Financial statements are vital to investors. But how do investors use financial statements? Before your meeting, learn what they want to see and why.
Business Finance Management
May 6, 2022
As the CEO of a startup, you have a lot on your plate: developing your product, building a team, raising capital, managing investor expectations, establishing a strong brand presence, and combing through startup books and industry articles to help you conquer your ever-growing list of responsibilities.
You only have so much time in a day to get everything done. At some point, you have to accept that you may need help overseeing the day-to-day operations of a business. But how do you know when it’s time to make that call?
Keep reading to learn about key indicators that you should hire a Chief Operating Officer (COO) and the steps to find and onboard the right person.
As the CEO, being overwhelmed by a growing list of mission-critical concerns is a primary indicator that you need help. When you can no longer dedicate sufficient time to carry out your responsibilities effectively, it can lead to disorganization, low employee engagement, and stalled growth. Hiring a COO will lighten your load and help keep the business on track.
Consider your skill set — does it include operational strategy and execution? Not every startup founder has a Bain or McKinsey consulting background. You may be more technology inclined, meaning your expertise is better suited for envisioning and developing a market-leading product rather than implementing that vision. Hiring a COO means you can focus your competencies where they’re most valuable instead of spending extra time and effort on areas more suited for a dedicated operational leader.
If you’re having trouble scaling and tracking performance, this will limit your ability to strategize and reach your goals and also make it challenging to instill investor confidence in your company’s future. A good COO will enable you to offload many operational responsibilities, freeing up time to focus on high-level concerns such as refining the company vision and developing goals to achieve that vision.
Many CEOs are the primary (or sole) resource for all functions when first starting out. As new departments are added, such as sales, marketing, and HR, there are more moving pieces to consider. Onboarding talent to take over these areas is helpful, but it also introduces a new burden of managing these functions and their respective teams. The role of a COO is to address the day-to-day needs of these operations.
Take a hard look at your business processes.
Are multiple employees striving to achieve the same outcome but taking different paths? Are customers getting their issues resolved most of the time? Do investors keep posing questions about your startup that you can’t seem to answer?
It could be that your processes need some work. Part of a COO’s job is establishing and standardizing processes across the company.
Once you’ve determined that hiring a COO for your startup is the correct move, you need to take a thoughtful approach. This person will be responsible for executing your vision and ensuring all the moving pieces are well-oiled and in sync.
Here are a few steps you can take to maximize your chances of finding the perfect fit for your executive team.
Before jumping into your search, paint a clear picture of the kind of COO your startup needs to be successful. In which of the areas above are you struggling?
You may need help translating strategy into actionable growth goals, implementing performance management, overseeing talent management, or ensuring compliance with governmental regulations or industry accreditations.
Identifying these gaps in your current competencies or workload will make finding and hiring a COO a more productive process. Otherwise, you may wind up churning through new hires — and the last thing you want is instability within your leadership team.
Your COO job description should address the items you identified in the previous step. These will be key items to include in the responsibilities section.
In addition to the right skills and experience, an effective COO should also have specific qualities:
It’s not enough to simply post a COO startup job description on a job board like Indeed. That may be suitable for individual contributors and some managerial positions, but your COO’s responsibilities and oversite necessitate using more targeted resources.
Executive recruiters are highly focused on finding high-level leaders and managers for companies large and small. They know how to weed out candidates who don’t have what it takes to maintain the broad responsibility of an executive role. They’ll use your job description and know-how to shortlist the right candidates.
In addition to using an executive recruiter, tap into your network and the network of other executives and board members. It’s likely that board members have access to or have already encountered individuals who could potentially step into the COO role.
An executive recruiter may interview potential COOs first, but it’s essential that you remain involved in the interview process since the CEO and COO work hand-in-hand. You’ll be working closely with this person for the foreseeable future and affording them significant authority over your business, so it’s important they complement your leadership style.
For questions to ask during the interview, consider these recommendations from LinkedIn Talent Solutions:
Asking questions across several competency areas — and listening carefully to each candidate’s answers — gives you a more holistic view of the person and their potential fit as an executive.
Don’t forget to include the management team and board members as part of the interview process. Getting their buy-in and establishing comfort with your choice of COO will allow for smooth onboarding and relationship-building.
Once you and the board have agreed on a candidate and you are ready to hire, it’s time to bring them into the organization. Onboarding will look different for every startup, especially if you’re hiring a COO in part due to unclear processes and disorganization.
Be sure to make proper introductions across the company and with external parties, and stay in close contact to ensure the new executive has what they need to succeed. Remember that the COO is here to help execute your vision, so maintain a collaborative relationship to stay in sync.
Your financial position dictates what you can accomplish — from hiring talent to developing new products. Stay on top of your finances with Zeni, a team-based, AI-powered finance concierge.
We combine cutting-edge technology with professional human expertise to help you overcome common startup accounting and bookkeeping problems. In addition, Zeni optimizes your accounting systems, so you always have access to the most accurate, up-to-date information about your company’s finances—and you can make informed decisions in less time.
Schedule a personalized, live demo of Zeni to see how we can help you maintain an insightful, full-picture view of your startup’s financial position.