Are You Still the Right Person to Lead Your Business?
How long should you — the person who founded your business — continue to lead it?
It’s a tough question, and the answer varies wildly. But there comes a time when every entrepreneur must consider stepping aside for the good of the company.
Here’s the thing: You started your business because you saw a customer need that no one else was fulfilling. Sales took off because your instincts proved to be right. But there’s a quantum leap between getting a small business off the ground and engaging in the long-term, labor-intensive task of building a company. Making the transition to CEO may prove extremely difficult for “an innovator with a great idea.”
This has nothing to do with how smart or driven you are. The leadership traits and abilities required for the next phase of growth are completely different than those needed to launch a startup.
Here are some signs that it may be time for a change:
1. Your passion is blinding. It takes heart to transform an idea into a thriving business, but passion can also prevent small-business owners from seeing new opportunities. Competitors emerge. Market conditions change. If, in the face of these challenges, entrepreneurs cling to their original business plan (because it got them where they are today), their enterprises will suffer.
2. You think managing people is a grind. Entrepreneurs aren’t motivated to succeed in order to manage other people. After a business begins to grow and take on employees, the founder must acquire new skills. For many, the ability to delegate operational tasks — after doing everything themselves for so long — is extremely difficult. Others veer off in the opposite direction, micromanaging the people who work for them and leaving themselves no time to think about the future of the business.
3. You don’t want to make tough choices. As a small business matures, it often becomes necessary to adapt to new customer demands or innovations in technology. Not every owner feels confident enough to make the right decisions (to diversify or not diversify, to purchase the latest communications upgrade or hold steady, etc.). That lack of confidence can cripple growth.
4. You’re unsure where to go from here. The vision that propelled your small business to early success can’t be set in stone. As circumstances change, the company may need to adopt a different long-term strategy. "Maybe the original product launched and was successful, but the CEO doesn’t have the insight to know where it goes from here," says Maynard Webb, founder of Web Investment Network, "or maybe the idea wasn’t successful and the CEO hasn’t been able to come up with a compelling pivot." The founder of a business may be too wedded to his or her original idea to devise a future plan for the business.
5. You lack specialized knowledge. Another byproduct of success is the need to hire people for increasingly specialized positions. There’s no way a small-business owner can keep pace with everything his or her employees know. This gap in knowledge often affects the owner’s ability to manage others, not to mention makes him or her feel ill-equipped to oversee new developments.
So when is the right time to step aside and hire a qualified replacement?
It’s one of the most difficult and important decisions a small-business owner will make. It requires being honest enough to acknowledge one’s limitations and to admit that running the business is nowhere as much fun as starting it was.
You may know in your gut when the moment eventually arrives and it’s time to leave. But it’s something you should be thinking about today.
"If you’re thinking about selling your business, whether it’s this year or many years down the road ... developing a sound exit plan can help you minimize the surprises and difficulties that a sales transaction can bring," notes Kathleen Richardson-Mauro, President of Florida’s Business Connection. "Owners should start thinking about their exit plan early in the life of a business and develop a strategy that will help them achieve their financial and personal goals … both short and long-term."
Lee Polevoi is an award-winning business writer specializing in the challenges and opportunities facing small business. He is former Senior Writer at Vistage International, a global membership organization of CEOs.