So you think you’re ready to make the big transition from entrepreneur to CEO? Well, before you make the leap, I advise that you take a step back and have an honest conversation with yourself. Are you really ready to do this? Even though you may have fully honed in on your entrepreneur abilities, the task of becoming an effective CEO is a very different ball game. The harsh reality is, not every entrepreneur is born to be a CEO. In fact, most first-time entrepreneurs simply do not possess the experience, business maturity, or mindset to be an effective CEO of their company straight out of the gate— or in some cases even after the second or third race. While some entrepreneurs are rock stars who can do both, it’s rare. Therefore, it’s important for the success of your business to discern which side of the line you fall on.
First things first, the roles of entrepreneur and CEO are very different. As an entrepreneur, your primary goals are to get funding, develop your product or service, find a customer base, and secure a foothold in the market. However, as a CEO the gears must be shifted. It is no longer about the setup, it’s about sustaining. You need to think about how to grow and expand the business through creating and implementing the strategic direction of a company. This includes everything from marketing and branding to financial management. You no longer have the perquisite to obsess over the small details; you have to be able to see the big picture. So ask yourself, can you truly be a visionary and see past where your business stands today?
One thing that I’ll say is that I am flabbergasted that so many smart entrepreneurs are so inept at managing money. It’s one thing to introduce a new product or service and find the money start rolling in. It’s quite another to know how to best utilize that money. Most entrepreneurs lack the knowledge of the best ways to use the new money that their business is making in and end up blowing it faster than it comes in, thus creating debt. They fall victim to the thought process of “My company is making money; therefore, I must know what I’m doing.” Ziad K Abdelnour, Start-Up Saboteurs: How Incompetence, Ego, and Small Thinking Prevent True Wealth Creation. This way of thinking is a recipe for disaster when not backed up with actual knowledge and experience. CEO’s, on the other hand, have the experience to know exactly how to reinvest the capital into the business, leading to growth and expansion. Knowing when to spend money for expansion or equipment upgrades also requires skill. You need to be skilled in sustaining cash flow, but without a strong business plan or knowing where the next dollar is coming from. A successful CEO always remembers the following rules:
Acquiring more company profits does not equal acquiring more managerial expertise
Debt is a dangerous tool, especially in the hands of the inexperienced
Assets are not the same as income, wealth is not the same as cash flow, spending is not the same as investing;
So ask yourself, do I possess the financial literacy to make the wisest financial decisions that will successfully grow my business?
The last thing you really need to consider is your decision-making abilities. Starting off as an entrepreneur, you’re the only one affected by your decisions. However, as your company grows, there are a lot more people affected including employees and investors. It’s not just about you anymore. You have to consider the big picture now. So if something isn’t working, you have to know how to cut your losses and move on—today. A good CEO knows how to make tough decisions based on the company’s needs, values, and goals as opposed to their personal whims and wishes. But that doesn’t mean that the CEO should be making every decision big and small. Some entrepreneurs are under the false impression that being a company’s CEO means being involved with everything. This is mostly due to the fact as an entrepreneur, you wear all the hats. But that doesn’t work once the company is up and running. As a CEO you have to have the ability to drop the “If you want something done, do it yourself” philosophy because ultimately it slows down progress. The best decision you can make is to surround yourself with smart financiers and advisors you can trust and who have done it before. Pick their brains and start listening.
Growing a company is a marathon that requires patience, dedication, knowledge, good decision-making, vision, and the ability to see the big picture. As your company continues to bloom, the time will come where you must decide whether you are CEO material or not. The truth is most entrepreneurs shouldn’t get anywhere near an executive suite. The notion that you are automatically qualified to run a growing company simply because you founded the business is either arrogance, stupidity, or both. Unfortunately, most entrepreneurs only learn the hard way—in retrospect—by having a business fail. However, this is your opportunity to improve your odds, learn from others’ miscues now so you can avoid them with your own start-up.
I’m not saying entrepreneurs can’t evolve into a savvy CEO, but it takes a lot of hard work and development to fill those shoes. So before you decide to take the leap from entrepreneur to CEO, face the real truth and honestly critique your abilities. Remember, it is never foolish to seek the best, qualified leaders to help your team succeed, but it is foolish to let pride and incompetence hinder the growth of your business. Acknowledging shortcomings is profoundly wise and simply good business because it gives the start-up the best chance for success. And if you have taken the risk and started your own business, of course the goal is to succeed.
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After all is said and done, THE BEST REVENGE IS CREATING OBSCENE WEALTH