Transcript Episode 93

E93 – When is it Time to Hire a COO
[00:00:00] Welcome to the 100 degrees of Entrepreneurship podcast, the show for purpose driven entrepreneurs who wanna get inspired to step outside of your comfort zone, expand it to your purpose, and grow your business in a big way. I’m your host Stephanie Kowski. A globetrot CFO Mission is to empower leaders to better understand their numbers, to grow their impact and their income.
Let’s dive in.
Hey everybody. Welcome back to 100 degrees of entrepreneurship. You know me. I’m Stephanie. I’m excited to talk to you today. About when is it time to hire a COO or a Chief operating officer in your business? And by COO I don’t necessarily mean like a chief position, but I mean anybody who is serving, um, as you’re sort of right hand, that second person in the business who’s really gonna oversee the [00:01:00] operations.
I’m talking about this cuz I have this conversation with a lot of business owners, um, who are at six figures, who are at seven figures and beyond. Some of them have this position and some of them don’t. And I recently hired, um, this role in my business this year in 2022. And so I just wanted to share like when I knew that it was time that this was the position that I needed.
First of all, the role in my business is not, um, Chief Operating Officer. It is the director of finance and Operations. So at the end of the day, you can call it whatever you wanna call it, but this person is really like my, my sort of second hand in the business and who I would consider the leader of my leadership team.
And. One thing I have learned over time is in, in earlier days in my business, I used to give people really high titles, even if they were just coming in in more of an entry level type, not an entry level role, but [00:02:00] you know, they came to me with some experience, but I would give really high titles like director and manager, and I don’t think I’ve ever given everybody the chief title yet, but.
I have learned that like let’s start with a smaller, more appropriate title and grow up from there to really give them an opportunity to grow their, both, their title and their responsibilities within the company. So my recommendation, if you are hiring this sort of like right hand person, this second in commands is operations person for the very first time in your business that you probably don’t give them the title of Chief Operating Officer from day one.
Unless you’re like a really big, really well established business, you already have other C-Suite leaders and this person is bringing a wealth of experience in the C-Suite role. I probably would not call them chief operating officer from day one. Like how about we start with operations manager and then operations director and then let them grow into [00:03:00] that role as you and the company grows.
So that would be one piece of advice when we’re talking about title. I just wanted to share a little bit about how I knew that it was time to hire a senior leader in my business. So I hired this person almost a year. Well, it wasn’t really even, almost a year ago it was Well, we’re, By the time this episode airs, we’ll be coming up on just shy a couple months shy of a year.
Um, and so I really felt like it was time because I didn’t have anybody senior in the business that I felt like I could go to for strategy. I definitely have had and have very capable people on the team, but I didn’t have a strategic leader alongside me that I could go to to think about like longer term planning and.
You know, sort of org chart strategy and things like that. I had a business coach, but I didn’t have anybody in the business working directly with me, and that started to feel [00:04:00] like, like a missing piece. Right. I didn’t feel like I could or wanted to. Do it all on my own anymore when it came to directing the strategy and the direction that the company was going.
So that was the first sort of clue that I wanted. A second in command, another person, another senior leader with me on the team. The second clue was that my team was growing. and the business was growing and my work was growing, and I was not able to manage the team well as well as I would like. I was not able to give them the time and the attention and the support that they really deserved and needed.
Because I was being pulled in so many different directions. When we think about our business, we have a few different departments. We have the, you know, sort of client success, which is all of our CFOs and our bookkeepers that work directly with clients. We have operations and we have [00:05:00] marketing and growth, and I was that one person that was responsible for everything.
I had every single person in the company reporting to me, and at that point, I don’t know, we probably. Maybe 10, 10 people on the team, but having 10 direct reports is like five too many, right? We should never have more than five direct reports or so, or we just can’t give them the attention that they deserve.
And I just wasn’t able to do that, um, when we had grown that large. And so I really needed to focus my time and energy on revenue driving activities and, you know, authority building and thought leadership and getting our name out there, but I couldn’t because I was supporting the. Because they needed support.
