OwnertoCEO_Body.jpgby Susan Caminiti.

 

Most entrepreneurs start out with a great idea, intense passion, and a willingness to work seemingly 24/7 to make their start-up a success. But what happens when the company begins to grow and expand? Are the skills that define a successful small business owner the same ones needed to run a bigger, more complex enterprise?

 

OwnertoCEO_PQ.jpgIn most cases, experts say, the answer is no. But that doesn’t mean they can’t be learned. “In the same way that a company grows, the entrepreneur has to grow and evolve, too,” says Ed Hess, author of Grow to Greatness: Smart Growth for Entrepreneurial Businesses. As a professor at the University of Virginia’s Darden School of Business, Hess has studied entrepreneurs and the various ways they approach and manage change. His conclusion: As a company grows, its owner has to transition from one stage to the next, beginning with doer, moving on to manager and leader, and then finally, coach or mentor.

 

Learn to evolve

While the metamorphosis sounds straightforward, it often proves to be the most complicated aspect of running a company, says Hess. That’s because the transformation from owner to leader taps into primal issues of trust, confidence, and even identity—issues not typically top of mind as most entrepreneurs go about running their companies. “Figuring out the processes of a business is not nearly as hard as figuring out the people part,” he notes. Hess recalls that one small business owner, whom he interviewed for his book, said he felt “more like a psychologist than a business person,” when trying to manage his employees. 

 

Evolving from a person who controls every aspect of a company into one that allows others to get things done takes time. “Leadership isn’t just a skill you pick up one day, it’s a journey,” says Suzanne Bates, founder and CEO of Bates Communications, an executive coaching and leadership development firm, and author of Discover Your CEO Brand. “The most challenging inflection points for entrepreneurs are when they realize they have to let go of some of the things that they used to do, and when they have to hire people who are better at certain things than they are. That’s a real turning point.”

 

Find complementary skills

For Michael Uytengsu, founder and CEO of Somersault Snack Co., that moment came sooner rather than later. When he was still getting the business off the ground in 2009, Uytengsu hired an executive who had worked at his family’s snack food business—National Pretzel Co.—to be his president. That decision, says Uytengsu, was made so that he could concentrate on securing financing for the Sausalito, California-based company (he worked for Salomon Brothers in the 1990s) and expanding its distribution,while his president managed day-to-day operations. “I don’t have the patience for the everyday issues and I knew that from the beginning,” he says.

 

Uytengsu is quick to add that although the decision to bring in other senior people to help him run the company was made early on, it was still a challenge for him. “I’m opinionated, but I wanted someone who had skills that would complement mine, and who still reported to me,” he explains. “It’s a difficult balancing act as an entrepreneur, but it’s the only way we could grow the business,” he says, noting that Somersault Snacks are now sold in 5,000 locations, including major retail chains like Whole Foods, Wegmans, and Caribou Coffee. Says Uytengsu: “There are some business owners who feel that they’re in the best position to make every decision about their company and they fail to share financial or strategy issues with their staff. The danger with that sort of approach is that it slows everything down. If I was the one who had to make every decision, that would create a huge stumbling block for getting things done.”

 

Know when to make a change

As a company grows, both Hess and Bates stress that business owners must also take stock of employees. “The people you have to manage when you’re running a $500,000 company are not the same people you’re going to manage when the company is at $5 million,” Hess says. As employees are brought in to handle various business functions—marketing, payroll, and IT, for instance—it’s critical that business owners step back and transition into the role of leader and mentor. “One CEO said to me that he reminds his senior staff ‘I’m not your co-pilot,’” Hess recalls. “What he means is that he’s there for the big-picture issues, not for all the day-to-day decision-making.”

 

In her own 12-year-old company, Bates says she’s tried to avoid another leadership misstep: viewing employees as family. “It’s common for entrepreneurs to feel great loyalty to the people who were there with them at the beginning,” she says. While the sentiment is admirable, the results can be harmful to growth. “As the leader of this company, I have one rule: do no harm to Bates Communications,” she explains. “I might love a person who works for me, but if I know that they’re no longer right for the company or the position that they’re in, then it’s my responsibility to make a change.”

 

Becoming the leader your growing business needs takes courage, Bates says. “Learning to delegate and to bring people into the company with skills that you don’t have is not easy, but it’s necessary to grow,” she says. Once you start down this road, “it creates the sort of positive energy that can transform a business.”