It can be easy to believe that if your startup is very young and your team only consists of you and 2-3 other people that you don’t need a COO. But the choice to not bring one on as early as possible in your startup journey could hurt you.
What is the role of the COO and why should an early startup hire one?
A chief operating officer is regarded as second in command of a company, reporting directly to the CEO. A Fractional COO, on the other hand, is basically a COO but part-time, and can be a cost-effective alternative to a full-time COO.
The COO is responsible for ensuring that the business runs smoothly from day-to-day. While the CEO handles the front end of the business, the COO is responsible for the back end operations. Everything that happens on the shop floor (real or virtual) is the business of the COO.
By executing the company’s business plan, the COO implements the strategy and vision that the CEO has laid out. While the COO reports to the CEO, the heads of all the units within the company typically directly report to the COO. As a result, COOs are also ultimately responsible for hiring decisions, training, sales, and marketing as well.
Areas where a COO can provide strategic value
Scaling your startup
Understanding the role of COO in scaling up your business is the first step in achieving the next stage of your company. The sooner you begin to plan for scaling, the better. But what if you as a founder or co-founders do not have the requisite business knowledge to responsibly prepare for scaling up?
An experienced COO can walk you through a scaling strategy that is relevant to your industry and help you prepare for all the key areas of expansion–hiring, sales and customer service, integrating new technology into your processes, and marketing.
A COO can also help you keep track of essential metrics such as churn rates so you know where you stand and when you need to course correct once your scaling journey begins.
Resource management and allocation
A startup founder is only human. You cannot be all things to all the people on your team.
The money spent on bringing on a quality COO is going to reap returns far into the future. As a founder, you can entrust your COO to develop and execute systems to manage and monitor day-to-day operations, freeing your time to focus on other matters, such as fundraising and meeting with potential clients.
If you are wearing too many hats and require other key personnel, a COO can assist you in both hiring and onboarding the right people for the jobs that need to be done. Experienced COOs have large networks to tap and often can find qualified professionals through referrals.
A COO can also examine your existing processes and understand where inefficiencies and gaps lie. A COO proficient in automation and AI can recommend technology that can save both time and money, strengthening your bottom line.
Priming your business for tomorrow’s regulatory environment
DEI and ESG are not fads and are here to stay. While your business may currently be small, eventually it will scale up. As it grows in size, so will its impact. Already in the EU, ESG reporting has become the law and it is predicted that within the next few years, more laws will spring up in other jurisdictions requiring mandatory reporting.
A COO can be used to leverage DEI & ESG goals and has a large stake in ensuring that reporting on DEI and ESG matters is conducted in a timely manner and that the data presented in these reports is accurate and complete. By hiring a COO early on, you can prepare yourself for the inevitable and avoid possible legal consequences in the future.
What if I can’t afford a full-time COO?
Understanding the importance of a COO for an early startup is crucial, but bringing a full-time COO onboard might not be feasible, especially for very small companies. This is where fractional COOs come in—they provide the expertise of a COO on a part-time or project basis, making it more affordable and convenient for new enterprises.
A Fractional COO is essentially a contractor, not an employee. As a startup founder, you can negotiate the duration of their involvement, the specific areas they will assist with, and the payment structure. Depending on your organization's needs, some fractional COOs may charge hourly, while others might bill per project. Compensation can be offered in cash, equity, or a combination of both.
The sooner you tap into the interdisciplinary experience and institutional knowledge of a seasoned COO, the faster you can accelerate your growth and meet your goals as a startup. Bhuva Shakti, a Board Director with deep expertise in fintech, AI, ESG, and risk management, is not a fractional COO herself, but she can guide you in finding the right one for your needs. With her extensive network and strategic leadership, Bhuva can connect you with qualified, veteran COOs who can help drive your startup forward.
Schedule a consultation with Bhuva today to explore how she can assist you in securing the right leadership for your business.
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