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Appointing an external CEO in your business


Often a business founder comes to the point where they think about stepping back from the day to day running of the business and bringing in someone to take on the role they have fulfilled.

This usually comes about after a lot of soul searching as the founder wrestles with the thought that no one can run the business as well as they do.

At some point if they do decide to step back then this typically for one of three reasons;

1. The first is that the business is very successful and the founder wishes to step back and enjoy the fruits of their years of hard work.

2. A second reason may be that the founder has lost their enthusiasm and motivation for the business and as a consequence, the company is underperforming. They are seeking an external CEO to shake things up and get the business back on track.

3. The third common reason is when the founder realises they do not have the skills and experience to take the business onto the next stage.

Taking the emotional plunge

In all three cases the decision is often a difficult one. Letting go and trusting the business to another person, brings with it many emotions.

If a founder is stepping back because of business success, then the emotion typically will be one of a job well done and pastures new. This is very different to the emotional state connected to the second or third reasons. In both, it may be a feeling that they have not been able to realise the dream that perhaps they have lived with for many years and therefore one of failure.

The third reason can also be sign of a very mature and well thought through decision. This reason shows that the owner is able to understand where their strengths lie, and that perhaps running the business in the long term may not be one. Perhaps the most well known example of this is Google – the two original founders Larry Page and Sergey Brin recruited Eric Schmidt as their first CEO in 2001 some five years after Google was first conceived as a research project.

Business owners must learn to relinquish control

Bringing in an experienced business professional is not guaranteed to work. There needs to be a clear understanding about the responsibilities of the role and the role of the owner. If the owner recruits an individual but does not relinquish control or continues to “interfere” in the running of the business, then frustration will exist for all parties. Both the owner and the incoming individual have to enter it with their eyes wide open and know the scope of each person’s role and stick to it.

Perhaps the business owner may see an opportunity to develop an individual from within the business to take over the running, ensuring a smooth and effective transition. This often happens within a family business as the business is handed down the generations, this, in itself, brings with it other challenges.

Stepping back from the day to day running of the business is a major decision for the founder. If this is done right, then it may be the best decision they ever make.

If you are looking to step back from or exit your business, why not take our business Value Builder questionnaire? or alternatively contact your local Business Doctor