Small business owners face an extremely strong temptation to view the growth of their business as a solo project — one that they, and they alone, can lead. And while it’s true that your business is an enterprise that clearly requires your close attention and personal involvement, it’s also essential to understand that you can’t be an expert in all areas and disciplines, nor can you become the largest obstacle to your own growth by being the “only person who knows” how any of the business activities actually operate.
The key to overcoming this obstacle is to understand and plan for the five most essential strategic hires that will help you scale your small business going forward. They are: chief financial officer, chief operations officer, chief growth officer, chief human resource officer and chief technology officer. Let’s explore each role in detail:
1. Chief Financial Officer: The numbers expert.
The chief financial officer or CFO is your numbers expert, and the role can be organized into a series of progressive elements that you can scale into. The first step is to bring a person onto your team who can properly manage day-to-day bookkeeping. This can be a direct hire or an outsourced role, but the key is that either way this position needs to be structured to drive a clear and well documented accounting and bookkeeping process and not just make bookkeeping pain ‘go away’.
Once you’re at this stage, it’s time to plan for the next step: A true accountant who can work with you to begin planning for how your business should operate financially. Historically, the outside aspect of this has been handled by a third-party accounting firm (primarily for tax planning and compliance purposes) and the in-house role has been defined as a controller position. A controller’s job is to properly ensure that money is where it is supposed to be, cash flow is healthy and bookkeeping activities are in hand and accurately managed.
Having achieved this level of performance, you can start thinking about a true CFO position. In most small businesses, this will be an outsourced position managed through a fractional CFO. The difference between a controller and a CFO is that a CFO also understands business finance, not just business accounting. As a result, they can help with questions and issues such as:
- Financing questions and options
- Correcting low gross margins
- Gaining control of inconsistent expenses
- Making your money ‘work’ by generating interest
- Navigating an audit
- Whether to buy or lease specific assets
- How to manage debt or prepare for equity investment
In short, your pathway to success is built on a foundation of solid bookkeeping practices, followed by accounting knowledge and controls, and then completed with true business financing and planning expertise. This person will serve as your CFO.
2. Chief Operations Officer: The run-smoothly superstar.
If the chief financial officer is the numbers expert, then the chief operations officer is the true run-smoothly superstar. In many small businesses, this position begins in the hands of the office manager, the person who serves as a day-to-day operational ‘get it done’ person. In order to grow, however, you have to make sure that your super-doer is also a super-planner so that you can begin to build and document repeatable business processes in areas including customer service, account management, invoicing and collections, employee payroll, material purchasing and procurement, product assembly and inventory control, and more.
To build in this direction requires you to begin thinking about the role in terms of people who can apply a process focus, are strong at documenting processes in detail, don’t mind training and supporting others, and are comfortable with a wide range of technology. A true executive-level COO will also bring experience in logistics, procurement, production/delivery and customer management. They will also be effective at interfacing with the other C-level roles, especially those in finance, human resources and technology.
3. Chief Growth Officer: The integrated growth driver.
In the past, companies tended to divide growth functions into a series of separate boxes — most notably between marketing and sales. This is no longer feasible as customer behavior, purchasing power and technology have dramatically shifted. Today, more and more of the sales process is driven by marketing decisions and sales processes themselves are far more dependent upon technology and marketing support than before.
That’s why you need to think from an integrated perspective and work hard to connect the dots between your business strategy, your brand message, your marketing program, the sales process and your customer relationship management (CRM) system and processes. The chief growth officer role is best filled by a person who understands these key areas across the board. This person may have marketing skills and expertise, but they also understand sales and what it takes to make customers sign on the dotted line — as well as what the company needs to do in order to keep those customers. Finally, this role needs to have a high level of technology comfort so that relevant systems and tools can be applied to create a “growth stack” of systems that work interchangeably to map and manage your most important relationships: those with your customers and prospects.
4. Chief Human Resource Officer: The talent builder.
Human resources is complicated because it involves both complex compliance issues and expert talent management skills. The person who can track and update your employee personnel files may or may not be the right person to grow into a true human resource leadership role. After all, a true human resource driver needs to be a person who has both administrative focus on attention to detail, and strong training and leadership capabilities.
As you think about how to scale this role, consider how technology and third-party services can reduce administrative burden and increase talent development capacity. For example, you might use an outside provider for manage payroll, benefits administration, human resource files, legal compliance and more. That frees up time and resources to focus on shaping position descriptions, define skill matrices, create training programs and build employee development and mentorship programs. This, in turn, positions you to build a more dynamic and effective talent brand that can attract strong candidates and also reduce turnover (which is critical, since the average small business spends upwards of 30% of the annual cost of a single position on just replacing a person who leaves that same position).
5. Chief Technology Officer: The execution efficiency enabler.
In the past, businesses of all sizes tended to treat technology as a ‘black box’ and the person hired to oversee it as some kind of a wizard, who should be left alone to maintain control of everything that involves a login or a database. This, in turn, created a culture in which many technology executives tended to hold onto power and actually work against the vision and real-world business needs of the other departments in the enterprise.
Today, with cloud applications and constant investment and innovation in business applications, this ‘set it and forget it’ role should become a thing of the past. Rather, a true technology leader for your small business should be a person who works toward one singular goal: to assemble and optimize a technology stack of applications and databases that makes execution in each area of your business easier, more efficient and more transparent to the end user. Far from isolating IT away from the rest of the business, this person is responsible for serving the other c-level positions with equal commitment and care, so that your growth, operations, finance and human resources are all receiving the right solutions and services.
It may be the case that your small business one day grows large enough to hire a true, full-time C-level professional for each of these roles. It could also be that you never reach that point for more than perhaps one of these. The key, however, is to plan and understand how the roles should evolve over time. This, in turn, positions you to effectively build a dynamic team that can properly collaborate to scale your company for success over time and well into the future.