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How to Know When to Hand Your Business off to a CEO

Posted by Neha De

April 2, 2020

You identified a pain point, came up with a solution and started a company. Then you raised money and hired a team. The company has grown. But you know your business is capable of so much more than you alone can achieve. So, to take it to the next level, it may be time for you to take the gut-wrenching decision of giving up management control to an outside CEO, while still keeping yourself involved as a strategic captain. A professional CEO can handle the business aspects of your company, giving you the chance to pursue other interests within or even outside the company.

A 2015 study done by Gallup of 143 US executives found that companies run by CEOs who pass on authority grow faster, earn higher revenues and create more jobs at a faster rate than those run solely by founders. If you are considering hiring a CEO for your organization, here are some signs that your business is actually in need of one.

You Don’t Have Time for Operational Tasks

Your job as CEO is to make sure deadlines are met, customer concerns are addressed and your team is inspired and motivated at all times. Essentially, it is your responsibility to ensure day-to-day operations run seamlessly. But if you are constantly exasperated over how much you have to do and cannot confidently take credit for your team’s motivation, then the most logical thing to do is to seek help.

“Founderitis” Is Keeping You from Having an Open Mind

Many founders are convinced that only they can lead their startups to success. New ventures are born out of love and passion, and founders often become emotionally attached to them — some even go as far as referring to the business as their “baby.”

As the founder, you feel like only you understand best what the company needs — and that’s fine because you really do know a lot. However, if you find yourself shooting down ideas without proper justification, providing business solutions based on personal biases or making decisions based on misjudgment rather than data, it is time to surrender your power.

You Lack Business/Management Experience

As a founder, while you may have great ideas, you might not necessarily have the experience or the expertise to put those ideas into action. A CEO with business acumen can help your company implement decisions and develop new ideas.

Your Company Needs a Clear Leader

If your employees seem confused about the company’s goals or operations, your firm may benefit from hiring a qualified CEO — someone who can set up company-wide goals and make them known, guide employees at all levels of the organization and serve as the leader of your company.

You Want to Encourage Growth

Sometimes a founder focuses so strongly on keeping the company running that they’re unable to spend enough time innovating. A lack of innovation can lead to inaction, which can create a serious problem for the business. By hiring a CEO who will ensure your company stays profitable, you can spend more time developing ideas and growing your business.

You Need to Have a Focal Point

As an entrepreneur, you juggle multiple roles that can often pull you away from favorable business activities. If you are a founder who wants to focus on one aspect of the business, such as operations, marketing or production, it might be worth it to hire a CEO to manage all the other critical areas of your business.

Your Company’s Growth Has Plateaued

It’s common for a growing company to suddenly reach the state of little or no change. This may be the result of a CEO who is more interested in building a great product for existing customers than in scaling the brand and acquiring new customers. If that is the case, you owe it to yourself — and to everyone else in your company — to take leadership of the development team and get a CEO in place who can handle the strategic side.

Entrepreneurs wake up every day willing to risk it all. While others are contemplating how to handle today, business owners are thinking about where their industry is headed — and what they can do now to put themselves in a position of leverage later.

Finding out that they are not as critical to the long-term success of their company as they once were can be a tough realization for most founders. But it is also a sign of ethical management. Being pragmatic and respectful enough to know when it is time to move on and let others with the right skill set and disposition run the company is a sign of long-term confidence.


Neha De
Neha De

Neha De is a writer and editor with more than 13 years of experience. She has worked on a variety of genres and platforms, including books, magazine articles, blog posts and website copy. She is passionate about producing clear and concise content that is engaging and informative. In her spare time, Neha enjoys dancing, running and spending time with her family.

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