When Entrepreneurs Should Hand the Reins Over to a CEO

Entrepreneurship is about a good idea and persistence, right? Maybe at first, but when entrepreneurship makes place for the reality of running a business, the focus and requirements change. It’s not uncommon when an individual or a small group gets fired up by an idea, spends all hours of the day of getting from a basic idea to a proof of concept to a product launch. The process is more a result of sheer willpower, sweat and tears, and, in most cases, personal savings and favors from friends and family, than it is because it made sense business-wise.

Entrepreneurs CEO
Shutterstock Licensed Photo – By Branislav Nenin

That’s why most entrepreneur’s momentum stagnates when they have a product in their hands. This is what people talk about when they discuss the transition from start-up to scale-up. For entrepreneurs, this seems to be the least exciting period for growing their business with many minutiae coming to the fore. And as tiresome as it might seem for some, it will be a difference between a company having a long-term future or a business fading in obscurity. This is about the right time to hire an operations manager or CEO to take on the helm with the original founders either making the transitions to more business-critical roles or take their stake in the company as a non-executive.

Fledgling companies going from start-ups to scale-ups can no longer count on favors from family or friends, or that garage and attic you could use. There is a whole list of things to think about, arrange and pay for when you grow your company.

And before you, as a true entrepreneur, jump to the common “I don’t want to give away control” mindset, take a minute to consider what you will be facing. Think of the growing group of employees you will employ and that you will seriously need to think about employee benefits. These people will need office space and facilities to do their work. With more space and more utilities, there will be permits and licenses involved to make sure you can run your business. In terms of utilities, you not only have the hardware to think of (tables, chairs, computers) you will also need software. Especially software critical to operations, such as enterprise resource planning (ERP) software, does not come cheap. You will be surprised how tricky it is to make sure you get a deal on leading ERP software such as NetSuite. Read more about how to reduce NetSuite costs with this guide.

Once you have made room for your core personnel that has their hands on your product, hired them and provided with tools to do their work with, you will have to think about all the other things that are in the periphery of running a business. Think of insurance, staff functions, money management, payroll and, especially at growing personnel numbers, parking spaces.

There are very few entrepreneurs who will go from start-up to scale-up doing the same thing. As the requirements of a business change, so does the ideal make-up of its leadership. In most cases, the entrepreneurial spirit is best suited for what it’s meant for: starting something new.