Duties of a Small Business COO

The decision for a small business owner to hire a part or full time Chief Operating Officer (COO) should not be taken lightly. Not only is there an expense consideration, it is also a sharing of the decision making power for the business. Most small business owners believe they can handle all of the decision needed for their business to operate, grow, and flourish. In my experience this is how white collar crime can flourish, especially when the owner becomes too busy to watch all activities within a business.

Here is an example. On day one most business owners have all of the following in common:

1. I have created a thriving business.

2. Sales of goods or services will make up for any monetary shortfall.

3. Keep all of the financials in either their head or on scraps of paper.

4. Market to the people they know who encouraged them to open the business in the first place.

5. I will get a place for the business.

6. My employees who will be just as enthusiastic about the business as the owner is.

The reality is this does not work. There is a reason why 50% of all businesses fail within the first five years. And this is where an external look at the operations, marketing, and professional services can be money very well spent. Consider the following when making this decision:

1. Look at the skills and experience of the COO.

2. Does their personality and working style fit with the owner and the company?

3. How does the candidate COO express their strategic thought and intellectual curiosity?

Here is a list of items that the COO should handle and be in charge of for the business owner:

1. Look at the long range opportunities for the company while assessing the current capabilities.

2. Assess the current team of professionals being used by the company for payroll, insurance, accounting, legal, sales, suppliers, and location. Make corrections and suggestions for better fit if applicable.

3. Assess the current tools being used by the business. This will include the Point of Sale system, Customer Relations Management system, web site, social media marketing, on line sales capability, bank accounts, payments of sales and business taxes, and creation of advertising photos and graphic art.

4. Chart a course to build an operating plan. This will use the vision and strategic planning as previously accomplished by the business owner.

5. Actively seek future opportunities for the business while monitoring the current daily activities to ensure growth towards the goals of the business.

Money is always an issue for every business owner. One solution is to offer a percentage of ownership in the business to the perspective COO. The bottom line for this idea is that if the COO does her job then the business will prosper and the compensation for the COO will also prosper. This does not negate a salary for the COO in line with the abilities of the business to support a salary. It does give very great incentive for the both the business owner and the new COO to operate in the best interest of the business for the benefit of all.

Above all have a contract signed by the business owner and COO that clearly sets the level of expectations for the business, percentage ownership if that is a consideration, any salary or salary start points, and who is responsible for all decisions. If the COO is to have spending access to the company bank account then I would suggest two signatures on all business checks to start the process. This also applies to any type of business owned line of credit or credit cards.

Have regularly scheduled meetings between the COO and the business owner in order to review the current and future operations. The COO should always offer their opinion of how the current service providers (accountant, payroll provider, insurance company) are operating and if a change needs to be made.

The COO allows the business owner to operate the core of the business while being assured that the details are not being lost in the woods. Properly executed this will give the business a much better chance of success and prosperity.

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