In the early days of running your own business, it's natural to try to do as much as possible yourself. It's the most cost-effective, comfortable, sensible way to do things in the beginning. But as your enterprise grows, you'll find yourself stretched thinner and thinner. Eventually, you'll find you just can't continue to oversee operations and sales and accounting and fulfillment and marketing--and hope to continue to grow your business.
When you reach this point, it's time to think about bringing other high-level managers on board to help you out. You need to build a senior team that's able to manage all the critical areas of your business to take it to the next level.
Building your team demands matching jobs to people's strengths. That means giving people responsibilities according to skill level, not based on how close a friend they are, or how closely related they are to you, or whether you just like their sunny personality. That includes you as well--don't give yourself an impressive title and job unless you're right for the job. The fact is, many smart entrepreneurs hire their own boss when they realize their skills lie elsewhere in the company.
When it comes time to hire an executive team, you'll need to find people to fill the following roles:
Chief Executive Officer (CEO). The fact of the matter is, the CEO is the boss of everyone and is responsible for everything. They determine the company's strategy. They hire and build the senior team. They make the final call on how resources (read: money) get divvied up, and they're the one whose face appears on the cover of BusinessWeek--whether that's in front of a grand jury on ethics charges or in front of a 3,000-foot yacht, wildly successful, and richer than a Betty Crocker, triple-chocolate fudge cake.
The CEO's skills must include strategic thinking, the ability to rise above the daily details and decide where the industry and business are headed. They must then be able to decide the company's best route for navigating the future market conditions. They have to be able to make good bets.
The CEO's key skill, however, is in hiring and firing. The right management team can cover a CEO's shortcomings. A CEO may be able to set strategy, predict the future and control the budget, but if they don't hire the right team, they have to master it all themselves. So they need to be able to identify and hire the best, fire the ones who don't work out, and run the show in between.
You know you need a professional CEO when you're mired in the details for way too long and can't pull yourself out. CEOs think about where the organization is going, the people and processes needed to get there, and how they'll work in the current market. If you like details rather than strategy, either shift your thinking or hire a CEO to do the job for you.
Chief Operating Officer (COO). A COO handles a company's complex operational details. Think about UPS moving three billion packages in the two weeks before Christmas: The company's COO insures the business can deliver day after day. He figures out just what needs to be measured so he can tell if things are going well. Then his team creates the systems to track the measurements and takes action when the company isn't delivering.
In a one-location retail business, the store manager is effectively the COO. When you expand to multiple locations or when ensuring smooth operations becomes a big part of your business, it's time to hire someone who revels in measurements, operations and details.
President. No one knows just what a president does. I've asked dozens of executives, and everyone's answer is different. Some say a president oversees staff functions--human resources, finance and strategy--while the COO oversees daily operations. Others proclaim that the president is a synonym for COO, especially in smaller companies. Yet sometimes, the president fills gaps left by the COO and CEO. Or sometimes, the title goes to someone you want at the strategy table but who doesn't have an obvious C-level title. In any case, you should think long and hard about whether you need someone to fill this title, or if your company is fully covered with a CEO and COO.
Chief Financial Officer (CFO). Plain and simple, your CFO handles the money. They create budgets and financing strategies. They figure out if it's better for your business to lease or buy. Then they build the control systems that monitor your company's financial health. The CFO is the "bad guy" who won't let you buy that really cool videoconferencing equipment and makes you pay down a commercial loan instead. While you mope about it in your office, the CFO will be busy figuring out which customers, business lines and products are profitable, so next year you can afford the really cool videoconferencing equipment.
Believe me, you'll know when you need a CFO. Do you lie awake at night dreaming about numbers? No? Then you need to bring someone on board who does. You want a person whose dream birthday gift is a calculator and a blank book of ledger paper. Money is your business's blood, and in entrepreneurship, cash flow is everything. You don't know the difference between cash flow and profit? Run--don't walk--to the nearest phone and go find yourself a CFO.
Chief Marketing Officer (CMO). Recently, companies have been bringing in a marketing expert at the C-level rather than as just a vice president. The reason is simple: Many current business battles are battles of marketing, so corporate strategy often hinges on marketing strategy. The CMO owns the marketing strategy--and that often includes the sales strategy--and oversees its implementation. The CMO will know (or learn) your industry inside out and helps you position your product, differentiate it from your competitors' products, enlist distributors, and make sure customers learn to crave your product.
If your business's success depends mainly on marketing, you need a CMO. That might be you--but only if you have time to keep up with competitors, oversee the marketing implementation, and still do the rest of your job--and do it well. Otherwise, you need to look for the person with the sunny disposition, Blackberry in hand, keeping up on what's hot and what's not.
Chief Technology Officer (CTO). I'm a techie from way back, so I'm pretty opinionated about CTOs: Many of them just don't belong in the C-suite. A CTO should keep up with technology trends, integrate those trends into the company's strategy, and make sure the company keeps current when it's necessary. They should not be buying new toys and leading-edge technology just because it's the latest, greatest thing out there.
You need a CTO if technology impacts your business or industry strategically. (If you're in tech yourself, or your industry relies heavily on technology, that means you.)
Here's a quick test to find out if your CTO can link technology and strategy: Ask your CTO how a company's chosen programming language choice affects strategy. If the answer sounds more sophisticated than "It makes it easier to find programmers," your CTO just might know how to think strategically.