Just about every founder believes they will be able to keep growing their business well into the future.
But the reality is, bringing a startup to stabilized growth takes a certain set of skills while moving into larger expansion and development takes another.
Most founders reach a point where they plateau and simply can’t grow the business any further.
This isn’t because they’re poor leaders, it’s just that “What got you here won’t get you there.”
Transition Challenges
Making the decision to let go and bring in someone new to lead is one of the biggest decisions a founder can make, and the transition itself can also be tough for two main reasons.
First, founders usually put an incredible amount of personal risk and sacrifice into their companies over many years, so they don’t want to lose what they’ve built.
Second, a change of the guard can disrupt the culture of the company, as founders have a strong personality that drives the business.
When they unplug, the business loses its North Star, which creates risk and uncertainty, causing investors to become wary and perceive the business as less stable and riskier to support.
It takes time for new management to replace that sense of direction and safety.
Related: Five proven strategies to seal the deal
Best Practices for a Smooth Transition
Businesses can use these five best practices to move forward without too much interruption, starting with being crystal clear on the objective and timing.
Good internal and external communication can break down any ill will by setting clear expectations and showing that the transition plan has been well thought through, reducing the odds that those overseeing the transition will undermine the CEO.
Another key practice is to set clear expectations for the founder’s role, as they may choose to have no involvement at all with their business after the transition, or maintain connections by putting on a different hat.
Aim for no overlap between the founder and the new leader, as lengthy overlaps can create confusion about who is really in charge, and collaborate to make the handoff of responsibilities as efficient as possible.
In a recent acquisition, a founder and his wife had funded their business from credit cards while their children were young.
Even though bringing in new leadership isn’t easy, it can absolutely be the right move, and with these guidelines, the shift from one to the other can be one of the most powerful things you do to energize your company and jumpstart its next chapter of success.
The decision to bring in new leadership is often difficult, but it’s a natural part of a company’s growth, as companies expand and develop, they require different skills and leadership styles.
By following these best practices, founders can ensure a smooth transition and set their company up for long-term success.
Companies can take small steps to achieve sustainability, as seen in SMEs sustainability initiatives, and by doing so, they can take on new challenges and achieve their full potential.