Industry Insights with Experts

Struggling to Scale Your Business? Understand the Role of a COO

Anurag Paul

21st Jun'24
Struggling to Scale Your Business? Understand the Role of a COO | OpenGrowth

Have you ever felt overwhelmed managing your startup and you wished that there were more hours in a day? You are not alone! Whether you are a beginner or already in the thick of your business, a Fractional Chief Operating Officer (COO) can bring drastic changes. 

COOs know that enhancing business productivity is the key to success, despite the recent pandemic and other unpredictable conditions. Surviving is not an option but a necessity. But what exactly is a fractional COO, and how do they operate? Today, we will discuss Fractional COOs and their responsibilities along with a pay chart. Prepare yourself to discover the ways to improve the performance of your startup without spending a fortune.

 

Full-Time COO vs. Fractional COO: Who Is Right for Your Startup?

A COO is important in startups. They come with operational skills, planning, and management skills in terms of resources. Additionally, they assist in the growth of the company and control the risks and formation of a good team and values. 

However, not all startups can hire or require a full-time COO. This is where a fractional COO comes in. A fractional COO is an individual who is a qualified COO but who will only work for a portion of the business week. So, the position is cheaper than having a full-time COO.

 

Key Responsibilities of a Startup Chief Operating Officer

A Chief Operating Officer (COO) is one who is responsible for the day to day operations of the organizations, setting goals and developing plans. They also coordinate the structure of the organization’s functions. Below are the main duties of a chief operating officer:

 

Key Responsibilities of a Startup Chief Operating Officer

 

1. Manage Business Operations 

The Chief Operating Officer oversees the operations of the firm in their capacity as the chief executive officer.. The COO also assigns duties, writes policies, and creates operational initiatives. They interact with other executives to facilitate the flow of work between departments and other units of the business. The main task of the COO is to ensure operational efficiency and solve any problems that may affect business development.

 

2. Improve Internal Company Performance

One of the main responsibilities of a COO is to carry out performance evaluation in each organizational unit. They assist in determining areas that require training so that the right training, up-skilling, and re-skilling can be done.

The COO works hand in hand with the HR department to ensure that the right talent is sourced and hired since the COO has overall knowledge of operations. They are also assertive in the financial aspect and the enhancement of the supply chain. This is the main reason why fractional marketing consultants and Fractional COOs are gaining popularity.

 

3. Nurture Healthy Work Relationships

Business management is never easy. However, a good COO ensures that different teams are linked. It conducts training sessions, career coaching sessions, and social activities such as dinners to ensure the employees interact. The COO makes sure that the teams are integrated as opposed to being mere operational units. Also, the COO encourages interaction between departments and ensures that there is effective communication between them. This is one of the leadership traits that make a CEO stand out in today’s market.

 

4. Implement Business Strategies

CEOs are different and they possess different skills. A CEO may be excellent in the areas of strategy formulation but weak in implementation. This is where a chief operating officer becomes vital. They assist the CEO in achieving business strategies by having good risk management and problem-solving skills.

The COO's involvement in the operational activities relieves the pressure on the CEO to oversee operations, thus the CEO can focus on the development of the company’s strategies and potential growth strategies. This is one of the best key metrics for evaluating fractional CMO’s services.

 

5. Analyze, Create, and Deliver Reports

COOs collect information, process data and provide reports on a daily, weekly, or monthly basis depending on the organization. They observe all departments to evaluate their productivity and make sure that each employee is performing as expected. One of them is financial reporting which is a major area that they manage. The company needs a COO with strategic thinking and reporting because it is crucial for the company.

Having an understanding of the characteristics of the ideal Chief Operations Officer, how then does one determine when to look for this position?

 

So, Do You Need a COO?

It depends.

Whether or not it is good for a business to hire a COO is a question that depends on the business’s objectives and its competition level. A firm hires a COO when the firm is tangled up in operations and needs a strong hand to run it.

Expanding a business is not a walk in the park. Coordinating teams across the different branches and dealing with the business development and the risks that are involved are challenging. You might require assistance in formulating and implementing strategies to realize your firm’s vision.

This is just one of the possible situations where the hiring of a COO is beneficial. But, one must be very careful when recruiting to get the right talent for your company. The right candidate for this position should be able to demonstrate all the qualities that the firm needs in order to manage its operations and expansion.

 

Are Fractional COO Rates More Cost-Effective Than Hiring a Full-Time COO?

Currently, Glassdoor shows that a full-time COO is expected to earn between $150,000 and $370,000 per year in New York City. In such competitive industries as fintech and cleantech, such salaries may be slightly higher.

On the other hand, fractional COOs are relatively cheap than the full time COOs since they work for fewer hours in week than the full time employees. Their charges vary with the experience of the particular personnel, the type of job, the company of the client, and the duration of the particular job. On average, fractional COOs cost between $200 to $500 per hour, this is relatively cheaper than having to employ a full time candidate. 

Okay, let us just calculate this. 

 

Cost of Hiring Full-time COO

  • Lower end of the salary range: The average monthly salary is $12,500.
  • Higher end of the salary range: The average cost per month would amount to $30,833.

 

Cost of Hiring a Fractional COO monthly

  • Lower end of the rate: $200 per hour × 10 hours = $2,000 per month
  • Higher end of the rate: $500 per hour × 10 working hours = $5000 per month

Here, you need to understand that as a startup, you may not even require a full-time COO! The fees of a fractional COO may be more per month if you hire them full-time, but you can only hire them for the hours you require, thereby possibly incurring less costs while getting professional advice.

 

Build a Successful Startup With a Fractional COO

A COO can be an asset to your startup and help you manage growth and increased operations. You have to be careful when determining his or her need for a COO in the business. OpenGrowth helps you in this regard by providing fractional executives and on-demand experts as per your need. These are the experts who come in with the knowledge that is needed for the operations as well as the foresight. 

Searching for a perfect COO for your startup has been made easier with OpenGrowth’s expert on demand service. Do you want to expand your business even more? Reach out to us at OpenGrowth to know how we can help you in identifying the perfect COO for your firm.

Anurag has been writing content for over eight years, and he is dedicated to it and cannot see himself in any other industry. As a passionate writer, he is interested in business and entrepreneurship. An accomplished technologist and financial expert, he strives to empower others through entrepreneurship, leaving his comfort zone to explore entrepreneurship. Having worked in the Financial sector for more than five years as a full-timer, he also has a keen interest in Corporate Finance ...

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