Speaker 1: Record.
Speaker 2: Welcome back to the CTOX podcast.
Speaker 2: Most people go fractional when they're forced to. The best outcomes, however, happen when you choose to go fractional.
Speaker 2: Today, we're talking about one of the biggest forks in a CTO's career.
Speaker 2: Do you wait until a layoff or burnout forces you into the market, or do you transition to fractional from a position of strength and proactivity?
Speaker 2: Lior and I will share why cash confidence changes everything and how timing
Speaker 2: determines whether fractional feels empowering
Speaker 2: or terrifying.
Speaker 2: Welcome, Lior.
Speaker 1: Thank you. This is a great conversation because it's one of these things that we learned after speaking to people with early interest in the program and then rebounding back six months later, a year later, a year and a half later. So we have a an interesting
Speaker 1: bird's eye view on this problem.
Speaker 2: Yes.
Speaker 2: And a lot of new members come to the CTOX Accelerator with a feeling
Speaker 2: that they've been almost forced into going fractional because of a layoff or an extended period between jobs. But when I think about it, Lior, you intentionally
Speaker 2: chose to go fractional.
Speaker 2: What's the difference here, and why does timing matter so much when making this transition?
Speaker 1: So the context first of all, it's it's a way to make money.
Speaker 1: Right? A job is a way to make money.
Speaker 1: Being an entrepreneur and doing fractional work is a way to make money. We see this. Some people come with a full time job and they go fractional to add supplemental income. Some people,
Speaker 1: have a full time job and go fractional to build in a way, to build an option to do this
Speaker 1: full time and replace their income.
Speaker 1: And some people,
Speaker 1: like you suggested, are kinda, quote, unquote, forced into it. Now nobody's forced into anything. Nobody's forced into a job. Nobody's forced into a business,
Speaker 1: but it's an opportunity
Speaker 1: they can make money with. And the context is
Speaker 1: what is
Speaker 1: your environment and how can you make decisions
Speaker 1: in a healthy way, and what opportunities do you have to act on an idea
Speaker 1: when you have cash flow coming in and when you don't?
Speaker 1: For people that choose to do it early when they still have a client or a job,
Speaker 1: they don't have as much time necessarily.
Speaker 1: Right? It depends on your job and so on, but
Speaker 1: they have a safety net, and that safety net gives them a psychological,
Speaker 1: psychological way to operate
Speaker 1: that is not driven by scarcity.
Speaker 1: And the difference, it's not really the model because you can make money again as a consultant,
Speaker 1: as a fractional executive.
Speaker 1: You can make money as,
Speaker 1: a part time job, as a full time job, but it's really what's the moment you enter into this decision.
Speaker 1: And that's really what separates,
Speaker 1: people who
Speaker 1: get into it because they feel like they're forced to
Speaker 1: and people who see this as I am blessed to do this. This is an opportunity in the market right now. You're gonna act as the same actions needs to be taken. The same behaviors needs to be applied in order to make money and get clients,
Speaker 1: but your mindset really changes your attitude and the opportunity and also eventually your success.
Speaker 2: Right.
Speaker 2: Let's say someone has
Speaker 2: just been laid off or perhaps has a sudden exit from their long time role.
Speaker 2: Why does urgency and specifically the need to create near term cash flow,
Speaker 2: why does that distort your decision making?
Speaker 1: The challenge is that desperation
Speaker 1: makes bad clients look acceptable.
Speaker 1: You're gonna look at an opportunity,
Speaker 1: and this person, this company is boring,
Speaker 1: unkind, not interesting,
Speaker 1: slashes you
Speaker 1: on on price,
Speaker 1: creates terms that are just unpleasant.
Speaker 1: And you might say yes because you're gonna need that money in your mind to hit, you know, whatever. Let's say it's a mortgage payment or something in your life,
Speaker 1: that you really tie in this opportunity in front of you
Speaker 1: as the only way to make that happen.
