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Why They Want To Replace You, The Founder
Sep 3, 2020  |  Kenelm Tonkin

 

I was watching an interview an about distressed companies and, in particular, how founders are replaced.

Reconstruction, turnaround and insolvency practitioner, Bryan Hughes, explained how distressed companies are frequently in trouble because the entrepreneur CEO often doesn’t have the skill to take the company to the size it needs to be.

Executive search expert, Deanne Tindale, who specializes in finding new CEOs for private equity invested companies, gave an insider’s view on how a new CEO is found.

It had me wondering.

WHY do so many founders fail the scaling and growth challenge that they have to be replaced or end in insolvency?

In my experience, there are two answers:

First, scaling skills are different from startup skills. In a startup, it’s all about marketing, sales, channel development and cashflow management. In the scaling phase, it’s all about modelling, team development, training, delegation, systems, processes and KPI management. Just even reading those two task lists gives you a sense of how different they really are.

Second, though these skills are teachable, many small business owners are:

  • Unaware they need different skills for scaling;
  • Unwilling to believe that different skills are needed for scaling;
  • Unable to take on the new skills necessary for scaling;
  • Unconvinced that scaling will improve the likelihood that their business will survive.

Once breakeven and some modest profit is achieved, founders have a stark choice:

  1. Learn the systemize and scale skills and transition from owner-managed to employee-managed so one day you can sell your company;
  2. Hand over the reins to a CEO who has those skills, grow and one day sell your company; or
  3. Stay small, face ultimate business failure and never sell your business.

If you’re in group 1 and want to learn how to systemize and scale your company, schedule a 15 Minute Introduction Call with me at https://calendly.com/k---20/free-15-minute-introduction-call.