They needed somebody. And so that was another clue that it was really time to hire somebody, someone else in the business that could work alongside me and really oversee the operations of the business, make sure the business was running along smoothly. So team was number two, Number three. That there were a [00:06:00] lot of projects that were not getting done because there was no one to do them, and I had no capacity anymore.
Like we knew that our sort of client management system and our billing was not great. It was kind of a cobbled together system using three different pieces of software that. Fine. But as we continued to grow and scale, we knew that like, this is not sustainable. This is probably not the best option here, but we had nobody to really take that project on and to own it and to manage it.
And we knew like some of our processes were broken or were not as smooth as they could be, but we had nobody to take those projects on and to smooth them out and refine them, and. Given that there were all these projects on our list, but I knew that I couldn’t handle them and neither could anybody on the team.
We knew that I, I needed somebody who was both a strategic thinker who could sort of help me sit at, sit with me at 30,000 feet [00:07:00] and see the big picture, but also somebody very tactical that would know how to create a project plan and how to put all of the wheels into motion and support the team to actually get things done.
And so that was another big clue that we had this big project list. Nobody to handle any of it. Now, would our business have broken if we didn’t hire somebody and we didn’t do these things? No. Like we’d probably still be here, but I feel like the team would be more stressed. I would be more stressed. I would be working way more.
Our clients may even sense. The sort of disorganization on the back end of things and not really be thrilled. And so no, the business would not have crashed and burned, but I feel like we’re a much better business because. I did hire this position, and like I said, she’s a director of finance and operations, not a Chief Operating Officer yet.
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So those were for me, kind of the. , big triggers. That helped me realize, okay, I need to hire this senior level person. And so the next thing to think about is like, okay, what is the impact going to be on the budget? And as you can imagine being a [00:09:00] numbers person, being a money person, that was the first thing that I thought of because I’m like, Okay, if I want somebody really amazing, they’re going to cost a decent amount of money.
And um, if I want the type of senior level leader that I’m looking for, they’re gonna cost money. And so I knew that I was going to need to basically take a hit to my profit margin, right? Because this person would not be serving clients. I knew I would need to take a hit to my profit margin in order to hire the role, but I really had to think about, okay, what are.
what’s the sort of cost benefit analysis, or what is the impact if I don’t hire this person well, I would still need to be, you know, completely overseeing the team with 10 direct reports. Possibly that number would grow. So my time would be greatly reduced and therefore my time available for authority building and marketing and growth activities would be greatly reduced and we would not be able to make progress on all of these projects that we need to [00:10:00] really increase the value that we’re providing to clients and keep things organized internally.
So cost benefit analysis, I was like, I really do think we, we still need to hire this position and we just need to know that the revenue will make up for it in the long run. Right. And so it’s, you know, you can’t predict. We couldn’t, I couldn’t tell you that. Okay. Because we have this position on board.
Now we know our revenue is going to increase 30%, like next quarter. No, we can’t predict that, but I am confident that our business would not have grown to where we are today without that position on board, and specifically without that, that person on board. So, , all of those things really contributed to, um, to making that decision and to knowing like, okay, our margins are gonna take a hit, but that’s okay.
We know that, and they will recover because they always recover. Right? So that went into, um, that went into the decision making. And the last thing that I really [00:11:00] considered, um, when thinking about hiring this position was like, well, could I just have like a business coach to do that instead? Like, maybe not somebody that’s full-time in my business.
And I had at that point in my business, when we were growing as fast as we were growing, when our revenue was what it was like a business coach was no longer that solution. A business coach would’ve been a bandaid because as amazing as all of the business coaches that I’ve worked with over the years have been.
At the end of the day, they’re not in your business 24 7. They’re not in every single Slack channel. They’re not, you know, getting the emails from the team. They are not, you know, seeing the challenges that clients are facing that we need to help with. They are not seeing all of that. They’re getting one perspective, and it’s yours.
And sometimes that perspective can be biased because we are humans and we have biases behind much of our thoughts and opinions and you know what, what we’re talking about. And so a business coach I [00:12:00] I knew was no longer the right solution for this particular gap. Now a business coach absolutely has. You know, has a role, has their purpose.