Speaker 1: And that's a problem because end of the entrepreneurship, you know, we say this in the program, entrepreneurship
Speaker 1: sucks. It's like it's it's it's a classic, you know, entrepreneurs quit a nine to five to work twenty four seven. Right. The payoffs, though, are wonderful,
Speaker 1: are great. And part of the opportunity of entrepreneurship and building your own business is choosing which clients, choosing which projects you get to work on. And when you feel like you have like, you're forced in, like, you're coerced into making a decision,
Speaker 1: you're gonna make projects you don't like, clients you don't like, markets you don't like,
Speaker 1: your very near term opportunity,
Speaker 1: which might solve the cash, but it's gonna create a whole slew of other problems. And certainly, sometimes when people come in, we might tactically recommend it. But if they can make a choice
Speaker 1: and not have to do something, but be in a mindset that they get to do something,
Speaker 1: it's,
Speaker 1: a much better type of life you can build.
Speaker 2: Yeah. And you speak to something important there, which is the survival
Speaker 2: kind of drive, the drive for survival versus building a long long term sustainable business, which can force you to kinda contort and compromise and say yes when,
Speaker 2: future you would really mean no. Yeah. Never say it.
Speaker 2: Let's let's talk about cash confidence. I know in previous episodes, we have touched on cash confidence, but it really becomes important here.
Speaker 2: Why does having either a job or a savings or a great network
Speaker 2: dramatically
Speaker 2: improve outcomes when you're, when you're going fractional?
Speaker 1: It goes back to that scarcity mindset. You know, the the best time to become fractional is when you don't need
Speaker 1: the money yet.
Speaker 1: Right? And we have some people that already have consulting and clients.
Speaker 1: But then it's a question of, are they starting a program like this? Are they starting to do marketing
Speaker 1: when they absolutely have to because they just lost a client and a big portion of their income or not. We call we talk about two different concepts. We talk about cash confidence and income confidence. Income confidence
Speaker 1: is the concept of trusting whatever money is gonna come at the end of the month. Right?
Speaker 1: And cash confidence is literally how much cash do you have in case you lose everything,
Speaker 1: what can you still do? Can you afford rent? Can you buy food? You know? Like, what what kind of needs is the cash confidence satisfying?
Speaker 1: A lot of people, especially if they come from a job mindset or job experience,
Speaker 1: they look at cash and income in in very similar ways. But the reality is when you're building a business,
Speaker 1: your income ceiling generally disappears.
Speaker 1: With a job, let's say you're
Speaker 1: highly qualified and you can easily land a job of, like, 350
Speaker 1: base, maybe you're making another 200 or something like that,
Speaker 1: in bonuses, which is great. But as a fractional CTO, there's really no limit to how much money you can make. So your cash confidence is really about what kind of risk
Speaker 1: you can take as you're building up your business. Naturally, your first client is not gonna be well, actually, most likely
Speaker 1: not gonna be $30,000 a month. You're not gonna quit a full time job and immediately replace it with a single client.
Speaker 1: Not as likely. Sometimes it does happen. That's why I'm saying likely because we've seen it.
Speaker 1: But more importantly, you're trying to build a system that gets you
Speaker 1: clients and new,
Speaker 1: sources of income. So you diversify
Speaker 1: your income with multiple clients, and you also build a system that you know how to trust in case you lose
Speaker 1: part of those clients and projects and part of that income stream. So the higher cash confidence you have, we're really describing
Speaker 1: how much risk do you feel like you can take while you're building up this business.
Speaker 1: And the more of that, which you can control with your costs,
Speaker 1: ideally,
Speaker 1: the longer runway you have. And the longer runway you have, the more opportunity you have to learn
Speaker 1: what niches do you like, what kind of clients do you like, what what is your flavor
Speaker 1: of, quote, unquote, marketing, what is your flavor of attracting
Speaker 1: opportunities. So there's definitely a direct relationship to your stress
Speaker 1: and to your runway,
Speaker 1: depending on how much how much confidence you have in the cash that you have available or accessible to you.
Speaker 2: What would you say to somebody who's listening to this? They've got a job. They've got or they've got some some income
Speaker 2: confidence,
Speaker 2: and,
Speaker 2: and they're thinking, okay. How do I create some more options for myself?
Speaker 1: Well, the the best time to get a new job is while you have a job. People understand this intuitively. Right? You wanna try to avoid that limbo period
Speaker 1: between job. And also the best time to become fractional is while you have cash confidence
Speaker 1: and not when you lost your job, you've eaten up your cash, and now you're trying
Speaker 1: to build clients from scratch. We have people that do that, but that is definitely the least ideal position to be in because we want you to be in creative mode. And if your mind is obsessed about scarcity and and,
Speaker 1: paying bills in a couple of weeks or in four weeks, your ability to be really creative is severely limited, and you have to be creative when you're building this kind of a business.
