Unless you are a fast growing tech company infused with millions of investment capital, the average startup can’t afford to hire C-Suite level executives. At around $150,000 to 250,000 per person, a five-person senior management teaming—adding together a CEO, CMO (chief marketing officer), COO (chief operations officer), CFO (chief financial officer) and CTO (chief technology officer)—would cost a total of $1 million in annual salary alone.
Unable to afford that kind of spend, most fledgling entrepreneurs will opt not to have that role filled at all or will have one senior level person fill several management roles. Since the management team is the driving force behind the business that is the one area where startups shouldn’t but back on, according to Forbes contributor, George Deeb, a startup consultant at Red Rocket Ventures, and author of “101 Startup Lessons–An Entrepreneur’s Handbook.” One way a startup can attract the high-power talent they need at a budget they can afford is to share executives between companies on a part-time basis, states Deeb.
He cites for example, let’s say your business needs a chief marketing officer (CMO) to set the high level sales and marketing strategies to drive revenue growth, and to help manage the junior-level marketing execution team doing the day-to-day work (e.g., search engine optimization, email marketing, social media management, creative development). What if this executive only worked for you one day a week at around $40,000 per year, saving you 80% in salary and related payroll taxes, plus not having to pay employee benefits for part-time workers?
Of course, this is provided that the job can reasonably be fulfilled in one-day a week, until the business can afford full-time talent. As long as you have other team members doing the lion’s share of the work in that department (e.g., bookkeepers managed by a part-time CFO), this model should work out well for you, notes Deeb, especially if the part-time executive is open to transitioning into a full-time role after the company has the resources to afford it.
But why would a proven executive do this for your startup? They typically wouldn’t, if you were their only job. But, if they were simultaneously filling this role for five startups, spreading their talent across five different companies on each day of the week, now they are getting paid a full-time salary that they are worth, and get the excitement of working on a diverse group of companies, explains Deeb. Not to mention, if they are getting a small equity stake in each company in this part-time role (e.g., 1%), they now have a diversified equity portfolio strategy, instead of putting all their eggs in one basket.
If this model is something that might work for your business, pitch it to other startups—peers that are in your industry, suggests Deeb. Five of you could collectively hire executive-level talent to help grow your business. Someone whom you all could work with weekly and utilize as an outside mentor say once a quarter.
Moreover, service providers, startup accelerators or co-location facilities with high startup flow, like Red Rocket, 1871, Techstars or Y Combinator, may be able to play “matchmaker” for you, helping to identify the executives or other startups who may have interest in this model.