Not long ago, I discussed the concept of “Before & After” over a beverage with the CEO of a company that had finally broken through its previous “revenue ceiling”.
The CEO (and owner) of the business had been wrestling for years with their seeming inability to grow beyond a specific revenue threshold. Naturally, once he and his team discovered what it took to get beyond that level, they eventually reflected and looked back on the issue – only to find that what made the real difference was suddenly really obvious to them all, as well as why.
Their key threshold to get beyond had been a bit more than $20 million in annual revenue. While ours was a dynamic and flowing dialogue, rather than a corporate presentation with power point slides, the essence of our discussion boiled down to this:
“I learned the hard way the importance of having a capable and experienced COO on my leadership team. Let me outline the problems that my business experienced (constantly) prior to us investing in our COO:
- Customers & Satisfaction Issues: Our business was suffering from a number of internal issues, all of which impacted on our customers. We received complaints about our delivery times, quality of products, and customer service. We found ourselves losing customers to our competitors, which hurt our revenue growth. It is demoralizing to everyone, but especially to your sales people, when you are forever losing customers as fast as you are gaining them. Without happy customers, it is hard to win net new customers. Customers drive revenue, and without revenues you cannot support the expenses of the business.
- Talent Management Issues: As the company grew, we struggled to attract and retain top talent. Without a dedicated HR department or another leader to manage talent, we relied on ad-hoc hiring practices and struggled to create a positive company culture. As a result, we experienced high turnover rates, and our employee morale suffered as a result. When you lose the best and most talented employees, and retain the worst ones, you can think of it as a double whammy to your business. After all, it is your employees that look after your customers.
- Operational Inefficiencies: Our company had grown rapidly, but without a leader to focus on this, we struggled to manage the day-to-day operations efficiently. We had several departments all working independently, which led to duplicated efforts, a lack of coordination, and inefficiencies. We also faced challenges in managing our inventory, which led to backorders and lost sales.
- Financial Weaknesses: Our lack of financial expertise also became apparent as the company grew. We struggled to manage cash flow, forecasting, and budgeting. We relied on outdated financial reporting practices, which made it challenging to make informed business decisions. Additionally, we faced difficulties in securing financing for growth opportunities, as we lacked a financial strategy and track record of stable financial success. When your revenues are constantly fluctuating, and your profits are unsteady then lenders are worried about your debt service coverage ratio and the risks that they would be running when lending to you.
- Lack of Strategic Direction: Our company lacked a clear strategic direction. As the CEO, I was responsible for developing the company’s strategic plan, but I found myself struggling to balance the day-to-day operations with the long-term vision for the company. This resulted in a lack of focus and direction, which led to missed opportunities and wasted resources. We had the resources to hire a leader for this, but did not see clearly the need, nor were we clear on which role we should fill in order to make the biggest difference.
So, yes, our business faced significant challenges prior to investing in an experienced COO. We wrestled with all these issues every day. What surprises us looking back is that we never realized they were all interlinked. We never thought or discussed that it might just take a single leadership hire to overcome all of these deeply entrenched problems.
By investing in the right COO, we were able to address these issues and ensure the long-term success of our company. As a CEO, I learned the importance of having a well-rounded leadership team and will continue to prioritize the retention of a capable COO to ensure our company’s continued growth and success.”
The difference between the “Before” and the “After” was very apparent to this business owner. Hindsight as they say is 20/20.
If you are considering hiring a fractional or interim COO, reach out to us for a conversation. Our COOs have 20+ years of experience providing fractional or interim expertise to businesses across a wide range of industries and company sizes. We can help you with an ideal COO, for your business.
Biography:
Peter brings years of comprehensive operational management experience to our clients seeking guidance and surefire methods for top operational performance. He helps business executives to develop and grow their businesses by offering expert ways to implement their operations, finance, growth and service/product management. He helps companies to integrate innovative methods and strategies so they function effectively.
Peter seeks out business challenges as his ambition is to find the opportunity within them and make the most of them with a team dedicated to success. Clients rely on him to provide reliable, innovative and cost-conscious strategy execution, project management services and solutions to fulfill their business objectives.