What are the deficiencies in the end-to-end operations of your business? Do you need to streamline your small business operations and require help in pursuing a strategic agenda to build or realize higher value?
Or perhaps your operations are built-up nicely, but you still feel the need for a key resource that can think strategically and also get the job done.
A Chief Operating Officer or COO is meant to do all that and a lot more; their duties include project management, goal setting, measuring results, streamlining operational procedures, strategic planning, budgeting and financial management, business development, team building and doing all that is needed to drive the company to better sales, profitability and cash flow.
In short, while the CEO is essentially in command, the COO brings the company’s vision to life. That’s why, ultimately, the CEO and COO are held responsible for the achievements and losses of a business.
While they are both considered vital for growth, most small businesses don’t really think about adding this layer to their management – but they should.
By now, you are probably thinking, ‘Why do we need a COO?’ or ‘Can I afford to hire a COO for my small business?’
In this article, we’ll answer all these questions and more, and explain why a COO is considered a business expert who can pave the path towards growth, value building, sales and exit goals.
Setting Up to Succeed with Operational Excellence
These are some of the most important reasons why your small business should have a COO:
They can put in place processes and systems that will promote growth and success
Ensure that the entire organization and all team members are on the same page
They are in charge of creating Standard Operating Procedures (SOPs) that set the tone and expectations for the business
They make it easier and smoother to scale a company up or down, according to the circumstances
They swiftly make sound decisions daily that align the organization to its mission
Now, you may not want to think about it, but later down the road if you decide to sell your company in an M&A sale event, then a COO can help increase its value during a sale, merger or private equity buyout.
The trouble is that for startups and also ‘lifestyle businesses’ with $10 million or so in annual revenue and a few handfuls of employees, it can be challenging to justify the costs of hiring a full-time COO – both financially and practically.
Hiring Small Business Leadership – Are You Really Ready?
Even if your company has grown to over $5M in annual revenues, it could still be considered as a startup or a small business. And this is one of the reasons why you should have more ‘doers’ than ‘thinkers’ on the staff.
It can be overwhelming for a smaller business to create and fill the leadership positions; in fact, research tells us that ‘of all the people who get hired, 46% will fail in 18 months.’
In other words, hiring leaders, i.e. Presidents, COOs, CFOs, CTOs, and other C-level executives can be a huge challenge – especially since the cost of a bad hire can be 30% of the person’s annual salary or more.
Also, hiring an experienced, quality, full-time C-level exec might cost you more than you pay yourself. Before you make any decision, ask yourself this…
Can you afford to make that financial sacrifice? Can you accurately predict additional revenues you'll gain from the decision of hiring? Will the COO be able to add-value that is tangible by identifying and executing cost reduction and right-sizing initiatives in the next year? Will hiring a COO give you time to focus on greater sales & marketing or product development for the company? Or will quality improve thanks to the new hire that will result in better client retention and repeat business?
Until you can realistically answer these questions, it would be unwise to spend time, money and effort in recruiting a full-time COO.
The Case for Business Consultant Services
You might want to hire an interim COO or a CFO consultant, i.e. people who work for your business on a part-time basis.
Such a decision makes good economic sense, especially since experienced business consultants are a cost-effective substitute for what can be very expensive and disruptive hiring blunders in C-level positions. A part-time and reputable professional may also be a better solution as they have other clients and do not solely depend on your for their livelihood, you want and need true objective and unbiased advise and not a paycheck collecting yes man or woman.
To ensure that you hire the right consultant, you’ll need to carry out due diligence. So for example, when looking for a fractional CFO, ensure that this person is not just a bookkeeper or CPA, but someone who can bring strategic insights and operational know-how to the position.
In addition to excellent accounting and finance skills, they should show proven value in operational, business development and other such roles. An accountant or CPA may not be the best person for a fractional CFO consultant role, as accountants are taught and trained and take an oath to follow a finite set of rules and think in pure black and white. In small business, there is always a lot of gray area and finance skills over accounting are usually more valuable. You have your CPA accounting firm to handle an annual audit, review or compilation and your year-end tax returns – your accounting firm remains a vital part of your team.
The right business expert can partner with your company and help overcome financial and operational challenges, attain growth, adjust strategy, implement systems, navigate complex business issues and even raise capital to ensure the business is set up for success.
And your business won’t even have to bleed money to hire them – this is the main reason why so many entrepreneurs are asking the exact same question: ‘How Do I Find the Best Small Business Consultant Near Me.’ Having a consultant on-call can provide your small business with all the benefits of the position, without the long-term salaries, benefits, and other related expenses. A skilled COO / CFO consultant even prevents the need for a full-time project manager on staff, so you end up hiring a PM on a per-need, project-to-project basis only.
In addition to all these benefits, you can make your hierarchy flatter and more focused: thus allowing you to adopt a collaborative approach. You are also free to focus on the things that matter to you and to your business, which truly lifts all boats.
Operations Consultants Make Small Businesses Better
Consultant services can help entrepreneurs focus on their process qualities and efficiencies. Smaller businesses need a COO / CFO business expert that can execute in a hands on fashion and do work themselves without needing to hire assistants and associates to do their work for them.
Working with the right business expert can help you map out current processes, analyze existing methods and get advice on how to improve business operations. The way they work will help you increase margins and decrease costs – the ultimate goals of every emerging small business.
Think of a COO consultant as someone who can figure out what drives the core of your business and execution that conforms to that core. Similarly, a fractional CFO will get down with the nitty-gritty of your business, optimize cash flows, and maximize profitability as they go along.
As a small business owner, you know that your business needs financial and operational expertise to succeed. The right business consultant service can put you in touch with a structured problem solver, someone who can break down your problems into easily solvable chunks, and figure out how to take your business to higher levels. Most smaller businesses could achieve greater heights if they just had a strategic agenda and knew how to execute it. The ability to execute is of course key.
As a bonus, a business consultant can also complement the CEO’s skills, abilities and experiences, thereby creating advanced competencies at the very top of the hierarchy.
In Conclusion
As a small business owner and CEO, it can get lonely at the top. A business consultant service in Charlotte can help you figure out your strategic agenda, understand and navigate your weaknesses, fortify your strengths, and give your business the direction it needs to reach its full potential. Building wealth to live a full life is what we are all after, freedom to do what you want and improve quality of life for those that you care most about.
Collaborate with us at Charlotte Capital for all your business consulting needs. We serve businesses like yours across Charlotte and Lake Norman regions in North Carolina as well as the Southeast and beyond. Simply put, we can support your small business, build your team and maximize the talents of your existing unit.
Are you ready to avoid the perils associated with hiring full-time executives for small businesses? Get in touch with us today.