Beware of the Founders Trap: It can Kill Your Business

founders trap

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Before discussing the founders trap, and how it can sink a business, let us first have a simple discussion of the four typical phases of a business life cycle.

1. Start-Up Phase

This is the client acquisition phase.  The owner is trying to drum up business, tweaking their business model as they gain insight into the marketplace and how to best, turn a profit.  There are few systems in place.  The owner wears many hats.

2. Growth or Go-Go Phase

The business is beyond the worry of client acquisition and has established its place in the market.  Existing client relationships are three or more years older.  It is now that the business can begin looking inward, identifying barriers to, and implementing operations and systems for, turning the business into a company.  It is during the growth phase that a business has the opportunity to become a company, and an owner, a CEO

The company is dependable and revenue, steady and consistent.  Managers are running the day-to-day operations and systems are running smoothly.

4. Decline/Renewal Phase

Seeing their place in the market as steady, some owners get a false sense of security and complacency sets in.  Revenues begin to decline, and the company is at a crossroads.  Some owners choose this time to cash out, while visionary owners decide to innovate, redefining and repositioning the company’s standing in the marketplace.

founders trap

It goes without saying, a business without clients, is dead.  However, it should also be said that a business with clients that it cannot properly serve, is also dead.

During the start-up phase, the business is focused on client acquisition. Understandably, little attention is paid to the operations and systems for servicing clients.  But as a business transitions into the growth phase, the focus needs to change.  Facing growing demands on productivity, the business needs to implement new processes for meeting this demand.

It is within the transition from start-up to go-go that the founders trap lurks.

 

During the business’s infancy, the owner typically wears multiple hats;   chief executive office, chief financial officer, chief operating officer, chief technology officer, and director of marketing, just to name a few. But where it was once feasible for the owner to juggle all these tasks alone, a growing client base eventually makes it impossible for one person to handle the load.   The owner must be willing to relinquish a hat or two.  If not, productivity will suffer, mistakes will be made, clients will become disillusioned, and chaos will reign.  If allowed to persist, the business will become a victim of its own early success.

So how can you tell whether your business is wallowing in the founders trap?

6 Warning Signs Your Business is Ensnared in the Founders Trap

  1. The founder makes every decision
  2. The founder is not delegating authority
  3. Achieving growth only happens through the direct actions of the founder.
  4. The essential teams and operations are in chaos
  5. The founder is frustrated with employees

Team members, though willing to work are frustrated by the chaos

How You Can Free Your Company from the Jaws of the Founders Trap

Freedom from the founders trap begins with the founder.  They have to make an honest assessment of themselves to see how their actions are effecting the well-being of the company.  They must be willing to change. They should consider hiring a business coach, who can help them release their “inner leader”.

The owner should also consider hiring an operations consultant, who can help create and implement new systems, which will improve organizational efficiency. And the owner must be willing to delegate these new responsibilities to employees.

Though these are not simple tasks, if an owner is willing to takes these steps, they will transform the business into a company and ensure the company’s transition to maturity.

 

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