Speaker 2: Yeah. That is definitely doing on a hard mode,
Speaker 2: and or maybe an expert mode.
Speaker 2: And, similarly, I think about, you know, testimonials,
Speaker 2: gathering testimonials before you need to, building your network before you need to. These are all, like, some helpful things, and it's not the same as,
Speaker 2: as
Speaker 2: cash in your hand,
Speaker 2: but it does create
Speaker 1: resources. Equivalent. That's why, you know, you can get paid cash paid equity. So if you're building equity in your business with reputation and proof,
Speaker 1: you can absolutely leverage it later on to make money.
Speaker 2: Yeah.
Speaker 2: What are the signs? What are the signs? How do you know you're ready to transition to fractional leadership
Speaker 2: proactively?
Speaker 1: So one of them is to look at the opportunity.
Speaker 1: Like, the way you look at the opportunity
Speaker 1: is you're adding this entrepreneurial path, maybe, again, citing a primary input income, but not be not due to fallback,
Speaker 1: not as a risk, you know, management modality, but rather something exciting as a potential new
Speaker 1: opportunity.
Speaker 1: Those are definitely
Speaker 1: like, if if you see that you have that mindset, that's a very good time to try this out.
Speaker 1: Also, if you're tired
Speaker 1: of getting hired for your time and getting paid for your time,
Speaker 1: If you realize, man, I just made a decision to save them a million bucks. Why am I just making $2.50 an hour or whatever it is? So once you have that insight and you realize, oh, I create value, so why not sell value? That's another really good,
Speaker 1: sign.
Speaker 1: And, also, you're comfortable. Sometimes I talk to people that wanna join the accelerator, and they're saying I'm very comfortable right now.
Speaker 1: And on one hand, that is the single best
Speaker 1: time because life changes and circumstances
Speaker 1: change. On the other, they it's hard for them to evoke a sense of urgency.
Speaker 1: And the way I usually talk about it with them is, like, let's work on the vision. Do you want let's say your vision is to make $800,000
Speaker 1: a year and you wanna travel.
Speaker 1: How early how soon do you want that vision?
Speaker 1: I understand you're not stressed right now, but how soon do you want this new life vision? Because the sooner you start, the sooner you're gonna get it. So just being cognizant about the fact that when you're when you have this golden cage moment or golden handcuffs,
Speaker 1: you're gonna tend to stay in it, but life is dynamic. You've never actually know if you're gonna lose a job, lose a contract.
Speaker 1: Something else is gonna change in your life circumstance. That's why the insurance industry exists. It doesn't exist because it's phantom.
Speaker 1: It exists because life happens.
Speaker 1: And this path is a really good insurance policy against your future and to evoke your vision sooner.
Speaker 2: That's a great point. And there's some other mindset shifts. I mean, I think about,
Speaker 2: inside the CTOX Accelerator, we do our game plan call. We do our money math. And and,
Speaker 2: some of the first things
Speaker 2: that you can that I hear you coach our members on who who are going from this kind of w two thinking to fractional leadership thinking is,
Speaker 2: we'll say, what do you wanna make? And they'll respond in annualized
Speaker 2: terms. They'll they'll say $3.50,
Speaker 2: 500,
Speaker 2: and you'll coach them to talk instead,
Speaker 2: about PACE. I'd love for you to to talk a bit more about that, but then what are the other kind of mindset shifts that are needed? What do you need to unlearn?
Speaker 1: Yes. Very common for people when we first ask them what's their income goal, they're gonna talk in annual income because it's like a job. It's a salary.
Speaker 1: So it's you know, they would say $2.50, $3.50, 500, something like that. And what I urge them to do is tell me about your monthly income. Because what we're trying to nail, we're trying to nail the system that creates it. Because you might get one account that's
Speaker 1: bangers and suddenly it pays you $30,000 a month. It happens once in a while. And then you'll you would have achieved your goal. But once you lose that account, and it's inevitable, you will lose it because life is life, not because you did anything wrong. It's just
Speaker 1: dynamics of life just like you can lose a job.
