Why Hire a Fractional COO for Series A Startups?
Chief operating officers (COOs) – fractional or full-time, help a CEO operate their startup right. Let’s face it; the startup world is tough, and there’s no room for error.
Maybe you have an amazing product but don’t know how to operate and strategize your day-to-day work – even that’s enough to cripple your startup.
COOs play a big role in keeping your startup afloat, and planning operations, especially after you’ve got a big fat cheque from your series A raise.
In this article, you will discover who is a COO and their role in a series A stage startup, why and when to hire them, and why fractional COOs are a secret weapon for series A stage startups.
Who is a COO & What’s Their Role in a Series A Stage Startup?
Going by the books, a COO is a senior executive overseeing a business’s day-to-day operations and reports directly to the CEO. These ‘day-to-day’ operations can be planning, organizing, hiring, quality assessment, etc.
But, not many of you might know this – a COO is often a former founder that was really good at operating and scaling business operations.
Let’s take an example to understand it better.
Imagine Jack – CEO of an enterprise software startup who raised series A funding.
He was able to scale the company and grow the team from just a few employees to dozens or even hundreds of employees by learning how to strategize and operate correctly, often through trial and error.
But here’s the catch; his customer acquisition cost was too high and wasn’t going down, so he was forced to shut the company down.
Seeing how he could massively scale up the operational part of the business, he decided to work as a fractional COO and replicate it.
This way, he is able to apply only what he is best at and work with a team of incredibly talented and motivated people who can handle the other aspects of the business.
That’s one example of how a COO is made!
What Can a COO Do for a Series A Startup?
What a COO can do, depends on the type of business you’re running. It also depends on what your exact requirements are when you’re looking to hire a fractional COO.
All COOs are not the same; some are more technical, some are more financial, whereas others are more growth-focused.
But most of them are sort of the ‘jack of all trades types’ (as in the case of Jack above) because, at some point in time, they were CEOs and had to learn everything crucial to keep a business afloat.
This is the main reason why COOs can do a lot of heavy-lifting for you.
Here’s what the COO can do for you:
- Process Mapping: A graphical visualization of how to get things done over a certain period of time; process mapping helps you increase business efficiency.
- Automating Tasks: COOs will use software like Zapier, Paragon, etc, to automate workflows, eliminate manual tasks (wherever possible), and save time and money.
- Hiring Teams: With a wide range of experience, a COO can help you hire for sales, customer success, account management, and more.
- Making a Business Plan: For an early-stage startup, a COO can help devise a business plan that will take them from 1 to 10 million dollars in just a couple of years.
- Budgeting: A COO can manage finances (to some extent) and assign a budget to each department to ensure the best use of funds.
And much more…
Note: Not every COO is a former CEO; some may be a VP of Operations who can help you onboard a sales and marketing team, or they may have a different unique background. So choose a COO that suits your specific needs.
Why Hire a Fractional COO Instead of a Full-Time COO?
Hiring a COO isn’t a small decision for any series A stage startup. Sure, you’ve raised money, but this doesn’t mean you can overspend.
First off, when you’re at series A stage, never go for a full-time COO but a fractional one; here’s why:
Benefits of Hiring a Fractional COO
#1. Right Hand for CEO
A fractional COO can do a lot of heavy-lifting and free up a lot of the CEO’s time for other initiatives. Apart from this, series A startups specifically hire at a rapid pace and it’s important to have someone that isn’t the CEO to oversee HR.
Being fractional, your fractional COO doesn’t have a fixed salary per year – you pay them per hour, per day, or per month instead.
#2. Helps In Growth
In any series A startup, there’s some serious growth work to be done. A fractional COO comes in handy for these exact situations and is more versatile, than say, a fractional CMO.
A COO ensures that a company’s operations are scalable and that everything is as efficient as possible or on the right track to maximum efficiency.
The head of operations often needs strategic support and guidance, and that’s where the fractional COO can come in and do some of the more strategic planning and management for your startup.
This guidance is important because it’s not uncommon for the head of operations to be less inexperienced with scaling a startup to series B and later.
Apart from this, a fractional COO will also coach and manage the team on a day-to-day basis.
Being a fractional hire, when you think they have trained your operations team enough to carry out processes independently, you can either end their contract or ramp down their hours so you can stay lean.
#3. Hiring Fractional COO is Much Cheaper and Quicker
It can be far easier and faster, especially through Shiny, to hire a fractional COO than a full-time COO.
If you’re planning to hire a full-time COO, it could take as long as a year before you find the right COO to join your executive team.
And what if, later on, you find you were wrong about your decision to hire them over another candidate?
Apart from the time, hiring a full-time COO is way more expensive, unlike a fractional COO (more on this later).
If you hire a COO fractionally, you can set up their contract quickly and start within a week instead of months or even a year.
#4. You Get to Test the COO Out
Hiring fractional means paying a COO for a certain number of hours or days per week. You can also structure a contract to have them fulfill certain responsibilities each month instead of focusing on how many hours they are working.
Everyone at some point in time needs a full-time COO, but startups hire fractionally before that time comes and to de-risk them as a full-time hire.
When you hire a COO fractionally and confirm that they’re the right fit, you then retain them for the long term or bring them on full time (if they agree, of course).
A lot of the time, startup founders realize that they actually just don’t need a full-time COO because they are usually this higher level, strategic, and management type of person.
