How Do You Know When You Need to Hire a COO?
As a CEO and founder of a startup, you are focused on multiple tasks everyday to make sure your business is running smoothly. It’s not atypical to focus on marketing, hiring, sales, product development, accounting, fundraising - and everything in between.
As you look to scale, it is critical to be able to narrow your focus and play to your key strengths. If you are a founder, the very thing that inspired you to start your business, might be the aspects of running a company that you enjoy and thrive in, the most.
I have found that oftentimes a creative-visionary-type CEO needs a right-hand, someone to exchange ideas with, to streamline processes, and to execute on strategic vision with operational intelligence.
So, what is the best time to hire a COO and what does that role mean to you?
Here are a few tips that will help you decide if a COO is the next best move for you and your business.
When do you need a COO?
The right time to hire a COO varies from every company. How can you figure out what is best for you? Here are a few red flags that will help you identify when you need to hire.
CEO can’t complete tasks
CEO doesn’t have time to focus on growth
CEO bogged down in weeds day-to-day, not gaining traction
Company is hitting a wall and needs tools, process and structure to scale
Burnout is high-risk, CEO is spending night and day working
Company is not measuring the success/failures of its strategies
Company does not have a Customer Experience plan in place
CEO can only focus on planning for one quarter at a time
Why do you need a COO?
An overwhelmed CEO can cause challenges - including not meeting the expectations of your customers, employees, investors, and important stakeholders. These can result in your business losing momentum and possibly revenue.
“CEOs are asked to be public figures,” according to the Harvard Business Review.
It’s true that many CEOs today are at the forefront of their business. A few examples include:
Sara Blakely of Spanx
Alli Webb of DryBar
Whitney Wolfe Herd of Bumble
This type of role is expected to do press interviews, attend events, be on the podcast circuit, fundraise, and grow their following online.
Because every CEO-profile is not the same, it might make sense to take a step back and clearly define your role, so you can determine the areas where you can make the most impact. Here are a few questions to help you identify what your ideal role is as the organization grows:
What aspects of the business do you enjoy the most?
What are the components of the business that you would like the most control over?
What areas are not your core strength?
Have you done this before?
Where are the fires burning in the business today? And what skill sets are necessary to address those fires?
What are complementary skills of a COO that you think would balance you as CEO?
What role do you want to play in PR, fundraising, and promotion of the business?
Realistically, how much time do you have to spend on the day-to-day operations of the business?
Where can you make the greatest contribution to the business today, and in the long-term?
What are the responsibilities of a COO?
Typically the COO is known to be the second in command to the CEO. But the exercise above will really help you narrow and define what the key responsibilities of the COO are, within your organization. To give you a glimpse, here are a few examples:
Oversees execution of big strategies
Manages key projects relating to sales, marketing, product
Implements necessary tools to optimize and scale business
Product management
Oversees customer experience and communications
Recruiting, Hiring, on-boarding new employees
Building documents and processes
Manages financial model and investor relations
How much does it cost to hire a COO?
There are many factors that impact the cost of this role. Obvious ones are location, experience, and whether or not you bring someone in-house.
I’ve hired, over 100 people in my career, and worked alongside countless executives - it can be tricky to find the right people, with the right balance of skills and culture-fit.
If you decide to go down the path of hiring full-time, in-house - you will most likely have to support a hybrid WFH, in-office model these days, and the salary range (even for a startup) is on average $175k-$250k/annually. Which boils down to about $15k-$20k per month. In addition to salary, full-time roles require benefits and equity should be considered for all executives hires. It’s a big commitment, with big impact.
If that seems like a big leap financially to hire an employee, then you can work with an expert on a contract-basis. What should you consider when you look for this person?
Assess how this role can make an impact NOW and compare the skills with those larger projects-at-hand
Find an interim COO who can jump in with little hand holding, and execute with precision
Determine the time required to complete key projects and tasks and and set a timeline for the engagement
Create a budget that coincides with the timeline you desire
Pro Tip: All contractors and consultants are not created equal. You don’t want to find this role through a recruiter (they’ll charge you a fee) or through gig channels (you won’t have quality assurances). To find someone that fits the mold, select a reputable executive who has the desired skills that you need - but is an affordable, low-risk solution. Check out their bio, ask for a reference or two and request a specific proposal that outlines the scope of work.
What will that cost? Well, again it’s all relative, based on the time required to support your needs each month, but cut the above budget in half. That’s typically what it would cost to work with an interim COO.
What are the biggest take aways?
As you embark on growing your organization you will receive unsolicited advice from many outside parties. The most important aspect as you look to hire someone full-time or on an interim basis, is do you enjoy working with them?
Choose an amiable, logical problem solver, who can break down problems & figure out how to tackle them, alongside you.. Find a communicator, who is going to value collaboration. And finally, consider someone who’s comfortable being outside the main spotlight, puts his/her head down to just gets shit done. Often COOs are simply a partner-in-crime to go through this journey with you. because after all - It can get pretty overwhelming building an empire alone.
“You want someone who will come in to complement, operationalize, and execute your vision as a founder.” – Elad Gil
To explore our Virtual COO services, feel free to review details here. And set up a consult.