What Is the Difference Between a CFO, a CEO and a COO?

As your business grows, managing your operations and finances can become increasingly complex. That’s where executive roles come in to help.

Also referred to as the C-suite, roles like the CEO, CFO and COO all provide leadership and guidance within a company, keeping everything running smoothly and profitably.

If you’re running a startup or a growing small business, you may be wondering if (and when) you should bring these executive roles onto your team.

Even if you’re not ready to hire full-time executives yet, understanding the difference between a CEO, COO and CFO can help you decide which type of support you might need, whether full-time or fractional.

Let’s dive deeper to understand how these roles differ, as well as how they work together to help businesses scale and grow successfully.

What Is a CEO?

The chief executive officer (CEO) is the highest-ranking executive in a company or other organization. This role often serves as the public face of the company and is responsible for decisions that determine the organization’s strategic direction.

The CEO of a company may be its founder, owner or a hired full-time or fractional executive. When hired externally, the CEO typically works closely with the founder or owner to make strategic decisions.

While there’s no single way to become a CEO, most have had years of hands-on business and leadership experience. Many also have an advanced degree, such as an MBA.

The CEO’s Roles and Responsibilities

A CEO is responsible for the whole business, honing its strategy, goals and future direction. Their roles and responsibilities include:

• Overseeing a company’s performance and direction
• Leading, guiding and collaborating with other executives
• Developing long-term strategies and working with other members of the C-suite to implement them
• Making decisions on company policies, partnerships and investments
• Communicating with shareholders and board members about strategies and performance
• Acting as the face of the company by attending conferences and other public-facing events
• Ensuring the overall success of the company

What Is a COO?

The chief operating officer (COO) is responsible for their company’s day-to-day operations and activities. Often, they are the second in command, after the CEO.

The COO role focuses on balancing the CEO’s vision with productivity and operational consistency, turning plans and strategies into real results while ensuring the company is running smoothly.

There’s no single path to becoming a COO, but most follow a route that combines a solid educational background, such as a business degree and an MBA, with significant experience in management, operations and, in some cases, industry-specific or technical roles.

The COO’s Roles and Responsibilities

Depending on the company’s structure, the COO’s responsibilities may vary. In general, this role acts to connect the high-level strategy produced by the CEO with the hands-on operations of different departments. Their responsibilities include:

• Overseeing the day-to-day operations of the company
• Working closely with the CEO and CFO to implement business and financial strategies
• Managing and optimizing workflow
• Ensuring teams comply with established procedures and policies
• Monitoring performance and productivity across departments
• Crafting actionable, achievable plans for all teams

What Is a CFO?

The chief financial officer (CFO) is the highest-ranking financial executive. They are responsible for managing a company’s financial strategy and ensuring its financial health.

A CFO not only tracks past and current financial performance but also looks ahead to anticipate challenges and identify opportunities. This person ensures that the business has the financial resources needed to grow sustainably.

A CFO works with the CEO to fine-tune financial strategies, balancing the company’s earnings and expenses to make smarter future decisions.

The CFO’s Roles and Responsibilities

A CFO plays an important role in a company, making data-driven decisions that help support long-term success. Their responsibilities include:

• Developing and executing financial strategies that drive sustainable growth
• Overseeing all accounting, budgeting, financial reporting and forecasting tasks
• Managing the company’s finance team
• Communicating with external partners and investors
• Meeting with other executives to discuss financial strategies
• Ensuring company-wide compliance with internal and external financial procedures
• Identifying cost-saving opportunities and balancing cash flow
• Overseeing and managing tax reporting and auditing

Does My Company Need C-Suite Executives?

There’s no exact right time to hire these roles, and not every company has or needs a full C-suite. Whether or not you need executives will largely depend on your company’s structure, financial situation and growth strategy.

Many startup and small business owners assume that executives are only for large, international corporations. However, as your business grows, you may find yourself in need of strategic leadership and decision-making across your operations.

Here are some signs it might be time to bring an executive onto your team:

• You lack experience in business, finance or strategy
• You want to scale but lack the time and resources to do so
• Your company has recently grown and needs dedicated leadership in a specific area of your operations
• You want to put more focus on improving a specific area of your business
• You’re looking to attract investors and want to present a strong public face

Why Fractional Executives Work for Startups and Small Businesses

There’s a reason most startups and small businesses don’t have a full team of in-house C-suite executives: their experience and knowledge can be prohibitively expensive.

As of 2024, these roles make a median annual salary of:

• CEO: $754,713
• COO: $457,468
• CFO: $363,559

If you’re running a startup or a small to medium-sized business with tight cash flow, these numbers may far exceed your available budget.

That’s where fractional executives can help.

A fractional CFO, for example, provides the same high-quality strategic expertise as an in-house CFO, but on a part-time or project-by-project basis.

This allows businesses of all sizes to access strategic insights on budgeting, cash flow management, financial forecasting, tax planning and more. You’ll receive reliable support to meet the needs of your organization, all at a fraction of the cost of a full-time hire.

If you’re interested in learning more about how a fractional CFO can help your business reach its goals, get in touch with Finvisor today and let our experts help you navigate all the complexities of your financial strategy.