Fractional HR Director / Outsourced HR

Provide part-time HR leadership and management for small businesses

Startup Cost
$10,000-$50,000
Difficulty
Advanced
Time to Profit
8-18 months
Profit Potential
$15,000-$100,000/month

Overview

Fractional HR consultants charge $3,000-$15,000 monthly per client or $150-$350 hourly.

Serving 5-20 clients generates $180,000-$1,200,000 annually with 75-90% margins.

In 2025, small businesses need HR expertise without full-time HR staff.

Revenue from fractional HR retainers ($3,000-$15,000 monthly per client), HR strategy and planning, employee relations and investigations, HR technology implementation, benefits and compensation consulting, and ad-hoc HR projects.

Services include strategic HR leadership and planning, employee relations and performance management, HR policy development and compliance, recruiting and talent management support, compensation and benefits administration, and HR technology and systems.

Successful fractional HR provides executive-level HR guidance, handles complex employee relations, builds scalable HR programs, serves as trusted advisor to leadership, and delivers full HR function part-time.

Small businesses (20-200 employees) without HR leaders as clients.

Marketing through business consulting networks, CEO peer groups (Vistage, EO), fractional executive platforms, business advisors and attorneys, and HR leadership expertise.

Required Skills

  • Strategic HR Leadership
  • Employee Relations
  • HR Program Development
  • Performance Management
  • Business Partnership
  • HR Technology

Pros and Cons

Pros

  • High monthly retainer revenue per client
  • Serve multiple clients with fractional model
  • Executive-level strategic HR consulting
  • Long-term trusted advisor relationships
  • SMBs increasingly use fractional HR

Cons

  • Need senior HR leadership experience
  • Managing multiple client priorities
  • Client HR emergencies require responsiveness
  • Limited clients per consultant (capacity)
  • Competitive fractional executive market

How to Get Started

  1. Build senior HR leadership experience and credentials
  2. Develop fractional HR service offerings
  3. Define retainer packages and pricing
  4. Market to small business CEOs and leadership
  5. Onboard clients and assess HR needs
  6. Provide strategic HR leadership and support
  7. Build long-term trusted advisor relationships

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