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Based on Noam Wasserman’s The Founder’s Dilemma, 4 out of 5 entrepreneurs step down as CEO, either because they found they weren’t fit for the role or because investors ousted them from the company. This adds up to the notion that entrepreneurs rarely make good CEOs.
Nevertheless, a recent study showed that corporations with founder-CEOs were valued (*3*)10% higher during IPO. There is a premium related to having the founder as the top executive when an organization goes public.
Successful entrepreneur-CEOs, corresponding to Jeff Bezos of Amazon and Larry Ellison of Oracle, led their corporations to massive growth before stepping down as chief leaders. I began my entrepreneurial journey at a young age and eventually established Admitad in 2009, which has since grown to change into one among the world’s largest partner marketing networks, consistently reaching over 500 million customers globally every month. After years of growing the company and acquiring several businesses, we decided to consolidate all entities under the wing of a latest parent company, Mitgo, where I currently function the CEO and remain the sole owner.
Listed here are my three key lessons for the transition:
1. Know when to evolve as an entrepreneur
Entrepreneurs and CEOs have distinct roles. Entrepreneurs are visionaries who create and transform groundbreaking ideas into successful, viable businesses. CEOs, on the other hand, execute the vision and construct the infrastructure for the business to succeed, scale and adapt.
While many entrepreneurs can successfully grow their businesses, they often struggle to move beyond the entrepreneurial level of sustainability. To achieve a bigger scale, a startup needs a CEO. Embracing this natural evolution is important for achieving true success.
To me, the realization got here once I noticed a decline in our business’s growth. We wanted to transition to one other stage of development and implement a management system.
Recognizing the need for change and having the courage to take motion are vital facets of leadership. To change into a CEO, you need to develop strengths in structure, organization, and delegation. It is a cognitive, proactive and deliberate process. It requires learning latest skills, adopting latest systems, and trusting others to make critical decisions.
Related: Here Are the Key Traits of a Top-Tier People Leader
2. Nurture leaders inside the company
Entrepreneurs often start their journey alone. Even when a small team joins, the company structure stays informal, with founders taking up multiple roles. Nevertheless, as the organization grows, entrepreneurs must relinquish some control by shifting from a hands-on approach to delegating crucial tasks to trusted leaders.
Becoming that thin throat for every part will not be an excellent thing. To create something great, something larger, you may have to form leaders inside your organization. Nurturing leaders goes beyond simply assigning tasks to individuals. It involves making a culture that values and fosters leadership qualities at every level.
As a CEO, you need to empower leaders to make critical decisions, take ownership and drive the company’s mission forward. Decentralization means letting go of a tightly controlled ship that relies on a top-down approach to decision-making.
When you stop micromanaging every detail of the company, you possibly can give attention to larger strategies to scale your enterprise and ensure its long-term success. To implement this principle, Mitgo now has business units led by specific individuals who act as CEOs of their respective units. They still report to a board but have been trained with the needed skills to lead.
3. Construct a sustainable business — don’t just create a “money cow”
It’s normal for entrepreneurs to construct a business to make numerous money. In any case, who doesn’t enjoy significant revenue and profitability? So, founders typically give attention to quick wins, immediate profits and short-term gains.
But every visionary entrepreneur should embrace a deeper and more enduring concept: constructing a sustainable business. We’d like to construct corporations which are transferable and can proceed to work even after we’re out of the picture.
It starts with the legal. When the founder is gone, and so they are the only founder, the company has no alternative but to die. I need my company to live long after.
Constructing the legal foundations to make the business transferrable is just the start. As a CEO, you may have to pave the road that others can follow without the risk of failure. This implies putting signposts to guide them along a clearly designated path. It also means realizing that all of them have families and that the decisions you make can impact them.
Related: 8 Ways to Turn a Good Leader Into an Exceptional One
The leadership qualities of an excellent CEO
Entrepreneurs are born leaders. From an early age, they’re inherently creative and possess the skills to make things occur. During the early stages of the business, they lead by example and play an important role in driving the team’s success.
Nevertheless, transitioning to a CEO role requires additional leadership qualities. Being an excellent CEO means acknowledging that you simply cannot do every part alone. You will need to delegate responsibility and empower the team to take ownership of their work. You will need to be receptive to feedback and listen to what others have to say.
In a continually evolving business landscape, you need to be willing to pivot when needed and make well-informed and timely selections. You must also take accountability for the outcomes of your decisions and stand behind them.
Moreover, it’s best to proceed to encourage a culture of innovation and proactivity. This includes promoting a forward-thinking mindset and staying on top of trends. As CEO, you need to proceed to hunt down opportunities and address potential issues before they arise. Remember, you might be shaping the way forward for your organization.
In the initial stage, you might be the nucleus that holds the whole team together. Sooner or later, you realize you possibly can’t do it on your personal. You are taking individuals with good soft skills, teach them the hard skills and provides them time to grow. You depend on them to help lead the company whilst you pursue strategies to grow the business. That is the way you change into a CEO.