Should You Let Someone Else Run Your Business?

Gene Marks

A recent study from researchers at Duke, Vanderbilt, and Harvard Universities took a look at entrepreneurs who started their own businesses, with the aim of addressing a long-debated question: Are the people who start companies actually good at running them?

So what do you think they found? I’ll give you a hint: It doesn’t look so good for the founders!

The research, which included hundreds of private and public companies, determined that a CEO who is also a company’s founder is “significantly less likely to implement basic management practices, even if these practices are associated with better firm performance.” In other words, no, people who start companies aren’t, in general, very good at running them once they reach a certain size.

Why is this true? The study concluded that many CEO founders basically don’t admit that they aren’t good managers. They’re not as open to changing their company’s environment to allow better management practices and tend to be reluctant to give up control.

I can see that. I have a client who, after 20 years of running his business, finally recognized this about himself. He started an equipment distribution business back in the 1980s and has since grown it to more than 100 employees.

But, unfortunately, he still runs the company like a startup. He insists on reviewing small invoices. He micromanages his employees. He is autocratic in his decision-making. He is reluctant to share financial data about his operations even with key people who could use that data to make better decisions. He keeps a tight rein on the company’s spending and is very cagey about bringing in any “outsiders.” He’s a fantastic entrepreneur. But a lousy manager.

And that’s where most of us go wrong: We don’t recognize our failings as a manager. We’re excellent at inspiring, selling, raising money, creating a vision, and building new products. But we’re just not very good managers.

Being a manager is a special skill set. It requires a great deal of talent to supervise, monitor, evaluate, and motivate a group of people. It requires patience, documentation, attention to detail, empathy, and trust in others. Many of us — business owners who founded our own companies — lack these skills.

The client I mentioned above started his business right after college. He never worked for a larger company. He was never taught managerial skills. He doesn’t know the ins and outs of effectively working with others. He’s used to barking out orders and getting his way without a consensus. This is all good for a startup or a very small company. But once you reach a certain size, these characteristics can be debilitating.

Now, at the age of 50, this reality is sinking in. He wants to build more value in his business and plans to sell it one day. To do this, he needs the help of outsiders. So he’s bringing them in. Recently he hired a general manager and new controller. It’s a lot of money, a big risk, and — more significantly — a huge change in culture. He’s doing the right things, as challenging as they are.

The takeaway is this: Look in the mirror. You’ve done a great job starting up and growing your business. But are you really the right person to run it, now that it’s reached a certain size? The research says that you’re probably not. Accept this. Bring in experienced managers. You can still lead, inspire, create, and innovate. But welcome the opportunity for others to run things day to day. Long term … you’ll make more money.

4 Responses to "Should You Let Someone Else Run Your Business?"

    • John | February 21, 2018 at 11:36 am

      My wife is a prime example of this. She turns 70 this year and has a successful business for the last 45 years providing sewing services to interior designers. She is very good at what she does. She understands the details of constructing and installing custom products for homeowners and is called upon to do such when homeowners are buying premium fabrics. Now that she is getting to the age of wanting to retire she wants to sell the business but it becomes unsaleable because all things revolve around her and her expertise. No one is trained to step in and take over her function so it appears that she will retire and have to close down the business leaving a ton of money on the table and the loss of her knowledge to the community.

    • Antonio | February 21, 2018 at 10:05 pm

      I started my business 39 years ago, and basically have gone thru any and all problems that most small businesses have (capital

    • Brooks Marie McElroy | May 6, 2018 at 2:01 pm

      I’m in same boat it’s sad

    • Molly | July 17, 2018 at 11:51 am

      I have a very small horticultural company with three employees. Two are skilled horticulturists and one of these has real management experience. The clients know and like them. They are interested in buying my company when I retire. So I think, like John’s wife, she may have skilled seamstresses who could buy her company or could find one. We have not discussed the details but a monthly payment agreement might be the way to do it for us without capital.

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