What to Do When Your Business Outgrows YOU

After more than two decades of coaching leaders across industries and around the globe, I’ve come to the following inescapable conclusion: It’s exceedingly rare to not have a business outgrow its Founder.

Scaling successfully requires recognizing this reality in order to adjust your perspective, mindset, and behaviors to do what’s best to support the business. More often than not, however, businesses stagnate, struggle, or fail altogether because the Founder / CEO refuses to admit and/or act on the fact that their organization’s needs have exceeded their capabilities.

Let’s explore why your business will most likely outgrow you in your current role, learn what you can do to avoid getting stuck, and discover how a change in perspective can transform both your potential and your organization’s growth trajectory.

Why Entrepreneurs Don’t Scale

To realize why most firms inevitably outgrow their founder, it’s critical to acknowledge that the qualifications to start a business are very different from those necessary to operate one at scale.

Imagine playing a game of word association with someone you know. If you were to say the word “entrepreneur” and ask them what comes to mind, they would likely respond with terms including “scrappy,” “fast-paced,” “risk-taker,” “unstructured,” etc.—all traits that allow Entrepreneurs to throw caution to the wind and lean into launching their big idea.

The qualifications to start a business are very different from those necessary to operate one at scale.

While those attributes are both necessary and ideal to get things up and running, they don’t align with the qualifications required to keep an established, profitable business on track and growing at scale. That’s why savvy founders seeking continuous growth hire an operator.

It’s certainly an Ego stroke to retain the Founder / CEO title, but it’s quite another thing to hand your growing toddler or preteen “baby” to a professional operator—typically a president or chief operating officer—who replaces you to run the operational day-to-day, week-to-week, month-to-month, quarter-to-quarter, and annual rhythms of the firm. That said, I’ve had multiple clients over the years who, with coaching, have done this with tremendous success. In hindsight, all of them report that it was the best thing they ever did to drive their aspirations, financial returns, and quality of life.

But making the decision and preparing for the transition is universally challenging. Here’s why: If your self-image is “Founder and CEO,” you’ll likely feel threatened by the idea of hiring someone to operate the business, because you’re already that person. This perspective reveals the primary obstacle Founders face as the firm outgrows their managerial and leadership capabilities: The decision to hire an operator conflicts with their self-image—who they believe they are!

Sadly, this is why it’s so darn hard to grow any business into significance. This can be observed statistically by taking a peek at the US Small Business Association’s (US SBA’s) grim survival data, which indicate that 96 percent of all business starts fail to grow beyond $1 million in revenue.

The Entrepreneur’s self-image is commonly in the way! But why is this so pervasive?

It’s highly unusual for Founders to be self-aware and willing to do something about it. Common obstacles to letting go include ego (fear of losing status), scarcity (fear of not being “fully” in control of the business), misunderstanding the very different roles of Owner and Manager, and resistance to funding an experienced hand to accelerate the firm. Your self-image is enmeshed in each of these obstacles, which is why they are so challenging to overcome. But there’s good news in the form of a path forward:

I’ve found there are three phases to every Founder’s self-image that evolve and progress for those willing and able to release one phase to reach the next for the benefit of themselves and their firm. They are the Entrepreneur, Builder, and Investor.

Transitioning from Entrepreneur to Builder

The first evolution of the Founder’s self-image advances them from “Entrepreneur” to “Builder.” Builders realize they’ve created something meaningful and understand that continuing to develop it demands discipline, process, and rigor.

Let’s consider the term “Builder” and play word association again. What words and phrases would your friends associate with the term “Builder?” You may find yourself thinking of some of the following:

  • Firm foundation
  • Right pieces in the right place
  • Process
  • Following a plan
  • Growing

The “Builder” self-image is a seismic shift from your self-image as an “Entrepreneur” and, in fact, is essential for survival as your firm grows into adolescence. Yet those with a “Builder” self-image also struggle to replace themselves as the business outgrows them. This is because they still perceive themselves as critical to the operation. The “Builder’s” self-image, just like the “Entrepreneur’s” self-image, doesn’t align with hiring an operator largely due to the same set of fears and obstacles preventing them from taking action.

Becoming an Investor — Where the Magic Happens

The third phase of the Founder’s journey is where the magic happens: Your self-image shifts yet again! This time, it’s from “Builder” to “Investor.”

Investors place bets on others to do things that generate a return. With the self-image of an “Investor,” it becomes much easier to see the obvious answer that will drive a higher return from your business: hiring an expert to run and continue scaling the operation. In fact, you must invest in others at some point to achieve the kind of return you seek. It’s the only way to move beyond your current position and contribute to the meaningful development of something bigger than yourself.

You must invest in others at some point to achieve the kind of return you seek.

Of course, none of these transitions are easy or low stakes. The Founder’s self-image journey from “Entrepreneur” to “Builder” and then, hopefully, to “Investor” represents a tremendous shift in identity, mindset, and behavior. But if you think back and remember the earliest days of your venture, you might realize that at inception, an “Entrepreneur” is actually an “Investor” in disguise. After all, when you launched your firm you chose to invest in yourself and fund your idea. The irony of the entrepreneurial self-image journey is that it’s about figuring out how to return to your roots as an investor in people and ideas!

Conclusion

As your self-image advances through this rarely traveled full progression, you’ll be better positioned to make hard decisions, including the one to step aside when the business almost inevitably outgrows your capability to operate and grow at scale. The ability to transition makes you that much more likely to breathe the rarefied air not only of the 4 percent of businesses that scale past $1 million in revenue, but also of the 0.4 percent who scale past $10 million in revenue (US SBA data). When you evolve your self-image to align with the real needs of your business, your business evolves in response–not the other way around.

Think about your current self-image—are you an “Entrepreneur,” a “Builder,” or an “Investor?”—and what (or who) can help you transition to the next phase? Yes, all meaningful change is uncomfortable at first, but rest assured that moving through this progression will be well worth it. Remember–every one of my “Investor” clients say it was the best thing they ever did to drive their aspirations, financial returns, and quality of life.

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