Every small business has the same problem, diseconomies of scale. What does that mean? You never need an integer of anything. You need 1.5 machines for the factory, 3.4 delivery drivers, .3 controllers, etc. There’s never enough scale to have the perfect number of people. When a small business needs 6.7 people in a position, a large business needs 67, and it’s much easier to work with. This diseconomy of scale is the scourge of small business.
Traditionally, businesses worked around the issue by hiring people who don’t mind having four or five jobs. They might do shipping for a couple of hours a week, do the bookkeeping, issue purchase orders, answer the phone, make an occasional delivery, and jump on the assembly line in a jam.
With lower-level jobs, it makes good sense to fill these fractional roles with a multitalented full-time employee. However, it gets trickier for higher-skill positions. In baseball, many teams have a player that can play multiple positions. They might be a catcher who can also play first base, third base, or the outfield. It’s great to have such a personal player on the team. However, these players never win the MVP award. They are like Swiss Army knives. They have a tiny little life, a tiny pair of scissors, a corkscrew that may or may do the trick, and other items handy if you’re camping but inferior if you have access to the real deal.
If you’re going to skin a deer, you don’t use a Swiss Army knife; you go to your garage and get that big knife you only use a few times a year that will do the job.
Key positions on your team work the same way. You don’t want to have a CFO that’s also your VP of Sales. Combining key roles makes sense economically if you have full-time staff in these types of positions. However, turning your executive team into Swiss Army knives will not get the best results.
The emergence of fractional executive talent allows business owners to access the precise talent they need rather than settle for a Swiss Army knife.
