By nature, most entrepreneurs are control freaks. Often that characteristic is key to initial success. But there may come a time when the skills you brought to your company are not enough to develop and grow it. If you've reached that point, it may be time to hire a CEO.
According to William M. Mayfield, director of the Center for Entrepreneurial Studies at Washington & Jefferson College in Washington, Pennsylvania, the right time to think about hiring a CEO is when entrepreneurs come to the realization that they have maxed out their personal resources and knowledge bases and need to go back to where their talents are.
That's what happened to Mary Westheimer, co-founder of BookZone Inc., which does Web site design, development, hosting and promotional services for the publishing industry. Westheimer, 45, started her business in 1994. By her fourth year, she knew she needed help. "I had exceeded my skills and gotten as far as I could get comfortably," she says. "I recognized that it was me who needed to be replaced because my skills were in sales and marketing, not the day-to-day operational stuff. It was just a matter of finding the right person."
That person was Edward Palmer, a publishing industry executive and former customer who joined BookZone as president and COO in early 2000. Since Palmer came on board, sales have doubled, and Westheimer couldn't be happier. "I never had a moment of regret, nor did I feel any shame saying I needed someone to run the company better than me," she says.
Sometimes outside forces necessitate bringing in a more experienced hand. In 1999, Outercurve Technologies Inc., a 1-year-old New York City-based financial services wireless technology company, was ready for its second round of venture financing. Before forking over any cash, however, VCs wanted to see whom the founders-Eric Solash, 30, and Larry Rubin, 42-would bring in as key executives.
Enter Arnie Reichman, partner and COO of Warburg Pincus Asset Management in New York City. When Reichman became Outercurve's CEO in April 2000, the company had 10 employees. Today it has 60. "I had seen the pitfalls associated with growth, and I had been working in one of the key markets they're trying to access, so my contacts are helpful," says Reichman.
Solash admits he initially thought that hiring a CEO would be a "rubber stamp" situation. "Lots of young founders think it's no big deal to just bring on an old gray-hair to make the venture people happy," he says. But Solash was sur-prised: "It turned out to be a tremendous learning experience for me. I really underestimated how important it was for us to have someone with this much real-life experience. I also felt a tremendous sense of relief from not having to do a thousand jobs anymore."
A CEO means big changes for your company and its culture. "Most founders tend to only look at someone's experience and operational skills, not his or her interpersonal and team-building skills, which can be a mistake," warns Don Andersson, author of Hire for Fit (Oakhill Press), due out in May. "The new CEO needs to introduce change with a surgeon's scalpel, not a meat cleaver."
Putting your company in the hands of someone else is like hiring a baby-sitter for your child. No one will love your business quite as much as you do, but the right individual may be just what it needs to succeed.
Group, a management consulting firm in Houston, advises asking
yourself several questions to determine whether it's time to
hire a CEO. "If you're learning too much on the job, you
may be risking the viability of the company," says Forte
co-founder Steve Harris. Ask yourself:|
Ellen Paris is a Washington, DC, writer and former Forbes magazine staff writer.
- Forte Group, (713) 964-6789, www.fortegroup.com
- Outercurve Technologies, www.outercurve.com, firstname.lastname@example.org
- Washington & Jefferson College, email@example.com