You have to take an objective look at your business before making that decision. Here’s how.
At my company, we work with CEOs all the time. Most of them are also founders and entrepreneurs who are still running the companies they started–sometimes even scaling the businesses up in impressive ways.
But what I’ve regularly seen over the years is many of these founders run into confusion over their ultimate role inside the business. Specifically, they struggle with the notion of whether they should be wearing the CEO hat or the business owner hat. Often, they commingle these two roles, which can lead to serious problems inside the business. To make the best decisions, you need to separate the role of CEO from that of owner. Ask yourself these important questions to start the process.
Are you too emotionally attached to your business?
As the founder and owner, you need to think differently about your business, which is likely the most valuable asset you own. Not unlike other assets, like real estate or stock, you need to take an objective look at your business to see if it’s performing. That means asking questions like: Are you getting a good return on your capital? How much risk are you exposed to? How is your business performing relative to other assets in your portfolio?
As it happens, private equity firms are really good at asking questions like these. Because they take a neutral view of the business, they can make tough decisions about what’s required to generate the kinds of returns they expect from the business, usually well above the public markets.
Strangely enough, it’s not often that Founder CEOs think this way. Usually, they are far less worried about the rate of return the business is generating. Rather, they are much more emotionally involved with the business, and with the people inside it. As a result, they make decisions that might not always be strictly in the best financial interest of the owner. Sometimes this is okay, other times it is a disaster and destroys wealth–not just for themselves, but also for the people who work with them. I wrote about how the CEO can become the kink in the hose– the limiter to further business success — in my book, Great CEOs Are Lazy.
Is your ego driving your decisions?
Of course, when you start a business, you don’t have a choice but to assume the role of CEO. You literally can’t afford to hire anyone else to do the job. But, as the company grows in size and value, you need to look in the mirror and ask yourself a tough question: Are you the best CEO to run the company you own?
Speaking from personal experience, CEOs have their fair share of ego. Which is why this is such a difficult question to answer. It takes a lot of emotional maturity to admit you might not be the best person to run the company–even if it means you might be destroying your personal wealth as a result.
I happen to be working with a founder who grew his business from $0 to $30 million over the past few years. But then he faced his fears and asked himself if he was the best person to take the business from here to becoming a $100 million business. He decided the answer was no.
We went out and hired a world-class executive to take over running his business. But he gave that person the title of president while he held onto the title of CEO and chairman of the board. The idea is that over time, as the president proves his worth in running the business, he will eventually transition into the CEO role, freeing up the founder even further to focusing on being the financially objective owner of the business. It was a mature and diffucult decision, but one that should lead ti a much more successful business.
So, if your business is growing and scaling–or maybe even stuck in a rut–maybe it’s time to look into that mirror and ask yourself some tough questions. Your ego might not like the answers, but in the long run you might build more wealth and have more impact as a result.