It seems timing is always crucial with a startup, whether it is bringing your product to the marketplace or planning a new business launch at just the right time to attract a group of investors. But there’s another matter of timing that is just as crucial: how do you know when it’s time to expand leadership and bring on a new management team?
There are a lot of reasons entrepreneurs may be hesitant about expanding, or even completely overhauling, their company’s leadership team. They often feel uncertain about finding people they can trust with their company’s future after putting so much time and resources into getting it off the ground. But as a new venture begins gaining a solid foothold in the marketplace, it requires different leadership approaches and capabilities than were required when the company was first established.
Founding CEOs often have difficulty recognizing that their talents are best suited for incubating ideas and launching companies. Acknowledging that it is time to loosen a grip on the reins and transition to new leadership can be challenging. But this self-analysis is essential if a young company is to create maximum value for investors and shareholders.
Bringing on new people too early can be just as costly of a mistake as waiting too long. While not a perfect science, there are signs that it is time to bring on new executives who are better suited for steering the ship as it navigates new waters. Here are three signs your company is ready to expand its leadership:
Sign #1- There is clear need for new expertise.
Few founders have the skills and talents to lead their companies into maturity. There is a reason it is so unusual for a company to go public under the guiding hand of a founding CEO. Entrepreneurs and the small group of executives they surround themselves with when getting a business off the ground, are very unlikely to be the same team that can take the company to the next stages. A new CEO will augment what the existing startup team has done, but more importantly, have the skill and knowledge to lead the company into future growth opportunities. A new, highly skilled management team will bring the marketing, sales and operational experience and expertise necessary for the company to thrive.
Sign #2 – Current leadership becomes less focused on the here and now.
Start-up CEOs and their teams tend to be big-picture people. They get excited over the prospect of turning an idea into reality. For these visionaries, the end game has already been reached once the company is off the ground. For that reason, their attention tends to become less sharply focused when it comes to the daily grind of operating the company and guiding it into maturity. Instead, you will find that the excited talk that was once a hallmark of meetings begins to take on new flavor. Ideas for the “next great thing” begin to seep into discussions that should be focused on driving the current business. Difficult as it may be, most of these executives will need to be replaced with quality people who are excited about growth potential for the existing entity. A disjointed management team could put the company’s future in jeopardy. Allow start-up executives to move on to incubating the next great idea.
3. The company’s needs are becoming too varied and overwhelming.
Most startup CEOs understand they will need to wear many hats when it comes to their fledgling companies. This situation works just fine as a young company is getting off the ground. However, as scaling up occurs, many founding CEOs find themselves increasingly pulled in multiple directions, forced to make day-to-day decisions outside their area of expertise. Being a jack of all trades is not a business growth strategy. Founding CEOs that find their time stretched with mundane, yet necessary, operational tasks need to realize it’s time to step back and hire people who are skilled at specific management tasks–or better yet, hire new leadership who are best-suited for putting these managers into place.
Change for any company, and at any stage, can be difficult. However, if a company is to survive and expand in a competitive marketplace, it needs the right type of expertise driving it. The entrepreneurial spirit is something not everyone possesses. While it is to be prized, it also needs to be channeled toward turning ideas into opportunities and opportunities into startups. Just as not every employee is the right fit for every job, not every entrepreneur is cut out for the daily grind of heading up a growing company. As a business evolves, its management team needs to evolve along with it. Thinking about starting your executive search? Let us help! Contact us!