeah. Yeah, it was enormous. So there's your perfect example. What would have happened if they were trying to hire you, Dan, on a full-time basis, me on a full-time basis? And then we could have had that done in a heartbeat, because we've got, like I said, there were 16, 20 people on the call. And I'm going, why do we have so many people on this call? First off, who's in charge? The people in charge, the leadership is the part that the company really needed, and it didn't really have it. So don't think of this as, we just fired... Because a lot of people tend to lean towards they hear fractional, and they translate it to part-time. If you're going to call it part-time, that's But call it part-time leadership. And make sure that you understand that fractional does not a bookkeeper that's there only a couple hours a week, or a controller that's only there a couple hours a week. These are not the important parts. The important part is you bring in somebody that has that higher level of experience so they can deal with you on a leadership level.
[00:22:21.23] - Dan Paulson
That's right. And the way these are usually structured, you might get, for example, we might plan for so many hours, but the whole point is those hours aren't used on a single day. They might be spread out through that entire week. So there's still accountability. There's still follow up. There's still check-ins. They're monitoring the process, whether they're on site or not. And that, to me, is the major difference versus somebody who's there full-time. And if you are listening to this and thinking, well, that's not our company. That doesn't happen to us. The examples you got, those are other people. I suggest you go back and check again Because I've worked in a number of companies as an employee, where I can tell you, especially as those companies start getting larger, those silos start getting more prevalent, and everyone is protecting their own ground, and doing their own thing. And it might be different than what they're reporting to the boss. And it all depends on, again, how the boss is doing at being a leader, and managing his people and holding them accountable, versus getting buried in the task, which once you get to that $10 million, and again, that's $50 million range, depending upon who you are, and depending upon your level of leadership experience, there can be a number of issues that pop up, because I still see a number of owners who Act like they're the only ones in the business still, even though they've got 5, 10, 100, 150, 300 employees.
[00:23:53.09] - Dan Paulson
And it just creates more work, more stress and burnout for them. Plus, eventually, you hit a point where you can't grow anymore.
[00:24:00.03] - Rich Veltre
Yeah. Absolutely.
[00:24:03.08] - Dan Paulson
So that's a little bit about how we got all this started. And we never really told that story before. So I think we both thought it was important to get it out there because there's a lot out there going on related to fractional now. I think since the pandemic and everything else, we saw a lot of people that wanted to work remotely and didn't want to go back to a traditional job. So you hear about these people that step into the role. It doesn't work out that well, and then they go get a job somewhere. So you have been doing this for close to 20 years, I believe. I've been doing my thing for about 20 years, 20 years plus now. So we've been doing this full-time, and we're around to stay. So, yeah, that's why I thought it would be important to get this out. And also anyone who's listening, if you got any questions or thoughts that you want to pop to us, feel free to drop us a line. We'd happy to address them in future shows. Rich, anything else we need to cover? Did we get it all?
[00:25:07.19] - Rich Veltre
I think we got a good base of it. Let's put it that way.
[00:25:10.20] - Dan Paulson
All right. Well, then tell them how to get a hold of us.
[00:25:13.14] - Rich Veltre
Well, I would definitely send me an email at rich@xcxo.net.
[00:25:18.00] - Dan Paulson
And you can get a hold of me at dan@xcxo.net. And while you're at it, feel free to visit the site. And you can see a few of our colleagues who are up there and people we can tap into. But we'd love to to talk to you about this. If your goal is to scale, especially going into 2026, I think we could help you. Rich, it's always been fun, and I'm going to let Bob take us out, and we will talk to you next time, all right?
[00:25:45.15] - Bob
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