{"id":708,"date":"2019-06-18T16:35:09","date_gmt":"2019-06-18T16:35:09","guid":{"rendered":"https:\/\/thejuntoinstitute.com\/shop\/?p=708"},"modified":"2021-07-28T21:28:44","modified_gmt":"2021-07-28T21:28:44","slug":"the-5-million-question-when-does-a-growing-company-need-to-hire-a-new-ceo-or-coo","status":"publish","type":"post","link":"https:\/\/thejuntoinstitute.com\/shop\/the-5-million-question-when-does-a-growing-company-need-to-hire-a-new-ceo-or-coo\/","title":{"rendered":"The $5 Million Question: When Does a Growing Company Need to Hire a New CEO or COO?"},"content":{"rendered":"[vc_row type=”in_container” full_screen_row_position=”middle” column_margin=”default” column_direction=”default” column_direction_tablet=”default” column_direction_phone=”default” scene_position=”center” text_color=”dark” text_align=”left” row_border_radius=”none” row_border_radius_applies=”bg” overlay_strength=”0.3″ gradient_direction=”left_to_right” shape_divider_position=”bottom” bg_image_animation=”none”][vc_column column_padding=”no-extra-padding” column_padding_tablet=”inherit” column_padding_phone=”inherit” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_shadow=”none” column_border_radius=”none” column_link_target=”_self” gradient_direction=”left_to_right” overlay_strength=”0.3″ width=”1\/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” column_border_width=”none” column_border_style=”solid” bg_image_animation=”none”][vc_column_text]\n
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A few years ago,\u00a0I discovered\u00a0an important pattern for us at Junto: companies\u00a0that passed the $5 million revenue mark had a need for an experienced CEO or COO to help run the company.<\/p>\n

Out of 26 total member companies, eight of them either had $5 million in revenue when they joined Junto, or surpassed that point\u00a0after joining. Four of those have\u00a0hired a seasoned CEO or COO\u00a0(who, in some cases, didn’t work out). And based on my intimate knowledge of the remaining four, I believe that each has a need for deep experience on their leadership team (as I do for\u00a0a ninth company that is approaching the $5 million mark).<\/p>\n

Of\u00a0those that did hire an outside executive, none were forced to by their investors, so it was an intentional choice by the founder(s). And of the other four that, in my opinion, could use seasoned leadership, three have a fair number of investors. They’re all performing well as businesses and, as far as I know, aren’t being asked by the investors or board members to bring in experienced C-level talent.<\/p>\n

There are two reasons I call all of this an “important” pattern for us, and why it\u00a0can benefit other growth-stage companies.<\/p>\n

What Got You Here Won’t Get You There<\/h5>\n

First, it\u00a0provides additional\u00a0and encouraging (yet limited) support of a hypothesis\u00a0we had when Junto was designed: that many companies outgrow the capabilities of first-time founders. But\u00a0because founder-led companies are believed to\u00a0outperform\u00a0others, it’s in the best interests of the business if\u00a0the founders can\u00a0grow and develop into effective leaders rather than bring in executives\u00a0to run the company.\u00a0Therefore, we further hypothesized that if there was a way to accelerate that growth, it could help keep the founders in place to produce higher performance (that one continues to be validated based on anecdotal feedback, survival rates, and financial results of the companies).<\/p>\n

Change Takes Time<\/h5>\n

Second, it helps us better understand and serve our market which we partly\u00a0identify as companies from $1 million to $25 million in revenue. Based on\u00a0my prior experience, as well as many conversations\u00a0with seasoned entrepreneurs and investors, the $10 million revenue mark (give or take a few based on industry, market, growth rate, etc.) is often when companies bring in\u00a0“professional management” to run the\u00a0business.<\/p>\n

Because it obviously takes a while for a company to begin thinking about hiring an outside CEO or COO, engage the recruitment and selection process, onboard and integrate the executive, and begin seeing results, perhaps it’s in the best interests of the company to start this process well before it gets to $10 million.<\/p>\n

If that’s the case, then we can bring up this experience and belief at the $5 million mark so that the company is in better position if and when it approaches $10 million. And while our data is not scientifically sound nor is the conclusion based on research (but rather on intimate knowledge and long-term observation), it’s a pattern worth sharing with companies that grow into the mid-seven digit range so that they are aware of what might occur.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n[\/vc_column_text][\/vc_column][\/vc_row]\n","protected":false},"excerpt":{"rendered":"

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