You might need them at the start of your journey for mapping your business course, but not as much when you’re working to achieve product-market fit. Once you’re in the middle of scaling and more of an established brand, you will need them more to organize and manage growth.
How Much Does Hiring a Full-Time COO Cost vs. Fractional COO?
Hiring a full-time COO, if you go the route of an executive search firm, can cost you upwards of $40,000.
Additionally, it will take a lot longer to vet many potential COOs. This will take a lot of your time and resources and so the actual hiring cost is far more than the above figure.
Regardless of salary, hiring a fractional COO can be free through Shiny. We don’t charge companies anything for finding and hiring someone fractional through us. As well, we’ve already taken care of the vetting so you can be sure that every COO you speak with via Shiny is pre-vetted and then matched to you specifically.
This means you can either pay $40k or more to hire a full-time COO, or you can hire a fractional COO for free. But this was just the hiring part; let’s now look at the salary estimate.
According to Glassdoor, the average base salary for a COO is $158,826 per year, with an additional cash compensation (commission, bonus, stock options, etc.) of $35,615.
That means, to hire a full-time COO, you have to pay them close to $200,000 a year.
Let’s now look at how much you will have to pay to bring a fractional COO onboard.
If you’re using Shiny to hire a COO fractionally, you could fill the position in 1 to 2 weeks. Talking about the pay range, our fractional COOs typically charge anywhere in the range of $100 and $250 per hour (the average being $150 per hour).
So let’s say you hire a fractional COO for 20 hours per week. In this case, the monthly payment comes out to be $12,000, which makes it $144,000 per year. That’s $56,000 less than a full-time COO’s salary. Plus, free to find and hire.
What Qualities Should a Fractional COO Have?
The qualities of a fractional COO depends on what kind of business you run and the way in which your business operates and grows. The person who fills in the shoes of the COO has a very dynamic role that revolves a lot around the business model and your product.
Short answer: Ideally, the fractional COO you choose should preferably have been a CEO or VP of Operations at a Series A stage startup and help you get to the next stage and beyond.
Here’s the long answer.
As the founder, you need to break down what your operations look like and what you expect from a fractional COO when you bring them onboard; because every business is different.
You want to make sure that the person you’re bringing on can do all of this and is comfortable with managing all of these responsibilities, whether they’re doing it themselves or managing a team that’s doing it.
Secondary to this, maybe a fractional COO you’re interested in hasn’t done every single piece of work that you need them to do previously but talking to them, you realize that they’re able to learn and adapt quickly.
As with any hire, that’s a key component.
When interviewing fractional COOs, you might find several great candidates who can do the job well for your startup.
But the one you choose will not be with the most experience or the best price; it will be the one with the best personality fit.
It will be the one you can trust and work well with, someone you want to bring on for the long term.
#Bonus: Things a COO Must Be Able to Convey to a CEO Before Working Fractionally
We’ve talked a lot about what a CEO should look for in a COO, but here are some things that a COO should be able to convey to a CEO.
Firstly, the COO should help the founders understand what they can do for them.
The COO role, specifically to many founders, is elusive because they understand operations but don’t understand how a COO can come in and help their business tangibly.
That’s because operations is a vague term, but at the same time can be very specific depending on the business and the processes the business has to follow.
Secondly, a COO should understand what the founder expects from them.
They should ask themselves:
- What are the most important pieces for them to work on if they’re brought on board?
- What are the challenges that the founders are having that they can get their hands on and fix or improve immediately?
If a COO has the answer to both these questions, they’re the right match.
Case Study: How a Fractional COO Optimized Client Experience for Shiny
|Problem||Lack of Client experience due to bottlenecks in Shiny’s operations strategy|
|Solution||Used Shiny to hire a fractional COO|
|Result||Optimized operational efficiency and decreased response time, thus improving client experience in just 2 months|
Due to a lot of responsibilities and work to be done, our CEO was letting things slip by and the client experience was lagging because of that.
That made him realize that he needed someone immediately to take on some of the key operations, optimize the core workflow, and help him scale it.
We hired a fractional COO when we hit a breaking point with our operations. We had no one on our operations team, and our CEO was handling everything.
We used our own platform Shiny (because of course 😉), and found 5 fractional COOs that were ideal for this job. Our CEO talked to them and decided to bring one of them on board within one week.
Within another week, the fractional COO had learned everything about how the company operated and was able to handle a few of the core operational processes, taking work off the CEOs plate.
He hired a team to manage it so that it scales. Now, we have one full-time and one part-time operations manager running the operations with the fractional COO as an advisor.
We had a three-month plan to improve the Client experience and we were actually able to achieve it in just two months.
With the scalable operations strategy in place, we’re able to focus on growth and our fractional COO is ready to work further in the future on more projects for us.
It’s a no-brainer that you might want to hire a fractional COO instead of a full-time COO for your series A stage startup.
Fractional COOs give you more flexibility, can be hired in weeks, and at half the cost of a full-time COO.
Hiring a C-suite full-time is always a big decision involving time, money, stock, and risking the future of your company. So it’s an easy decision to test the waters first (hire a COO fractionally) and see if they are the right fit for you before taking an unnecessary risk.
If you’re ready for it, sign up on Shiny and tell us your requirements. We’d be happy to shortlist ideal candidates for you for free.