It's often difficult for an entrepreneur to know the right time to hand over the reins of their company.
There's certainly no shortage of company founders who claim to have been unfairly ousted from the role of CEO of their own company by their investors. However, a transition in the role of the company founder does not have to end in tears, many entrepreneurs successfully manage a change in leadership, both for themselves and their businesses.
Very few people combine the qualities needed to lead a business throughout its lifecycle. Entrepreneurs who thrive on the excitement, pace and unpredictability of launching a business soon become bored and disenchanted with a business that’s grown-up.
Signs that an exit/handover could be the right thing:
Boredom is a classic sign of a need for change. A bored entrepreneur is a dangerous beast, inclined to meddle in things that are working perfectly well and usually better understood by the people responsible for them. Employees will tell you off the record that the business works better when the boss is not around.
No longer understanding the business at a granular level is another sign that it is time to change. In the early days, the entrepreneur holds the business in the palm of their hand. As it grows, this becomes increasingly difficult. Those who remain obsessively involved in the detail can delay decision-making, alienate the management team and ultimately, prevent the business from growing.
Change is also needed when the CEO role is stifling an entrepreneur’s talents. If someone is really good at envisaging the future and solving problems creatively, those are the things they should be spending their time doing.
If you decide a change a needed, what happens next?
- Recruiting the right successor is crucial - Those who have stood down as CEO to become chairman of the company they started will tell you that recruiting the right successor is crucial. Given what is at stake, it should be professionally managed, based on a carefully-crafted job description and may take many months of painstaking interviewing to complete. Even those who approach it in this spirit admit to making mistakes.
- Managing your own expectations - When the appointment is filled, the entrepreneur needs to manage their own expectations accordingly – and either back or sack their successor – with the need to adapt to your new role another key element in the transition process.
- Opening a new and rewarding chapter - For those founders who feel the need for change, stepping up to chairman is not the only option. However, for many, it makes sense and opens a new and rewarding chapter in their business career. Taking a step back could be the best thing you ever do for you and your business.
The Business Growth Programme (BGP) has been working with businesses that are planning for succession for over 30 years. Whether it is family succession, a newly appointed CEO or the whole senior team that have joined us, we have been able to assist with the development of a robust business growth plan. Find out more.