Not all entrepreneurs are or should be CEOs. I can already hear a whole lot of entrepreneurs going on the defensive.
Having founded a dozen companies and invested in a dozen more over the last 2 decades, I can tell you without a doubt that not all entrepreneurs make good CEOs. As a matter of fact, less than 5% of entrepreneurs have the skills to be a CEO within their business.
To understand this, you need to first understand the two roles:
The role of the entrepreneur is as a creator, disruptor and innovator, being able to identify a problem and come up with a solution to that problem. Not all entrepreneurs have a lot of business acumen and understand strategy and finance well. The entrepreneur focuses on the big picture, the vision, the dream, creating something from nothing. Think of the entrepreneur as the engine of a car.
The role of a CEO is to take the entrepreneur’s idea to market and achieve sustainable success based on creating the working infrastructure and processes the business needs whilst also managing investor relations. The CEO has a lot of business acumen and understands sales, strategy and market conditions. The CEO focuses on the small things needed to make the dream of the entrepreneur a reality. If the entrepreneur is the engine of the car, the CEO is the person behind the steering wheel driving it in the right direction.
That said, there are many entrepreneurs that are very good CEOs, having either learnt along the way with the right mentor, or having had the business acumen before starting his/her business.
When I started my first few businesses, I really wanted to be the CEO of my business. I mean what could be cooler than having those initials when you so young, but after the first 2 failed attempts in business, I realised that bringing in the right partners and co-founders into my business that could add their business acumen to my technical and sales skills, was a powerful combination. As a result, in my first few businesses I held roles such as Development Director, Sales & Marketing Director, and Operations Director, even though I was the majority shareholder in these businesses. The success of this strategy was clearly evident in the successes we achieved. Over the years I studied and learnt from my partners, investors and mentors, constantly developing myself personally until such stage where I took over the role as CEO quite successfully.
This highlights the importance of having a partner or co-founders within your business that has the strengths to compliment your weaknesses. If as an entrepreneur, you are a hot-shot developer with an amazing idea and all the technical knowledge you need to create one kick-ass application, then partner with someone who has the business skills to create the strategy and sell that to consumers. Think of Steve Jobs and Steve Wozniak. Woz created everything within Apple, and Jobs took it to market and brought in the investors.
Statistics show that start-ups with co-founders focused on different roles within the business have a 67% more change to succeed than solo entrepreneurs. It is also important to note, that most Venture Capitalists prefer to only invest in start-ups with more than one partner.
The key to being a great CEO is being able to channel the genius of everyone else around you within the company, in the best interests of the company, and drive it to success. While entrepreneurs are often focused only on a single deliverable, a CEO has to focus on all aspects of the company, including future growth. At the same time the onus is on the CEO to consider all input from the entrepreneur, and the entrepreneur should rely on the judgement of the CEO whilst running the company.
In one of my most successful ventures, Hiyer, I made a strategic decision and partnered with a highly experienced project manager and developer and made him a co-founder and shareholder within the company. Both of us are entrepreneurs, though our roles within the business are very different which we clearly discussed and defined upfront. His focus is solely on the development and technology aspects of the company (essentially a CTO role), whilst mine is the strategy, sales and marketing of the company (essentially the CEO role). With this combination we made a powerful team with me bringing my years of experience, network and business acumen to the table, and him bringing years of project management and development to the table, leading to a very successful business.
The take-away from this is that by partnering with the right person/s to compliment your weaknesses as you do theirs, can put you on the path to success much faster than trying to go it alone, and sometimes having someone else take over the CEO role is not such a bad thing.
Remember, as an entrepreneur your personal pride will be your downfall, always consider the best interests of the company as a living thing and you could be well on your way to becoming a great CEO.