Who would you call tomorrow if you needed a finance director for two days a month? Most of us who run small businesses could probably name someone, and plenty of us would describe that person as a stopgap, the help we lean on until the business is big enough to hire properly. That word “properly” carries more assumptions than it seems to. The labour market we’ve had for most of 2026 makes this a good moment to look at them again.

Economists have settled on a phrase for this year: “low-hire, low-fire”. Firms are keeping the people they’ve got and taking on very few new ones, so the market looks calm from a distance while barely moving underneath. My view is that fractional and contract people should be a deliberate part of the business’s design, a column on the org chart in its own right, rather than the fallback for when a permanent hire isn’t affordable. In a market like this one, the owners who make that change will find it easier to add the capability they need. It’s a bigger shift than it sounds, because many of us learned, one way or another, that a business grows by adding names to the payroll.

A market that has stopped moving

In the UK, the numbers have pointed the same way for months. When the ONS published its figures in August, vacancies had fallen to 707,000, the lowest level outside the pandemic since late 2014, and there were 2.5 unemployed people for every vacancy. Even so, unemployment had edged down to 4.9%. Back in February, BDO’s Scott Knight summed up the mood well: “Businesses are holding on to staff where they can, but they are reluctant to hire or invest while underlying conditions remain weak.”

The work hasn’t stopped, of course. Projects still need finishing, products still need launching and the books still need closing at the year end, so what has changed is how firms get that work done. Robert Half surveyed more than 2,000 US hiring managers for a report published in February and found that only 6% had the talent they needed for their priority projects, while 55% expected to increase contract hiring to cover immediate needs. Robert Half sells contract staff, so we should take its numbers with a pinch of salt, but they fit what most of us can see around us: businesses keeping their core team steady and buying in the rest.

Why we treated it as second best

For a long time the permanent hire was the grown-up answer, and there were good reasons for that. A permanent employee learns the business, carries its history and is there on the bad Tuesday when something breaks. Contractors came with a faint whiff of failure by comparison — you used one because you couldn’t find or couldn’t afford the person you really wanted, and you hoped to replace them before long.

That reasoning was easier to live with when employing someone cost less than it does now. Employer National Insurance rose to 15% in April 2025, with the threshold at which it starts cut to £5,000 a year, and the CBI expects the cost of the Employment Rights Act to be “significantly higher than initially forecast”. Employing people is still the right answer for a great deal of work, but every permanent role now has to earn its place. In a market this still, it’s also harder to be sure that the role we hire for today is the one we’ll need in eighteen months.

The stronger argument has little to do with cost, though. Plenty of the capabilities a small business needs are real and recurring without adding up to a full-time job. A twenty-person firm needs a finance director’s judgement, but probably for a few days a month; it needs someone who understands employment law when it restructures, and a senior marketer when it plans the year ahead. Hiring a full-time person for any of those means either paying for capacity that sits idle or, far more often, hiring someone more junior than the work deserves. A business that could never afford a seasoned finance director full-time can often afford two of their days a month, and they’ve probably solved the same problem in a dozen other businesses already.

Three columns instead of one

The practical change is to stop drawing the org chart as a single column of employees and draw it as three:

  1. Core – the people who carry the business’s identity and relationships, and who need to be there every day. That includes the owner, the people customers ask for by name and whoever holds the knowledge that would walk out of the door with them, but also anyone whose daily workload or operational responsibility needs a person on hand, whether that’s in the warehouse or on the accounts desk.
  2. Fractional – senior specialists on a regular retainer for a set number of days: the finance director, the HR adviser, the marketing lead, the operations person who comes in to fix a process and then checks in monthly. They’re part of the team, invited to planning and properly briefed, and they hold an ongoing responsibility, just not a full-time one. That’s what separates them from a contractor brought in for a single project.
  3. Agentic – work that can be written down clearly enough for software to do it, increasingly with AI agents handling the routine. It’s the optional column as far as this piece is concerned. I’ve written before about what happens when AI lets a small firm scale without hiring, and the first two columns are worth redesigning whether or not you ever touch the third.

Deciding which column a capability belongs in usually comes down to two plain questions: how often does the business need it, and does it depend on context that only builds up by being there every day? Finance shows how one capability can split three ways. The bookkeeping and credit control need someone in the business every day, so they sit in the core. The judgement about cash, pricing and when to borrow is needed every month but not every day, which makes it fractional work. It’s exactly the two days a month we started with. The bank reconciliations and the first round of invoice chasing can go to software, provided the tools handle them reliably and someone in the core owns the exceptions. If you’ve already drawn a capability map of the business, the three columns are simply another layer on it, recording who each capability lives with as well as what it does.

Making the fractional column work

Treating fractional people as strategy means treating them better than most of us have treated contractors. The businesses that get the most from them give them a proper brief, a standing slot in the calendar and access to the same information as the core team, along with clear responsibilities, agreed outcomes and a regular review point, so both sides know what success looks like and how the arrangement would end.

It also means being honest about the drawbacks. A fractional finance director has other clients, and on the day you need one urgently they may be sitting in somebody else’s board meeting. Knowledge can leave with them when an arrangement ends, so it’s worth getting the work written down as it’s done rather than in a hurried handover. Some long-running arrangements also start to look very like employment, and both the tax rules on off-payroll working (IR35) and the separate question of employment status turn on how the engagement is set up, so it’s worth taking proper advice before yours drift that way.

How far the model stretches is still an open question, and I don’t have a confident answer to it. A five-person firm with two fractional directors feels sensible, but a forty-person firm with most of its senior team on part-time retainers might turn out to be fragile in ways that only show up in a crisis. Whatever the size, it’s worth knowing who can make an urgent decision between retained days, who covers when someone’s away, and who in the core is accountable for the work.

Building the bench before you need it

The best time to find fractional people is before the business needs them, because a working relationship that already exists is worth far more on the day something goes wrong than a name found in a hurry. The first step is a small one. Pick one recurring capability gap you’ve been waiting to afford a hire for, write down what you’d expect from it and how often, and ask yourself whether it needs a permanent person or two days a month of the right one.

A business built this way can have a smaller core and a stronger bench around it, and for those of us who spent years believing that growth meant headcount, that’s an encouraging thing to discover.