For a founder at $1M to $5M in revenue, this comparison usually comes out one way. Strategy at that size is the founder’s job, the decisions are close to the customer, and the cost of a fractional Chief Strategy Officer is hard to justify. Coaching, a peer group or a planning framework is usually the better buy. The exceptions are worth knowing, though.
The running example
A founder runs a $4M specialty food distributor serving restaurants in one metro area. Growth has slowed to 5% a year. The founder sees three options: expand to a second city, add a direct-to-consumer line, or acquire a smaller competitor that has approached them. The leadership team, three managers, has opinions but no data. A board member has suggested hiring a strategy consultant.
When to get coached
Get coached when the founder needs a method for making strategic choices and the discipline to stick with them. CEO coaching and peer groups help founders define where they compete, run a simple annual planning session, set three to five priorities for the year, and pressure-test decisions with people outside the company. Operating systems such as EOS include a strategic planning component that many founders run themselves with a coach or facilitator. Programs listed here range from free introductory classes to monthly CEO coaching retainers; peer groups for CEOs often cost several thousand dollars a year.
For our founder, coaching is the right start. A coach can help the founder lay out the three options with the numbers each would need to work, gather the customer and cost data, and run a decision session with the managers. That costs a fraction of a fractional CSO and keeps the founder in charge of the choice.
When to hire a fractional CSO
Hire when the strategic work exceeds what the founder can do alongside running the company, or needs skills the founder lacks. At $1M to $5M, the main case is acquisitions: evaluating a target, valuing it with the CFO, negotiating and planning the integration. Another is a market entry that needs serious research. A fractional CSO at this size usually works on a project of a few months, with quotes typically around $6,000 to $10,000 a month.
For our founder, the acquisition offer is the trigger to consider one. Buying a competitor at $4M is a large decision, and someone who has done acquisitions before can save the founder from overpaying or from an integration that fails. Pair that with an M&A advisor and a lawyer for the transaction itself.
When to do both
Coaching and a fractional CSO combine well when the founder wants to build strategic skill and needs help with one major decision now. The coach works on the founder’s planning habits and leadership; the fractional CSO handles the analysis and the deal. As the company grows past $10M, the balance often shifts toward a fractional CSO on a light retainer around the annual plan.
A simple test
Ask whether the decision in front of you is one you will make again. If it is a recurring part of running the company, such as setting annual priorities, learn to do it yourself through coaching. If it is a rare, high-stakes event, such as an acquisition, hire experience for that decision.
Fractional CSOs and leadership coaching programs are listed side by side on this site.