By all appearances, the company you’ve founded can’t possibly survive without you, right?
This is one of the biggest challenges founders of small companies face. After years of identifying your company’s values, creating a culture and implementing scalable systems, your company should be able to carry on without you.
But most people struggle to recognize when the moment to let go arrives.
A Question of Leadership and Legacy
Gina Folk, a contributor at Entrepreneur, argues that being able to step aside is essential to leadership — and it’s something that separates leaders from bosses. “Bosses may feel they are delegators, but because they don’t trust anyone else to do the job as well as they can, they never fully delegate anything,” she writes. “Leaders truly delegate. They assign tasks, and then let go (though they still follow up periodically to ensure their team members are on track to achieve the desired results).”
Folk’s definition applies both at the day-to-day operations level, and when it comes time for a founders to design themselves out of their companies. Fundamentally, both of these leadership traits come down to a question of trust. Do you trust the people you’ve hired to run your business?
If not, you might be playing leader more than you are actually leading. “If a project is heading into a ditch, by all means, step in,” advises Tara Jaye Frank, VP of Multicultural Strategy for Hallmark Cards. “Otherwise, clarify your goals and expectations, then trust people to get the job done. Don’t insert yourself just because you can, or because you feel the need to appear in control.”
If you are in the habit of doing what Frank advises, it will be easier to ultimately hand over your company to the team you’ve built. The trick is to recognize when that time has arrived, and being mentally prepared for it. Below are three signs — which typically overlap to some degree — that this time has arrived.
When a Great Leader Emerges
Authors Gary Keller and Jay Papasan tell a story at TheOneThing.com about Sophia Amoruso, who built an online retail empire with her company, Nasty Gal. Amoruso guided her business from its start as an eBay retailer in 2006 through to eight-figure sales just seven years later, which earned Amoruso a spot on Entrepreneur’s Women to Watch list in 2013.
Amoruso eventually hired retail veteran Sheree Waterson to be the company’s CEO, and a rougher-than-expected 2014 showed Amoruso that the company she’d built from scratch would need Waterson’s leadership to continue growing.
Here is how Amoruso explained her decision to step aside and embrace her role as brand ambassador on the Nasty Gal blog:
“My entire youth has been Nasty Gal. My entire future is Nasty Gal. This is a choice that will give our team, and our business, legs. And it will give me the freedom to feel that I’m using my talents at my best and highest. And for Sheree, this will unleash her incredible talent and leadership across an organization that has never been so ready.”
Richard Feloni at Business Insider covered Nasty Gal’s transition in January 2015, and he spoke to Duke University’s Sim Sitkin, a professor at the Fuqua School of Business, who pointed out to Feloni that young entrepreneurs often need to bring on an experienced CEO to handle a business that grows faster than the founder can learn the game.
“Duke’s Sitkin says when there is a transition in senior-level management at a company, it is crucial for the founder to ‘recognize what their real continuing contribution is, what their real continuing contribution is not, to let go of the things they need to let go of, and to do so gracefully,'” Feloni wrote.
When Your Passion Now Belongs to Someone Else
Founding, running and leading a company takes a lot out of anyone. To be successful, a founder must shoulder tremendous pressure and make difficult personal sacrifices. At some point, whether in five years or 25 years, the initial passion that led to the company’s founding will not be enough to push through that stress and those sacrifices.
But because of a sense of duty or identity as Company X’s Founder, you might be standing in the way of someone who does have that necessary passion.
Sabrina Baker, CEO at Acacia HR Solutions, tells a story of one mentor she had who had expended that initial passion, but she ended up staying too long in her leadership role out of obligation.
“She was a respected leader who was very close with her team,” Baker writes. “She didn’t want to leave them in a lurch and knew her departure would create more work for them. Some leaders know they should leave but don’t because they feel obligated to those they work with.”
Part of a legacy, she says, is formed by the person’s knowing when to bow out gracefully.
When Your Company Grows Beyond Your Reach
As with Amoruso’s experience at Nasty Gal, sometimes a company can outgrow its founder. This might be the hardest reality for a founder to accept, and there aren’t too many prescriptive tips to help you recognize when your company has outgrown you.
Sometimes, as John Brandon writes at Inc., a founder is only good at leading smaller teams: “Someone might be good at leading a small team through the early startup days and then realize, as the company grows, that he or she just can’t lead a large organization. It’s a totally different skill set. Leading a small team is all about the relationships, the ideas, and the conviction to a cause. Leading a large team is more about strategy and vision, and can often become more of a financial leadership role.”
Other times, founders design company-wide bottlenecks around themselves. This seemed to be the case at 4chan, as Megan Geuss at Ars Technica reported in January 2015 when founder Chris Poole stepped down.
Here is Poole’s own statement:
“4chan has faced numerous challenges over the years, including how to continuously satisfy a community of millions, and ensure the site has the human, technical, and financial resources to continue operating. But the biggest hurdle it’s had to overcome is myself. As 4chan’s sole administrator, decision maker, and keeper of most of its institutional knowledge, I’ve come to represent an uncomfortably large single point of failure.”
Each founder and each company is different, and recognizing whether your company has outgrown you relies on your own honest self-assessments.
How to Hand Your Company Over to Your Team
Sattar Bawany, CEO of Singapore’s Centre for Executive Education, writes at HR.com that his country’s long-serving prime minister, Lee Kuan Yew, understood early on that handing his office over to a successor would be crucial.
Lee served Singapore for 31 years and oversaw its transition to an independent country in 1965, but as Bawany says, “The heart of Lee’s leadership legacy is succession planning.”
He continues: “The saying goes; there is no success without a successor. To be successful as a leader, your organization must transcend you and you must be humble enough to acknowledge that. If you are indispensable to your organization, then your organization will not last after you’re gone. You need to strive to build an organization centred on a mission or purpose rather than an organization that is centred on you.”
Bawany writes that a key part of any succession strategy is hiring people whom you respect, whom you regard as equals and “co-leaders.” This close core of co-leaders can help you build your company, steer that growth toward a vision you all mutually share, and challenge your beliefs every single days.
Brenton Hayden, the founder of rental property management company Renters Warehouse, touches on these same ideas in a piece for Entrepreneur. Three points from that piece deserve closer examination:
- Train someone to eventually take over for you. “There’s no such thing as a ‘ready-now’ successor,” Hayden writes. “Even the best candidate will require some degree of training to prepare them to take over your job. They’ll get there in time.”
- Empower that person. “I sought to empower many of the key executives at my company. I gave them full access to the books and called upon them for important management decisions. From the start I saw to it that they were involved with everything from branding to hiring decisions.”
- Track his or her growth as a leader. Hayden says he measured certain performance metrics such as month-over-month growth, customer satisfaction ratings, average units under management per employee, new accounts and cancelled accounts. “Having numbers such as this holds people accountable, measures success and gives peace of mind when you review the numbers on a weekly or monthly basis. As a retired CEO, this allows me to stay out of the day-to-day operations of the company, but still gives me the chance to step in and advise should something indicate a problem.”