Speaker 1: You will not know how to recover
Speaker 1: and how to build back that income back to $30,000 a month. So first of all, we're trying to talk about PACE because we're trying to create systems that are reliable
Speaker 1: and are recurring. So you know that you have some kind of a cycle that creates meeting and some kind of a capability that converts those meetings into money at whatever cadence you want. Maybe you want one client new client every two weeks. Maybe you want a new client every quarter. But whatever it is that you collected all the skills and developed all the capabilities in order to create your targeting.
Speaker 1: With that, we're trying to get people to understand as entrepreneurs,
Speaker 1: because you're creating a system,
Speaker 1: does it really matter if you hit your goal in six months or nine months or three months or twelve? Not really. Because if you hit a system goal, then you have that forever.
Speaker 1: You know? The IRS doesn't tax you on capability.
Speaker 1: And usually when you come in, that's what you're building. You just like, I'm not a marketer. I'm not a salesperson. Everybody says that when they come in, and they're right. They're not. That and we're not trying to turn that into that. We're just trying to get them to,
Speaker 1: understand how to make people aware that they exist and they provide a service. That's what marketing is. And then we're trying to help them how to build trust
Speaker 1: in a way that their prospects sell themselves
Speaker 1: and not them trying to,
Speaker 1: you know, do direct response selling or sell sell it like a car because they are building these relationships and they're helping people,
Speaker 1: realizing their visions.
Speaker 1: And with that comes just the entrepreneurial mindset. So we say with that
Speaker 1: concept of does it matter if it's six or nine months or three months, I tell them entrepreneurs this is Dan Sullivan thing. Entrepreneurs don't go crazy because of their goals, but because of their deadlines.
Speaker 1: And managing your emotional space
Speaker 1: as you're building up a business is very important all the time. And in that context,
Speaker 1: if they're like, I wanna make $30,000 a month in eight weeks. Why? Because I just lost my job, and I just wanna go back to where I was. Like, well, that's scarcity mindset. You're gonna be very stressed for these eight weeks. Maybe you'll make it, maybe you won't.
Speaker 1: But if you're building a system as opposed to just choosing a job, which is just a one source of income, does it really matter if it eight weeks? If it doesn't really matter in that context, let's change it to sixteen weeks or twenty weeks.
Speaker 1: If that number change changes your stress relationship
Speaker 1: with the goal, then I recommend
Speaker 1: they do it So they don't go crazy because their goal is great, but their sense of timing
Speaker 1: might make the entire experience
Speaker 1: and their decision making within that
Speaker 1: very challenging. So those are
Speaker 1: thinking in systems,
Speaker 1: understanding
Speaker 1: that
Speaker 1: time and stress are interconnected.
Speaker 1: And, generally, numbers and stress are interconnected. So I said the same as, like, somebody comes in and say, I wanna make $80,000 a month and ask them why.
Speaker 1: And suddenly, they don't know how to answer the question. I'm like, okay. So let's ignore the 80.
Speaker 1: Because we're trying to build a system. And once you know how to build a system, if you wanna do more of that, you just activate a system. Once you have the x y relationship, just do more of x to get
Speaker 1: y. But if they start and just say, yeah, I wanna make 80,000. So they're not happy if they're making 60.
Speaker 1: They're not happy if they're making 70 because they created a gap between their vision and reality.
Speaker 1: So all of that are nuances of entrepreneurship
Speaker 1: to understand really
Speaker 1: that you wanna have fun.
Speaker 1: You wanna love this new opportunity with all of its challenges,
Speaker 1: and you wanna make sure the payoffs are actually gonna achieve your goals.
Speaker 1: And if you tie a happiness goal
Speaker 1: to that money,
Speaker 1: it's very rare that it'll actually satisfy it because you're gonna you're gonna hit that 50,000 a month at some point, and it'll feel normal.
Speaker 1: Then just like right now in your job, whoever's listening, you're making 25 a month, 35 a month. And when you were 20, you probably thought, man, making $30,000
Speaker 1: a month is a lot of money.
