Creating a business is a challenging and complex undertaking that requires immense talent and effort, but that doesn’t mean those entrepreneurial traits will translate well to running that business once the entrepreneur’s vision is realised.
Quick takeaways if you’re in a hurry:
- Creating a business is a different job than running a business, and acknowledging and dealing with that is vital for long term success
- Entrepreneurs are involved in every aspect of their business, while CEOs are communication and management specialists
- CEOs and Entrepreneurs work in different types of environments, and need to hire different types of people to achieve their goals.
- Entrepreneurs are often too emotionally involved to take on the more impersonal mantle of CEO within their business.
Read on: The challenge of transitioning from entrepreneur to CEO
Entrepreneurship is risky, difficult, and tedious, but also very rewarding. Successful entrepreneurs, in many cases, get such a rush out of successfully realising their creative vision that they’ll sell their business once it succeeds to pursue a new idea and a new venture.
These serial entrepreneurs are driven by their own passionate creative spirit, and the drive to build something new. They see life as a series of exciting projects, and often just don’t see the point in sticking around after a project is “completed”. Of course, that’s not all there is to it. The reason they consider the project to be “complete” is because entrepreneurs have a startup mindset.
Running a startup isn’t the same thing as leading an established business. For the sake of this article’s terminology, startups are run by entrepreneurs, and established businesses are run by CEOs.
Being a CEO requires a different set of skills, and many entrepreneurs aren’t ready or willing to face the challenges that come with transitioning into this new role as their startup grows up.
CEOs are specialists
As an entrepreneur your job is literally everything that needs to get done. To name a few tasks, you might personally need to write the business plan, apply for a loan, find suppliers, write procedures, hire staff, handle payroll, buy equipment, make sales calls, and do your own taxes. None of those include the actual work of producing anything, which you might well also be involved in. Because of this, entrepreneurs commonly work 70-90 hour weeks for years on end.
CEOs have a strictly defined job description centered around communication and big-picture decision-making. They sit in long meetings representing their business to the public and the board of directors, and representing the board of directors to their employees. They constantly make important decisions, but they don’t execute them personally. They operate as just one part of a much larger system, and need to be able to rely on supporting staff and departments to do their parts without any micro-management from above.
CEOs need to hire differently than entrepreneurs
Because entrepreneurs usually operate on limited budgets, they simply can’t afford to hire an engineer, and HR director, or a quality manager with 15 years of experience. Instead of relying on experience, they save on wages to hire intelligent, young, and passionate people with the potential to grow with the company in the future. Because these employees’ level of experience is very much entry-level, entrepreneurs have to be very involved in these employees’ day-to-day work.
CEOs cannot take the time to train employees or to oversee their work in any real sense. Those who have been known to do so, like Elon Musk or Steve Jobs, are famous for their complete lack of free time and sleep. To ensure that their business runs effectively without constant supervision from the top, CEOs need to hire much more experienced workers and managers, who can be trusted to perform even without constant management from above.
Unfortunately, even a very successful entrepreneur might not be able to recognise the value of paying much higher wages for these more experienced employees, because they’re used to making do with the people they have. That can interfere with their business’ scalability and long-term competitiveness.
Entrepreneurs are too emotionally involved
Even entrepreneurs who do take steps to technically structure their business to run without their constant direct oversight are often too emotionally invested to put this into proper practice. They’ll have poured years of time, effort, and money into their venture, and won’t be able to cope with the risk of figuratively pushing it out of the nest to see if it flies.
Additionally, emotions can get in the way of these staffing and structuring issues. Early startup hires who have come a long way in a few years might still be less qualified for upper management positions than much more seasoned applicants that the startup attracts as it establishes itself. Entrepreneurs rely on close employee relationships, and might be unable to balance the needs of the company with their personal obligations toward those early hires and friends who served such a vital role early on.
Building a business from the ground up is a deeply personal process in a way that running an established business can’t be. There isn’t really a “right” choice for whether it’s best to slip into this new role, or to jump ship and start something new. Whatever you choose to do, Fifo Capital can help you with cashflow solutions including unsecured business loans, invoice finance, import finance and more.
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