By: Craig Speed & Mark Rittmanic
The Position of Choice is a fundamental long-term goal for business owners, yet most never get there. Why? Simply put—most business owners are mired in the day-to-day running of the Business and never implement the changes required to achieve these Choices. That is unfortunate because the alternative, the Founder’s Trap, has ruined the health and relationships of many leaders as well as the growth and profits of countless businesses. And it has denied most business owners the legacy they long aspired to achieve.
At FortéOne, we believe the long-term goal for every business owner should be to achieve the Position of Choice. The benefits are personally and financially rewarding. And once achieved, the business owner can step away from the day-to-day running of the company and has the Option to do any of the following:
This last point is important—here’s why: the changes required to optimize a business for sale are consistent with the changes that deliver The Position of Choice. But the beauty is that once realized, you do not have to sell—although you are well-positioned to sell.
Most executives never intend to retain all the decision rights as the Business grows. But if a leader fails to surround themselves with competent staff that have earned the right to make decisions, that is the result.
The Founder’s Trap occurs when a leader is so essential to a company’s day-to-day operations that the business requires their continued daily involvement to sustain and grow.
The leader doesn’t hand over key areas of responsibility to others—and therefore can’t attract or retain people who have the ability to grow the Business. We often hear them say, “if I get hit by a bus, this business would probably fail to exist.” The result is a business that is denied the structure, specialized roles, formal processes. and managerial hierarchy required to grow.
As the Business grows, these leaders find themselves working long hours, making little progress, and feeling as though the Business has taken over their life (which it has). They are unable to take extended vacations without constant interruptions, spend adequate time with family and friends, or just enjoy life. They no longer control the Business—the Business controls them. And although that takes a huge personal toll, the toll on the Business is often worse.
Leaders in the Founder’s Trap become the number one factor limiting business growth for two reasons. First, growing a business requires a dramatic broadening of specialized skills across multiple disciplines, and a single leader will never possess the necessary expertise to make informed decisions for the entire company. As the firm grows, the magnitude and complexity of decisions across the company reduces the founder’s ability to effectively wear multiple hats. Second, there are only so many hours in a day, and key areas will get less of the leader’s time as the company grows. But the challenges with the Founder’s Trap extend beyond growth.
The “control orientation” that causes leaders to retain all key decisions is almost always accompanied by other growth-limiting factors. These include retaining people who are not qualified for their roles, failing to invest in systems or processes that allow the Business to scale, neglecting to establish a Culture of Performance where employees understand how their work contributes to the company objectives, and not developing (with staff) a compelling strategy. And the list goes on.
A single leader does not have the experience, technical competence, or personal bandwidth to oversee all the efforts required for sustained growth. The behavior that results in the Founder’s Trap is inherently self-limiting; if the leader needs to control everything, then they also need to ensure that all areas of the company do not evolve beyond their (limited) experience, capabilities, and personal ability to exert control. The result: revenue, profits, product quality, customer service, and talent retention will eventually suffer.
We often tell owners: “If you are making all the important decisions and feel that the firm would not survive without you, it’s time to change your role at the company and relinquish some control. By building out a competent team and collaborating with them to make decisions, you’ll start building a business that gives you options.”
Because this also involves bringing in skillsets that are new to the Business, it requires external assistance to identify and implement the capabilities and culture required for achieving the Position of Choice. This is another reason why many leaders never “evolve” their companies. Accepting that outside expertise is needed can be a tough decision for leaders with a strong control orientation.
FortéOne is a firm with over two decades of experience assisting middle market business owners in breaking out of the Founder’s Trap and achieving the Position of Choice. This experience has fueled our development of the Value Accelerator process—where we work alongside owners to speed the path toward the Position of Choice.
Speak to us today about how you can get out of the Founder’s Trap and on your way toward the Position of Choice.