Entrepreneurs are in love with their ideas. And oftentimes – especially in the case of first-time entrepreneurs – they want to run the resulting business. That’s usually because they think no one can care about the idea as deeply as they do and as a result, no one can run the business as well as they can. But sometimes, holding onto a business may not be in the best interest of the company – or the entrepreneur.
Here are 5 situations when that might be case:
- You turned a hobby into a business. You may start your own business in order to transform something you love to do into a profession. In the beginning, you do everything because to you, it’s still a hobby. You make your product, sell it, clean up shop, balance the books, get your supplies, and update your website. You don't mind all the hard work, because it’s your passion. As the business starts to grow, you may find yourself spending less and less time on what you love and more time in other functional areas of the business. If a lifestyle business is what you want, it may be time to refocus and hold tight to the small business that you’ve built. If you want to see the business take off and move beyond the hobby stage, something has to give and it might need to be your control.
- You don’t have enough time for your business. If the business potential is strong but you don't have time to build it yourself, then hiring someone else to run it and make the business successful is a good option. In the short run, this strategy might accelerate your losses because you have another salary to pay. But if the person you hire turns the business into a money maker, you can reinvest the profits to grow the business, or sell it for more money than you invested. The bottom line is that you probably will not have time to do everything yourself, and achieving your financial objectives means appointing the right people to run your business.
- The growth of your business has plateaued. You know that the future of your business looks promising, but setting the company's long-term growth strategy is beyond you. In this case, an entrepreneur's decision to step down is a hard and humbling one. After all, who wants to face up to his or her limitations? Business owners may be unable to drive their company to the next level or simply don't enjoy the complexities of running a larger company. On another note, Boomer business owners are now reaching retirement age, and many are seeking a new CEO to lighten the workload or prep the company for sale.
- Your business seems to be stuck in a rut. Company founders can be blinded by their passion and overly attached to their dream. Therefore, they are more likely to stick with business plans they've created, products they've launched, or people they've hired, long after the outside world has identified the need for change.
- You like starting companies, not running them. Sometimes, an entrepreneur will start a company and then move on to the next big project. This type of entrepreneur doesn’t stick around to actually run a company past the startup phase. Since the idea of running an established company does not appeal to them, they are likely to sell the business or hire someone to run the daily operations for them.
After carefully building a company from scratch, hiring someone else to be CEO can feel like giving away your child to a stranger. However, companies should not be run in the interest of their owners, but rather in the interest of the stakeholders and customers. Once the decision is made to hand over the reins, take the time to find the right CEO for the success of the business.