Speaker 1: And that's gonna be the same mindset when you make a $100,000
Speaker 1: a month. It'll always feel normal. You will always grow into it. So decoupling
Speaker 1: your emotions from your goals and your activities is very important, and all of that is just mindset. It's
Speaker 1: not practicing specific behaviors. It's not skills. It's really perspective and reframing
Speaker 1: on on your life and day to day challenges.
Speaker 2: Yeah. There's one more and,
Speaker 2: that that I think I'm thinking of right now. And,
Speaker 2: some of the members that I work with most are the ones who come from cutthroat
Speaker 2: toxic environments
Speaker 2: where it's, you know, every person for themselves, and they learn to be kind of these lone wolves.
Speaker 2: And, we work together and we heal that because
Speaker 2: the the reality is this fractional lifestyle requires that you learn to be curious,
Speaker 2: collegial,
Speaker 2: ask for advice, learn on the fly, be coachable, be humble, be collegial.
Speaker 2: And, for some folks, it takes a lot of unlearning
Speaker 2: based on where they've been. So for those who are listening and you, you know, maybe you're in a toxic work environment and you're making a list of things you never wanna experience again in your bigger, better future.
Speaker 2: Very interesting interesting reflections there too.
Speaker 1: Yeah. Yeah. And that's because when they get a job,
Speaker 1: that's the only way they make money. So they're trying to not lose the job the job and adjust to all of the circumstances,
Speaker 1: all of the meetings, all of the people, all of the projects
Speaker 1: as a and that's the advantages of having clients. You don't need to. In fact, if you do it right, you're gonna attract clients in environments that you like all of it, and you don't need to adjust yourself at all.
Speaker 2: Show up exactly as you are.
Speaker 2: And,
Speaker 2: beautiful.
Speaker 2: Well, for someone who is, let's say, currently employed
Speaker 2: and curious about fractional,
Speaker 2: what are what are some of the first moves they should make?
Speaker 1: So we say in the accelerator, you're not gonna get any contracts without any conversation without any proposals. You're not gonna make any proposals without any conversations, and you're not gonna have any conversations without any contacts.
Speaker 1: So contact someone.
Speaker 1: Start a conversation.
Speaker 1: You don't need to go for the jugular and try to hit a 10,000 a month retainer. Right? Try to sell a session. Try to sell a half day. Try to sell some advisory low ticket, $3,000 a month. We have plenty of free resources in other podcast. We have,
Speaker 1: a menu guides on our website. We we host free webinars,
Speaker 1: as well. But the all of those lead you to try
Speaker 1: to have a conversation.
Speaker 1: Even this week, we had people in our accelerator
Speaker 1: that were in, like, their church barbecue
Speaker 1: and got a client.
Speaker 1: And they build trust by sharing a burger.
Speaker 1: You know, there's just so much obsession about, oh, I need to know about AI. I need to know how to sell, and I need to have an LLC. None of these things are true. They're all fallacies. What you need to is find somebody that needs help,
Speaker 1: and then you wanna help them.
Speaker 1: And if you can, the best way, help them by them paying you. But even if not, go help them, and it'll give you a sense of how to create value outside of
Speaker 1: your job.
Speaker 1: Now if you're
Speaker 1: already forced,
Speaker 1: slow down, protect your boundaries, and try to rebuild some leverage
Speaker 1: before you scale effort
Speaker 1: because you're gonna
Speaker 1: you don't wanna find yourself in a doctor cut the car moment. You're gonna try to get this client. You're gonna get the client, and you're gonna hate a 100% of it. If you really have to because you do need to hit your mortgage payment in two weeks, totally get it, and that's completely
Speaker 1: fair. But in most cases, that's not the case,
Speaker 1: where people start off. So be mindful
Speaker 1: that end of the day, this work is about creating value to other people.
Speaker 1: So to try it out, you need to find other people and give them value. And once you do that enough time or you get enough value, you also give a price. And once you give a price more than once, then you're in business.
Speaker 2: I love it.
Speaker 2: If this episode helped you rethink timing and leverage,
Speaker 2: share it with someone who's considering going fractional before
Speaker 2: circumstances
Speaker 2: force their hand.
Speaker 2: Lior, as always, I love when we get together.
Speaker 1: I know. I'll see you next time. I hope this episode was valuable to anyone who's on the fence.
Speaker 2: See you soon.