Moving From O to E

In the early stages of starting and running a business, entrepreneurs do it all, essentially being the chief operating officer, chief cook and chief bottle washer in their business. As the chief operating officer, the COO is responsible for managing the company’s day-to-day operations and reporting to the chief executive officer.

While that is necessary during the early stages, at some point the business will grow to a size at which the entrepreneur must focus on future growth and sustainability rather than day-to-day operations. That is the point when the entrepreneur must move from “O,” as in COO, to “E,” as in CEO.

The common phrase used is, “Work on your business, not in your business.” In moving from “O” to “E,” entrepreneurs must delegate the day-to-day activities to other employees and focus on the issues and activities that will allow the business to grow.

In Entrepreneur, small business expert Ray Silverstein writes:

The duties of the CEO are those that can’t be delegated to staff, and in fact, shouldn’t be delegated to staff, as they affect the profitability and sustainability of the business. As owner, the entrepreneur has an inherent interest in both of those; if there are other investors, the entrepreneur has a responsibility to protect their investment and maximize the return on investment.

All of this may sound reasonable, but before you can make the move from COO to CEO, how do you get your business to that point? Here are some basic actions and steps that will give your business a solid foundation from which you can launch it to the next level:

Develop an operational plan that can project and track business performance by month. This will allow you to easily oversee where the business is versus where you want it to be in terms of orders, revenues, expenses and profits.

Create job descriptions and job requirements (in terms of employee qualifications needed for the position) so that you will be able hire individuals who will not only be able to perform the job duties but also will excel at them.

Use the operational plan and the experience and knowledge of the employees to develop and document the processes and procedures the business should follow to deliver its services.

Over a period of time, delegate the day-to-day operating decisions to employees. This will give them an opportunity to accept responsibility and give you a chance to mentor them during the transition.

Compensate employees on the profitability of the business in order to create a team that has the company’s best interest in mind at all times.

The final step in moving from “O” to “E” is for you to prepare yourself for the transition.  Take some management courses. Join any CEO networks available from your local Small Business Development Center or Chamber of Commerce. Read some of the excellent books that describe how to be more effective as a CEO.

If you can make this transition in your business, it will be the most rewarding action you will have undertaken. It will enable you to move from having created yourself a job in your business that pays you a salary to building wealth in the form of equity in your business—equity that can be turned into wealth far in excess of any salary the business can pay you.

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