Should the Founder Run the Grown Up Business?
There is no doubt that there's a small handful of people who have what it takes to create a business from nothing but a dream. A significant portion of a business’ initial success is directly tied to the skill set, relentless drive, and vision of the company’s founder.
The good news is that a business grows at the hands of the founder... and the bad news is that the business grows at the hands of the founder!
The more your business grows, the more you need new and different skill sets to fill in the gaps and provide the support your business needs to thrive; the more you needed infrastructure!
I worked with a 10-year-old company for a while in their CFO role. Their founder was truly a visionary, and the company was doing incredible things. In fact – it achieved almost every one of its founders original objectives! But things were starting to fall off the rails.
The founder had done a tremendous job building the company; he was inspirational, rallied the team like no one I’d ever seen, and had the kind of "roll-up-your-sleeves" mentality that propelled the company to a position of international leadership while steadily expanding its strategic vision.
He was great at a lot of things, but what he wasn’t so great at was making money. In his effort to further the mission, he was giving away the company’s services for free. He didn’t have the systems, processes, or infrastructure in place to scale the business, retain talent, and drive profitable revenue.
In this particular case, the founder’s skill set simply wasn’t the skill that would take the business to the next level. What got him here wasn’t going to get him there.
There’s a certain point in every business where it shifts from being the founder’s baby to a grown up business entity.
This transition can often require things that founders hate to do, or things they don’t know how to do.
If you are here, and want your business to get through these growing pains, it may be time to bring in the skill sets to do those things for you. Rigidity, routine, and repetition aren’t the things of a start-up, but they are the fuel for growth. It’s time!
The Culture Clash
Typically, the things that founders hate to do and don’t know how to do involve processes, systems, and infrastructure. So you need to hire process-driven team members to take your business to the next level.
But sometimes, there’s a bit of a culture clash. The “startup” culture and the “process-driven” culture don’t always mix well. As an additional complexity, bringing these people in and letting go of control isn’t easy. You’ve raised this child from birth, and you need to hire professionals who are sensitive and emotionally intelligent enough to constructively implement the necessary changes.
For example, you might need to hire a CFO to take control of the corporate finances, an office manager to implement more structure in the office, and an IT person to set up a systems infrastructure.
These tasks aren’t things that fire up your imagination, but they don’t need to be! They need to ignite the strengths of the team members responsible. They fill in the blanks and round out your team in a way that channels success for “the next steps”. These are the skill sets that can grow your business profitably.
You Don’t Need to Leave; You Just Need to Let Go
A recent study, which examined 6,130 startups from 2005 to 2012, found that a startup’s valuation fell by an average of 17.1% to 22% when the founder stayed on as chief executive or chairman after the first two years.
Now, before you start thinking that your company is doomed to fail if you stay in charge, don’t worry. You don’t need to leave your business for it to grow. You just need to let go of the things you likely don’t want to do anyway – but that are absolutely necessary.
This is freeing! You can and should focus on the things you’re best at, whether it’s strategy, marketing, business development, art, or science. You are a creator; delegate the rest and make room for the people you hire to do their jobs. That’s called leverage. And that’s called scaling.
Now, despite all of this, I have worked with founders who defy logic, and are actually just as well equipped to grow their businesses as they were to found them! They may have the skills, but the truth is they often don’t love executing on those skills.
You’re a grown up company now, and you don’t have to love everything – you have to love putting together the TEAM that loves everything that needs to get done. Take this as a wonderful opportunity to be honest with yourself and let go of the areas that fall outside your zone of genius.
If you’re faced with this, it’s a quality problem to have! Congratulations! If your organization's needs have outgrown your skills and interests, it’s only because you’ve made it so. Good on you!
I’ll leave you with a story about Derek Sivers. Derek is an entrepreneur and the founder of CD Baby. From day one, he said he’d never sell his company and he’d see things through to the end. Companies offered to buy him out multiple times, and he always declined.
But then one day, he took a look around at his business and realized he just wasn’t excited about it anymore. There was still a lot to be done to take his company to the next level, but they weren’t tasks he particularly wanted to do. He started feeling stuck in his business instead of inspired by it. That’s when he realized he was doing both himself and his company a disservice by staying. So he sold.
People often ask Derek, “How do you know when it’s time to sell?” Like he says, you’ll just know.
Whether you decide to stay or go, embrace the changes in your organization. As founder, decide what you are good at and like to do, then pick the best people to support your company’s growth. You deserve that!
Author, Virtual CFO, and Finance Coach
"Your First CFO: The Accounting Cure for Small Business Owners" on AMAZON