I do still work with a business coach, like I do think that is still really important. But, um, a business coach was no longer the right person to sit in this role of like, you know, strategic operations. Um, cuz at the end of the day, they can give you all the strategy and coaching and support in the world, but they’re not gonna get in there and actually do anything because that’s not their job.
Right. So, I knew that it was time to no longer use a business coach and move on to, um, to somebody in house, so, I’ve probably forgotten like some things that have went into my decision making for hiring this role. But what I can say is that in 2022, having this role, this person on board has been an absolute game changer for our business, and we would certainly not be where we are today without her on board.
Um, oh, the other [00:13:00] thing that I will say is just like a little bit of a funny story on how this position came to. And I just encourage you to think about your own hiring when I tell this story. So we were actually hiring a cfo, another CFO consultant to serve our clients. And this, um, the person had applied and we really, really liked her.
Actually, our operations manager had interviewed her and she’s like, Oh my gosh, I love her. She’s fantastic. You should definitely talk to her. I think she’d be a great fit. And while all of that was happening, she had actually decided, you know what? I actually don. This position, I don’t think it’s a good fit for me personally.
The role itself is just not really what I wanna be doing. Um, so I’m gonna withdraw my candidacy and we said, Oh man, okay. Bummer. I wasn’t really that heartbroken cause I never even met with her. So I was like, Okay, well she withdrew herself. That’s fine. Probably better off if she doesn’t think she’s a good fit for the role.
But my fabulous operations manager and Danielle said, I think she [00:14:00] would be a really good fit for our client success manager and. I think, I think we should tell her. What do you think? And I’m like, Okay, well you’re the one that met with her, so if you think so, go for it. Tell her and see what she says. And so she said, Oh yeah, okay.
This sounds interesting. I’ll throw my hat into the ring for this one. So that’s when I met with her and I was like, Yeah, you’re right. Like she, she is fantastic and I think she would be a great fit for this job and for the company and everything. And so she ended up starting as our client success manager.
And the role at that time was a little bit of a hybrid between. Most of it was client success with a little bit of operations. But as time went on, we realized that that really was not a splitable role. That role really needed to be client success. And then we really needed operations. And so we ended up shifting her over into operations and hiring a different client success manager now called client relationship manager.
And so that’s how, that’s how things came about. But she had a really strong operations background and had grown another [00:15:00] company, um, really quickly into. I think eight figures in revenue and worked with them on the operations side. So we thought she’d be a great fit. But it was just funny that she had applied for one position and then said, No, you know what, This is not, this is not for me.
I’m gonna take my name out of the running. And then our, our operations manager was like, No, we don’t wanna let her go. And then we found, um, we didn’t find a role for her. I mean, this is, A situation where we created a role for somebody. We were actually, you know, looking for this other role as well and decided she would be a fantastic fit for that.
So I would just encourage you that long story. I would just encourage you to really think about, um, when you’re hiring people, if they don’t end up, you know, if everything else sort of checks out, but they don’t end up being a great fit for the particular role that they interviewed for, is there another role in your company that you are already hiring for that they could be a good fit for?
I definitely don’t encourage like, Creating, making a roll up for somebody just cuz you like them. [00:16:00] That is not a great practice. But, um, just kind of thinking outside of the box and I’m grateful to our operations manager for doing that, for thinking outside of the box and thinking, Hey, she might be a great fit for something else.
So anyway, that’s my story about bringing our, um, director of finance and operations on board. And I, I wanted to do this episode because I know so many of you, like we’ve all heard of the visionary and the integrator. and the CEO and the COO and these sort of partnerships and of leadership in our businesses and, you know, thinking that we need to hire somebody.
But for me, that wasn’t necessary until this year, until we were what, five, six years in. Um, that didn’t really feel necessary to hire that senior level of a person. And so just to think about, think about your own business and have you come to any of those sticking points that I mentioned today. That really make you feel like you need to bring in, you know, a senior level leader onto your team.
So anyway, friends, I hope that was helpful. Find [00:17:00] me over on Instagram if you wanna chat all the things. Stephanie dot, s k r y. Um, tag me if you’re listening to this episode, I would love to see that. And if you haven’t left us a review yet, I know I look at our stats over here on this podcast, my friend and I know that we have a batch of very loyal listeners.
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