Making the Leap From Entrepreneur to Leader of a Professionally Managed Business

If you choose to see your venture through its transformation from a growing start-up to a professionally managed firm, prepare yourself for a second, equally important, and potentially more challenging transformation.
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You may not know it, but if you're an entrepreneur at the helm of a growing business, you're quickly approaching a crossroads. At some point in the not-too-distant future, your business will become too big. Too big for the means and methods that helped establish and guide it from success to success. Too big for the culture and attitudes of its employees.

Too big for you.

If the climate of your office has begun to resemble that of an emergency room, there's a murky understanding of where the company is headed and who's doing what to get it there, and you're finding it harder to convert a growing customer base into growing profits, chances are you've hit the "too big" point. But it's going to take more than just hiring better middle managers and developing more efficient internal systems to take your company to the next level. If you choose to see your venture through its transformation from a growing start-up to a professionally managed firm, prepare yourself for a second, equally important, and potentially more challenging transformation: your own metamorphosis from an entrepreneur into a professional manager.

Swapping tool boxes
Whether you're a software engineer who's developed a new mobile app or a creative director who's launched her own agency, there comes a point when the entrepreneur's tool box is no longer sufficient to deal with the challenges of a growing business. In fact, many of the skills, attitudes, and behaviors characteristic of successful entrepreneurs are antithetical to the personal and managerial traits required of the leader of a large, professionally managed enterprise. And while many entrepreneurs understand that their growing business needs new systems and processes to flourish, they often don't understand how they themselves must change the way they do things in order to accommodate the evolving nature of their firm. Here's a summary of some of the key shifts that must take place for an entrepreneur to successfully transition into the leading role of a professionally managed company.

Learning to delegate
In its beginning stages, a company is its entrepreneur. Because the entrepreneur is the creator of the enterprise, he frequently experiences a very strong emotional attachment to the business not unlike that of a parent to a child. As a result, entrepreneurs often feel the need to exercise complete control over every detail of the business, being driven by the fear that if they don't do something, it won't be done correctly.

But when a business reaches a certain size, this "do it myself" mentality becomes a major liability. Entrepreneurs who want to be able to scale successfully need to learn how to delegate, pushing decisions as far down the organizational chart as possible so that they can focus on high-level problems like determining the company's overall direction and long-term goals. It's extremely important for the entrepreneur at this stage to set clear emotional and practical boundaries for himself. He can no longer equate himself with the company; he can no longer be all-powerful and all-seeing. In other words, if you're trying to transform your company into a professionally-run organization but still find yourself proofreading marketing emails, it's time to reevaluate your relationship to your business.

Trust but verify
Too often during the start-up phase, entrepreneurs put their trust in several employees who are initially great, but don't have the skills or experience to fulfill their position requirements once the company grows. In order to be successful in her new role as professional manager and to ensure the future success of the company, the entrepreneur must surround herself with great managers who are skilled at executing agreed-upon deliverables on time and under budget. She has to be tough on evaluating staff and quick to root out any deadwood. If the people who once constituted the entrepreneur's de facto "C-level team" during the initial stages of the company can't handle the broadening scope of their positions, it's time to replace them.

Shifting from a reactive to a systems-focused mindset
Many entrepreneurs are accustomed to taking a spontaneous, gut-reaction approach to running a small business. They make decisions based on instinct, and deal with problems on an as-needed basis. While this spontaneity is often adequate during a company's start-up phase, at a certain point it is no longer sufficient to manage all of the variables of a growing business. The entrepreneur looking to transform into a professional manager has to expand his short-term, day-to-day perspective and begin to focus on creating systems that will enable his company to run effectively and efficiently in the long-term. This includes transitioning from cash forecasting to a developed financial planning system, replacing a sales-oriented approach with a focus on building robust marketing and advertising programs, and developing information, employee recruitment and training, strategic planning, and operational planning systems.

Some entrepreneurs fear that implementing a more systematic, process-driven approach will dampen their company's creative edge. But the truth is that without systems to manage the ever-increasing complexity of a growing business, the creative momentum of the company will eventually come to a standstill as employees devote more and more time and energy to putting out fires.

Learning to listen
If learning to delegate is an entrepreneur's solution to not being able to do everything, learning to listen is an entrepreneur's solution to not being able to know everything. Because an entrepreneur is often the employee with the most knowledge about her company's niche, hers is often the sole guiding voice when the company starts out and when the most significant questions it faces revolve around issues of product development and marketing. But when a business begins to grow and an entrepreneur starts the transition to leader of a professionally managed firm, she begins to tread unfamiliar waters. At this point, it is crucial that she surround herself with knowledgeable advisors who can help guide her in areas that fall outside her particular area of expertise. She must move away from an autocratic style of decision-making toward an inclusive approach where different voices are encouraged and taken into account. And she must remember that hearing is not the same as listening--to truly listen, she must be open to the possibility that others might have something valuable to add to the discourse.

Managing emotions
Running your own business, no matter how small, is often extremely stressful. Consequently, many entrepreneurs are given to emotional outbursts, panics, tantrums, meltdowns, and other less-than-optimal office displays. While never good for employee morale, such behavior can become a real liability when your business starts to grow and become more complex. As an entrepreneur transitions to a professional management role and begins to rely more on others for information and advice, it's imperative that he learn to manage his emotions in order to foster an atmosphere that encourages honest communication. If your employees are afraid to confront you with bad news or a divergent opinion, you'll be left in the dark about important information and perspectives. And your business will suffer as a result.

Or, look at it this way: as your company grows, the scope of your employees' roles will broaden. With the stress of increased responsibility and inevitable company growing pains, your workforce more than ever will need a cool and centered leader to see them through the transition.

As an executive coach who does a significant amount of work helping managers expand their skills, I've found that entrepreneurs frequently express qualms about changing their ways. Many feel that the systematic approach of a general manager is diametrically opposed to their own natural management style, and fear that making the switch means sacrificing the strengths and qualities that made their business creative and successful. They often fancy themselves successful rogues who can flout the conventions of traditional business. A romantic notion, but one that frequently doesn't play out as happily as people would like.

The truth of the matter is that when you decide to see your company through its transition to a professionally managed business, you are essentially accepting a new job -- one you've most likely never done before, and about which you probably have much to learn. Just as with any new gig, view your new position as professional manager as a learning experience, and begin each day with an open mind. It may not be an easy road ahead, but staying flexible and adapting your skills, attitudes, and behaviors will enable your business to continue to grow and thrive.

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