Founded a business and want to take it to the next level but not sure how? You might need to take on an experienced CEO.
In this article, we talk about why stepping aside and bringing someone in to take on the top job could be a great move, and what it means for you as a founder.
Here’s what we cover:
- Why you might need an experienced CEO
- When to consider hiring a CEO
- Why Gymshark CEO Ben Francis decided to step down
- What a CEO can bring to the table
- What to look for in a CEO
- What can the founder CEO do next?
- Final thoughts on why hiring a CEO could help your business
Why you might need an experienced CEO
As a small business owner, you want to see your company grow and become successful by expanding its reach, increasing profits, and gaining a strong reputation in the industry.
And no doubt you’ve done a great job to build the business to where it is today.
However, perhaps you want to take your business to the next level but don’t have the skill set or experience to make that happen.
If that’s the case, it may be the right time to hand the reins over to an experienced chief executive officer (CEO).
They can be a powerful force for driving business growth and achieving success in this situation. They’ll provide the guidance and strategic vision necessary to help your business reach new heights.
Founders as CEO are more likely to experience rapid growth initially, but this growth tends to level off over time.
Meanwhile companies with professional CEOs tend to experience more sustained growth over the long term, according to research from Harvard Business Review.
When the new CEO is in charge, you can put more effort into important tasks, such as implementing cost-saving measures, streamlining operations, and focusing on customer satisfaction.
This will help you supercharge your business growth and make your life easier.
When to consider hiring a CEO
No one knows your business like you do, and you certainly have a strong emotional attachment to the company you’ve built with your hard work and dedication.
This can make the decision of putting someone else in charge a difficult one. But certain signs can help you figure out if it’s the right time to consider hiring a CEO.
- The business has reached a certain complexity level, which is giving you a serious challenge.
- Business growth has slowed and isn’t going as you have projected.
- Your employees aren’t as productive or engaged as they used to be.
- You don’t have the necessary skill set, expertise, or connections to move the business forward.
- You feel ready to focus on new business opportunities or ventures that require your attention and leadership.
There’s no one-size-fits-all answer to this, as the decision to step down as CEO and hire a new one depends on various factors. They include the stage of the business, your goals and priorities, and the needs of the company.
The signs given are some of the most common and typical situations that indicate the necessity of hiring a new CEO. There could also be other factors.
According to research from Harvard Business School professor Noah Wasserman, founders who prioritise growth tend to hire new CEOs and collaborate with their boards to create new positions for themselves within the company after the leadership transition.
Why Gymshark CEO Ben Francis decided to step down
Ben Francis is a great example here.
The founder of fitness clothing brand Gymshark originally ran the business as the CEO but as it continued to grow, Ben felt that someone with more experience was required to achieve the company’s ambitious goals.
While he had a real interest in the front end of the business, covering the likes of sponsorships, brand and marketing, he didn’t have a thorough understanding of the back end – financials, stock and operations, for example.
So in 2017, he stepped down as CEO and brought in Steve Hewitt, someone “locally known as ‘the business guy‘”, who’d worked as an agent between European suppliers and businesses, and also had experience heading up Reebok’s European sales, to take the reins (Steve worked as the Managing Director of Gymshark prior to his CEO role there).
According to Ben, Steve was “significantly better at the business fundamentals than I was”, making him the perfect person for the role.
Taking up a new position as Chief Brand Officer, Ben was able to do what he was best at, while also having the opportunity to learn and develop his skills across other areas of the business.
Fast forward to 2021, and Steve decided to step down as Gymshark’s CEO.
And his replacement? Ben Francis.
In the video below, Ben goes into more details as to why he decided to stand down as CEO:
What a CEO can bring to the table
When shaping the direction of a company, an established CEO can play a vital role, as they bring plenty of experience and expertise, plus established leadership skills.
Data from the National Bureau of Economic Research shows founder CEOs may face challenges with standard management practices, and research suggests they may be prone to overconfidence and relying on incorrect assumptions.
A professional CEO is more suitable for situations such as these, as they can have different and non-biased perspectives.
Let’s look at some of the most prominent ways an experienced CEO can help your business.
Provide fresh perspective
There’s a good chance they can bring a fresh perspective and new ideas, which can prove valuable if the organisation is facing challenges or changes are required for goals to be achieved.
Since the founder has some emotional attachment to the business, spotting practical issues can get difficult.
The new CEO will quickly pick those up and make positive changes.
Experienced in growing businesses
A CEO who has previously led the way to turn a startup into a successful mid-sized company can bring valuable insights and strategies for growing a business.
They might have experience in identifying and targeting new markets, establishing partnerships, and streamlining operations to boost efficiency.
Experience often leads to a deeper understanding of an industry or market and the skills and knowledge needed to succeed within it.
Can effectively implement growth strategies
They can develop and implement strategies for growing the company in various ways.
For example, they might identify new market opportunities and develop a plan for expanding into those markets. They might also develop new products or services to meet the needs of existing or new customers.
Helps to attract investors and make connections
A CEO with a strong reputation and a proven success track record can be a valuable asset in attracting investment for the company.
Investors are more likely to trust and invest in a company led by an experienced CEO who is well-connected.
They can also work to build relationships with key stakeholders, such as customers, partners and investors to increase visibility in the market.
Can put essential structures in place
They can work with the leadership team to put the necessary structures, processes and systems in place to support the growth and success of the company.
This might include establishing a strong corporate culture, implementing effective management systems, or setting clear organisational goals and objectives.
For example, a CEO might develop a company-wide strategy for improving customer satisfaction or establish a system for tracking and analysing key performance metrics.
