One myth about entrepreneurs is that they are good at starting things, but not as good at managing businesses once they start to grow.
While I generally believe that this is a myth, there are situations when the founding entrepreneur may not be the person to manage the business over the long term.
Whether it is because running a business can take a toll on you over time, or simply that you want to pursue the “next big thing,” some entrepreneurs eventually may look to hire their potential replacement.
There are other situations where entrepreneurs recognize that they are actually happier working in the business rather than on the business. Seymour Cray, the legendary “father of supercomputing” and founder of the company that bears his name, left the CEO position of his company to go back to what he loved most – research and development of faster and more powerful supercomputers. He left the running of his company to professional managers.
No matter what the circumstances, entrepreneurs who are ready to begin the process of transitioning out of running the business day-to-day should follow a planned process:
- Assess the resume. Develop a job description for the CEO role in your business. The job description may include all of the thinks you currently do running your business plus some things you know you should be doing. Use your contacts to identify possible candidates for the job and use the demands of the job description to assess the resumes of potential candidates.
- Assess the fit. One you have identified some qualified candidates, spend time with the strongest candidates to determine if they will fit in the business you have built. Do they share your core values? Will they fit in the culture you have built? Do they have a philosophy and style that meshes with the approach you have taken in the business? It is best to assess their potential fit over several conversations.
- Negotiate terms. Once you have picked the person with a strong resume and who demonstrates the best fit with your business it is time to negotiate. Beyond negotiating pay, you need to agree to a clear plan to transfer equity and control over time. Make sure that your attorney and accountant have reviewed any equity plan before it is finalized.
- Stick to the plan. Handing over control should be a gradual process with many checkpoints and opportunities to terminate the transition if it is not working out as hoped for. If it is not working out, be ready to go back to step one in the process and start over with a new person.
- Let them take control. As you begin to hand over control, seasoned employees may still try to come directly to you. Reinforce the authority you have passed along to your successor and send them back to him or her.
Once you have completed the transition you will likely stay on in some sort of Board role where you can keep an eye on things. But, once the transition is complete, don’t look back. It is now your successor’s job to run the business.