Why Startup Founders Often Fail to Become Great CEOs

Becoming a great CEO is a challenging task for anyone. But it can be even more difficult for startup founders. Why? Because the energy and skills required to conceive and launch a business into existence are very different than the skills required to be an effective CEO who can scale a company.

Many founders struggle to grow into the role of CEO as their companies grow and evolve, and this can lead to a lack of growth and loss of passion, at best, or flat-out business failure at worst.

In this post, I’ll explore some of the reasons why startup founders often fail to grow into great CEOs and provide advice on how they (or you) can improve the odds of success.

The E-Myth

One of the primary reasons why startup founders fail to grow into great CEOs is a lack of leadership experience. After all, many founders are first-time entrepreneurs, and they may not have the background or skills necessary to effectively lead a growing company. They may make mistakes and missteps that can cripple the business, and they may not have the knowledge or expertise to navigate the complexities of running a business at scale.

Michael Gerber’s book, The E-Myth, provided great insight into this dilemma. As this Forbes article states, the E-Myth (“Entrepreneurial Myth”) is the mistaken belief that most businesses are started by people with tangible business skills, when in fact most are started by “technicians” who know nothing about running a business. Hence most fail.

The result is that many startup founders stay in their comfort zone of being “technicians” where they do stuff for the business and never grow into the very different (and distinct) role of leading the business.

Lack of Guidance

Another reason why startup founders fail to grow into great CEOs is a lack of mentorship and guidance. There’s a reason we’ve all heard the expression, “it’s lonely at the top.”

Many startup founders are on their own when it comes to learning how to run a business, and they may not have access to experienced mentors or advisors who can help them navigate the challenges of growing a company. Without the guidance of a mentor or a CEO Peer Group, founders may make poor decisions that could have been avoided. Or not have the courage to act on opportunities that could have propelled the business to new heights.

Mired in the Day-to-Day

Another major issue is a lack of focus. Many startup founders are so engrossed in the day-to-day operations of the business, that they tend to neglect their role as a leader. Since they feel trapped by the business and don’t take time to work strategically on the business, they may not have a clear vision for the company. The result? They can’t inspire and motivate their team members.

As a result, the company may not be able to achieve its full potential.

See the difference?

Effective CEOS are leaders, not doers. They’re not mired in the day-to-day. Instead, they live largely in the future, seeing what is possible and charting a course (and allocating resources) to make that future a reality.

To make the leap from startup founder to CEO you’ll need to get out of the day-to-day and find ways to work strategically on your business.

Develop Your Leadership Skills

Another limitation many startup founders face is the lack of management skills. As their company grows, it becomes more difficult to manage, and there are more moving parts to keep track of.

This can be overwhelming for founders who may not have the skills or experience necessary to manage a larger organization effectively. And, given the tendency I mentioned earlier of staying in the “Technician” role, they may also not be able to delegate effectively.

This can lead to burnout and poor performance.

4 ways startup founders can grow as CEOs

1) One recommendation is to seek mentorship and guidance from successful CEOs or coaches. The mentor can be a proven CEO you know. It can be a CEO coach. It can come from several mentors in a CEO Peer Group. It’s up to you to find the guidance that can best help you grow in this role. A mentor or group of mentors can provide valuable insights, advice, and support, and can help the founder avoid common mistakes.

2) Another important step is to build a strong leadership team. As a company grows, it becomes more difficult for one person to handle everything. Building a strong team with diverse skills and experiences can help to spread the workload and allow the founder to focus on what they do best. A strong team can also provide valuable support and feedback, which can help the founder improve their leadership skills.

3) Take time to develop a clear vision for the company and communicate that vision to your team. A clear and inspiring vision can provide direction and motivation and can help the team stay focused on the company’s goals. Having a clear vision makes it easier to identify and solve problems and to address challenges and capitalize on opportunities.

4) Finally, it’s important for startup founders to continue learning and growing as leaders. Too often, small business leaders think about developing their employees but forget they need to continue to develop their own leadership skills. This can be achieved in many ways. Through reading, attending workshops and conferences, or working closely with other CEOs to learn what works for them. The more knowledge and experience a founder has, the better equipped he or she will be to lead the company to success.

Becoming a highly effective CEO is a challenging task. Challenging, but not impossible.

After decades of leading both large and startup businesses, my best advice to startup entrepreneurs is to seek guidance and mentorship from other CEOs. Whether it’s a formal CEO Peer Group or a singular mentor who can guide you, the value that can come from an outside perspective is, well, invaluable.

As CEOs, we confront critical choices – growth strategies, succession planning, employee engagement, leadership development…the list seems endless. The weight of these decisions can feel exhilarating, yet also stressful. And lonely.

Even though I started an INC. 500 company, I spent too many years trying to navigate it all solo. I’ve learned every CEO needs a community of peers who understand the unique challenges we face.

Peernacle is a private peer advisory group where leaders in southern Virginia come together and help one another to make better decisions and grow as leaders. If you’re looking for a community where you can gain insight from others who have sat in your seat, explore Peernacle group membership.