Is able to build the team
They could help to attract and retain top talent by creating a positive company culture, while providing opportunities for employees to grow while receiving competitive compensation.
Besides these points above, there could be many more ways an experienced CEO could help your business. You just have to choose the right person for the job.
Let’s learn how you can do that in the next part.
What to look for in a CEO
When hiring a CEO, consider key qualities and characteristics that’ll help the individual succeed in the role and inspire the rest of the team.
You need to look for certain traits to find the right CEO for your business.
It’s worth noting that criteria can vary depending on the situation and business type. However, some common pointers can help you make decisions easily.
Let’s list them for you.
Has similar ambition and common ground for growth
The new CEO should share the same ambition and vision for the company’s growth as the founder and the rest of the team. Finding someone aligned with your long-term goals and committed to levelling up the business is important.
The first step to doing something right is about caring.
You want someone who cares for the business and has the vision to lead it in the right direction.
Good cultural fit
A CEO should fit in with the company’s culture and values, and work effectively with the team.
Finding someone who can lead and inspire the team while also being a good fit with the company’s culture is important.
Culture is everything.
If your established culture promotes openness and sharing, it’ll benefit from a CEO who shares the same vibe.
The right skill set for your business
A CEO should have the skills and expertise needed to lead and grow your business. This may include industry knowledge, financial management, sales, marketing and operations.
If you work in the shoe industry, for example, you want someone with all the skills to lead a shoe-making team.
Identify and list the primary skills needed for your business, and choose those criteria when selecting the CEO.
Knowledge of your company’s industry
A CEO should have a deep understanding of the industry in which the company operates, including trends, competitors and customer needs.
It’ll help them make informed decisions that align with the market and the business.
For example, a CEO in the car industry should have a deep understanding of the latest technologies and advancements in the field, as well as a clear understanding of the competitive landscape and the needs of their customers.
This knowledge can be used to make strategic decisions, such as investing in electric vehicles and autonomous driving technology, or entering new markets.
Additionally, a CEO with a deep understanding of the industry can anticipate and respond to changes in the market more effectively, such as shifts towards sustainable transportation and changes in consumer preferences.
Strong track record of growing businesses
The new CEO should have a proven track record of success in growing businesses, either in the same industry or a related field.
It’ll give you confidence that they have the experience and expertise needed to lead your company to success.
As an example, consider a CEO who has led a software company from a startup to a well-established player in the market.
If you own a small software company and want a similar outcome, chances are, that CEO can do the same for you, as they can bring relevant and valuable expertise and experience to your business.
Can operate at the stage your business is at and take it to the next level
A CEO should be able to understand the current state of the business and have a plan for levelling it up. This includes adapting to change, thinking strategically, and making difficult decisions.
Someone could be from the same industry but never faced your business situation at this point. if that’s the case, they might not be the best person for the role.
By carefully considering the points outlined above, you can increase your chances of finding the right person to help you grow your business as you want to.
You can hire someone from your own network, post your job online, or seek professional assistance from recruiting agencies.
Welcome your new CEO by preparing all the necessary materials to be onboarded effectively. This includes sharing your story, mission, and values with them.
Remember, they’ll be learning about your business from a fresh perspective, so a plan is important to help them quickly become an integral part of the team.
With the right preparation, you can set your new CEO up for success and help them hit the ground running as the leader of your small business.
What can the founder CEO do next?
After you hire a CEO to run your business, your role as a founder can significantly vary.
In some cases, you may choose to step back and take on a more advisory role, focusing on providing guidance and support to the new CEO as they navigate the challenges of leading the company.
In other cases, you may remain actively involved in the company’s day-to-day operations, working alongside the new CEO to drive growth and success.
Ultimately, the specific action you take depends on your goals and priorities, as well as the needs and goals of the company.
Let’s list some of the most common options you can opt for.
Run different departments or take up another leadership position. Depending on the situation and what you’re good at, you could take on a leadership role in a different department or division, such as sales, marketing, or operations. You may consider taking on a different leadership role within the company, such as becoming a board member or an adviser. These options would allow you to continue providing guidance and support to the company, while the new CEO takes the lead on day-to-day operations.
Return as a CEO in a few years. Coming back is always an option. A lot of CEOs have done it. The aforementioned Ben Francis is a good example. When you come back, you’ll bring a lot of different perspectives and skill sets with you. This could help the business steer in directions that you couldn’t have done before.
Focus on other business ventures. We all have a big list of things we want to do. But time and responsibility don’t allow us to pursue everything we want. Once you step down, you’ll have more free time. You could use this opportunity to focus on other business ventures or projects, either within or outside the company. This could include starting a new company, investing in other businesses, or pursuing other professional interests.
Take a break. Simply taking some time out doesn’t hurt. You’ve worked hard, you’ve given your best shot, and now you can take time out to recharge. This could involve taking a holiday, pursuing hobbies and personal interests, or simply relaxing and refocusing.
Final thoughts on why hiring a CEO could help your business
As a business owner, you may take on various responsibilities that can sometimes distract you from more important tasks.
Hiring a CEO with the right experience means they can take charge of the critical decisions related to day-to-day operations. Meanwhile, you can focus on new strategies, innovations, or tasks of which you are better equipped to tackle.
Building a business from scratch can be fulfilling and challenging at the same time.
You had the vision and guts to start your company but you need the self-awareness to recognise if you need help.
Knowing your limits and when to bring in someone with more experience can only move your business forward faster.
Editor’s note: This article was first published in February 2023 and has been updated for relevance.
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