Scaling Smart: When and How to Use Contractors, Consultants, & Fractional Talent Effectively

February 18, 2025 | Edition 2

To scale successfully, build the right team at the right time.

Not every role needs to be a full-time hire. Many founders struggle to balance when to use contractors, consultants, and fractional leaders versus making full-time hires. Get it right, and you’ll scale faster with flexibility. Get it wrong, and you’ll waste money, create inefficiencies, or slow down momentum.

Here’s how to use flexible talent effectively at every growth stage.

Talent on Demand: What Does That Mean?

The flexible talent market is filled with jargon, and many of the terms aren’t standardized. Here’s how I’ve most often seen them used:

The 3 Stages of Leveraging Flexible Talent

Choosing the right talent depends on your stage, budget, and needs.

🚀 Stage 1: Scrappy & Reactive (1-50 employees)
​At this stage, founders and generalist “leads” (e.g., Sales Lead) handle most functions. You often have an “I don’t know what I don’t know problem” and can benefit from bringing in consultants short-term to give you an organizational assessment, foundational documents, and roadmap. This is especially helpful when a founder took a bet on a generalist lead(s) with little prior experience because they were trusted members of their network.
​Common Flexible Talent by Sub-Stage:

• 0-15 Employees: A law firm to provide you with your handbook, CIAA, separation agreements, and other foundational employment documents.
• 15-30 Employees: A bookkeeping firm or outsourced accounting team providing a blend of strategic FP&A advice and tactical accounts management (e.g., AR/AP).
• 30-50 Employees: An HR consultant to complete an organizational diagnostic and give you a roadmap of how to address big risks, plus prepare to scale smoothly.

📈 Stage 2: Foundation Building (50-150 employees)​
This stage is where you’ll see generalist lead roles become distinct specialized functions. This is often when you’re hiring your first dedicated People leader and a separate Finance leader. A cofounder who oversaw engineering, product, and design might start layering in full-time functional leaders who takeover management responsibilities.

This is an optimal stage to bring on fractional or advisor talent to secure strategic advice without the cost of a full-time hire. Expect to pay a premium rate for someone who should have seen the stage you’re in multiple times. To get the most out of the investment, you need concrete deliverables and a clear plan for when you will bring in a full-time hire and move your fractional leader to an advisor (or end the relationship).

🏆 Stage 3: Strategic & Scalable (150-250+ employees)
​At this stage, you should have a full-time, specialized leadership team in place and start to have a robust management team underneath them. You might bring on consultants for one-time high-impact projects, like pricing and packaging or a rebrand.

You’ll likely also start to see more requests for contractors to outsource lower-level, repetitive, and internal work. You might be faced with a decision on whether or not you want to have contractors in roles that interface with clients or candidates, or if you want to keep that fully in-house to own the end to end experience.

Watch out for core business processes becoming too dependent on flexible talent and make sure that you have back-up plans in place (e.g., alternative vendor).

Where Startups Go Wrong

1️⃣ Ignoring Compliance Risks
​Misclassifying employees as contractors can lead to legal trouble. Know the difference and follow labor laws. Here’s a resource on the IRS’s 20-point classification system for contractors (1099s) vs FTEs (W2s).

You should not expect contractors to act like full-time employees—attending all-hands, leading ongoing projects—this can elevate your “coemployment risk” for which you face potential legal and financial penalties (e.g., fines, back pay, etc.).

2️⃣ Not Defining Clear Deliverables
​Vague contracts (e.g., "help us scale HR") lead to wasted time and budget. Instead, define scope, timelines, and KPIs upfront.

3️⃣ Underutilizing Expensive Talent
​If you’re paying for senior-level expertise, don’t waste them on admin work. A fractional CFO should be shaping financial strategy, not reconciling invoices.

Where to Find Flexible Talent

🧑🏽‍🏫 Fractional Leaders and Advisors

Best source: Your network, ask fellow founders and operators.
If “building your network” is still on your to-do list, search LinkedIn for top voices in the space, check out if they offer fractional or advising services, and contact them directly. (You can look at my LinkedIn profile to see how this is presented.). Or, use a fractional executive marketplace like Bolster. There will be finder’s fees associated with most marketplaces.

💼 Interim Leaders

Best source: Internal full-time talent.
A previous leader’s deputy or high-performers on the team are solid choices, especially if they want to build a career in management.

⚙️ Consultant and Contractors

Best source: A talent marketplace. Upwork and Fiverr are good options.
Referrals work well here, but are not as high-stakes as fractional / advisor talent because these tend to be shorter-term relationships. Niche Slack communities, especially paid communities, are great if you have access and they have a #job-opportunities or similar channel that’s targeted towards consultant and/or contract work.

📌 The Four-T Playbook: Tip, Trick, Tactic, or Template
​Every edition, I’ll share a proven insight to help you scale smarter—whether it’s a hiring shortcut, a culture tweak, or an ops hack. Just what works.

👉 Tip: Check the testimonials
​
For flexible talent, client testimonials = reference check for full-time talent. Look for testimonials that are from individuals in a similar role (e.g., if you’re a CEO hiring a fractional leader, look for other CEO recommendations) at a similar stage company.

Final Thoughts: Using contractors, consultants, and fractional talent wisely can help your startup scale faster and leaner. The key? Know when to use them, check their qualifications, set clear expectations, and leverage their expertise efficiently.

Until next time,
Melissa

Need help structuring your People function as you scale? I offer ongoing advising services to CEOs, COOs, and Heads of People at Seed to Series B companies as well as consulting engagements providing a People Operations Organizational Diagnostic to startups with 15 to 150 employees. Reply to this email or check out my services to get started.

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