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How Entrepreneurs Grow Along with Their Businesses

Successful transitions require focus on managing oneself, others, and business.

Key points

  • The entrepreneurial journey is not a smooth, straight line as it is often portrayed in the media.
  • Startup founders often struggle, stumble, or fail to scale as their businesses grow.
  • Successful transition from startup founder to scalable leader requires learning to manage self, manage others, and manage the business.
 Jenny Ueberberg/Unsplash
Source: Jenny Ueberberg/Unsplash

Stories of celebrity founders like Elon Musk, Jeff Bezos, and Marc Benioff inspire us. They move us to start and build companies at scale. Their success seems like a smooth, straight line. The truth is far more complicated.

What the stories leave out is the jagged, challenging, lonely, uphill battle it is to successfully transition from founder to CEO. Most fail to scale up as leaders as their businesses grow. It's important to understand what it takes to be an entrepreneurial leader at scale.

Business growth starts to take off once companies find a product-market-fit, meaning a solution or product that customers line up around the block to buy. That's when the entrepreneur comes under tremendous pressure. The evidence suggests this typically happens once the business crosses a threshold of 50 people.

The first issue concerns the founder. What it took them to get to this point is not what it takes to get them to the next level of growth in their venture. The second issue is typically about the employees, investors, and stakeholders. There are more, too, and they are about shifting operation of the business from an ad-hoc basis to a professionally managed one with structures, processes, and performance metrics.

 Alisa Cohn, with permission.
Alisa Cohn
Source: Alisa Cohn, with permission.

Alisa Cohn, a sought-after executive coach to founders and CEOs of high-growth businesses and author of the book From Start-Up to Grown-Up, advises founders that they will encounter predictable difficulties in their journeys to success, and they can navigate around them by focusing on three areas critical to a successful transition — managing oneself, managing others, and managing business. The three are tightly interconnected, reinforcing toward desired success and growth of the business.

 Rahul Bhandari
Three areas critical to transition from founder to leader.
Source: Rahul Bhandari

Managing Self

"You cannot manage other people unless you manage yourself first," said Peter F. Drucker, the father of management and author of Managing Oneself and The Effective Executive. Research on emotional intelligence gives us powerful insights into becoming good at managing ourselves. These include knowing and managing your emotions, motivating yourself, recognizing and understanding other people's emotions, and managing relationships.

Managing self is about increasing your self-awareness, understanding your natural swing of behavior, and adapting as you go. So, for example, you may be the type of founder who says everything that pops into their heads. The result is everybody running off in all directions to do what you just said, not knowing that you were just brainstorming out loud. You may not realize that your suggestions are taken as commands directing what you want to be done by your employees. The flip side is a leader not sharing what they are thinking with their team, so that nobody knows the leader's intent.

Founders often suffer from imposter syndrome, which initially helps propel and fuel them, but it becomes their Achilles' heel as the business grows. They swing to extremes: they become arrogant — or paralyzed by severe self-doubt. It becomes important to deal with the negative self-talk and handle the self-doubts. (P.S. Everyone has them!) One invaluable tool is to put together a highlight reel — a list of your successes — and keep it in your top drawer for quick reference when you are down, to remind you of your greatness. Another is to stay grounded by creating a kitchen cabinet of trusted advisors and peers whom you can lean on to provide perspective.

Managing Others

Managing others is about social awareness of other people's emotions and relationship management. This becomes a challenge as the business grows in intensity and complexity; the founder typically feels a loss of control and has difficulty realizing the required shift from exercising control to exercising influence. This is when focusing on building the company culture; defining the values; creating psychological safety; promoting diversity, inclusion, and equity; and learning to effectively delegate become critical for success.

Hiring the right person for the right job and decisively letting them go when it’s not a good fit are learned abilities. Good leaders do this by becoming granular about the job to be done and the capabilities required to do the job. In the knowledge economy, the ability to learn and adapt becomes important in fast-growing businesses. One effective way to ensure people have the necessary skill and flexibility is by asking behavioral questions during the interview process; the aim is to get evidence that the person has the behavior to do the job for which you're considering them. Creating the environment and opportunities for employees to learn and grow becomes important at this juncture.

When the founder is an army of one leading a small startup team, it's easy to get overwhelmed by the sheer amount of things to be done. In a high-pressure environment, it's easy to overlook crafting culture and values, motivating and creating team cohesion, and aligning proper incentives. They are not to be overlooked.

Managing the Business

In Lewis Carroll's Alice Through the Looking Glass, the Red Queen informs Alice that "here, you see, it takes all the running you can do to keep in the same place." The red queen effect is a metaphor used in the business world to describe the unsuccessful efforts of a company to get ahead of its competition. A startup, however, has inherent advantages to overcome the red queen effect. Startups can be agile, fast, and innovative, and bring about changes faster than their competitors.

Typically, founders' strength of vision and excitement about their products or services fuel the early days of the business. Many run the business with sheer audacity and insanely hard work, often leading to burnout. This tempo is not sustainable and hinders the growth of the business. Once the founder realizes this way is not tenable, they start to look for a better way to run their business, often nudged by their investors, board of advisors, and employees.

Getting clear on the goals and objectives, getting smart about finances, and putting in place performance measures through dashboards are some ways to help structure and measure business progress. Being driven by customer obsession leads to creating a culture of process excellence to serve customers. This, in turn, leads to consistently high-quality customer service, loyal customers increasing the lifetime value they create for the business, reduction in costs to serve the customers, and an increase in earnings.

As you build your startup, you will have to grow rapidly along all three dimensions. You can develop the tools for your journey of self-growth as your company grows from startup to grown-up. A leadership journey is a mountain without a top. It takes hard work, openness to feedback, and the ability to learn, adapt, and grow toward realizing your vision. If anyone can do it, it’s you.

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