by Justin Grensing, Esq., MBA
Entrepreneurs are typically very passionate about the companies they found. Some even take on a quasi-parental mentality. This is understandable. After all, many of these entrepreneurs pour their life savings and countless hours of work into getting their businesses off the ground.
But the skills that make a good entrepreneur are not always the same skills that help guide an established company. As Abhinav Asthana explains in an article for Forbes, “The mission of a startup is to search for a business model, while the goal of a company is to execute that business model. Understanding this difference—search vs. execution—is critical to the success of a startup.” At some point, many businesses start to consider transitioning operational control of a company from the founder to a new CEO. Here are some key tips to keep in mind when working through this transition.
Establish and Maintain Close Relationships Between Founder, CEO and Leadership Team
In an article for Harvard Business Review, Suren Dutia tells us that the “ideal handover period should be approximately two weeks. Depending on the complexity of the transition, a longer time may be required, but the handover period should not exceed thirty days.” At the same time, Dutia says it’s essential to maintain close relationships between the founder and the new CEO as well as the other members of the leadership team. This helps build chemistry as well as make the process of knowledge transfer more efficient.
Be Clear on the Strategy Going Forward
There are many paths a start-up can take after it passes the initial phase of business development. The company should have a roadmap for the next several phases of its growth, and the new CEO should be someone whose skills complement those of the remaining leadership team such that they collectively have what it takes to get to those next levels.
Embrace Change
It can be difficult for the founder of a company to see someone else at the helm calling the shots and possibly taking the company in a different direction than the founder would have. Additionally, other members of the leadership team who are staying on and may have come on board at the beginning or shortly after might chafe at seeing their influence diminished and changes to how things have always been done. It’s important to agree at the outset that the person being chosen to run the company in its next phase of growth is being chosen for a reason and the old guard needs to respect their decision-making, even if that means seemingly radical adjustments.
It can also be difficult for an entrepreneur to turn over the reigns of a start-up that has finally gotten its feet underneath it, but that transition is often in the best interests of the organization. And for many entrepreneurs, turning day-to-day operations over to someone else frees them to embark on their next venture.
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Tags: clear strategy, Entrepreneur, entrepreneurs, growing your business, M&A, selling your business, starting a business