Why Entrepreneurs May Not Always Be the Best Managers for Their Businesses

Entrepreneurs are often celebrated for their ability to bring innovative ideas to life and navigate the uncertainties of starting a business. However, the traits that make them successful as entrepreneurs—such as embracing risk, enjoying new challenges, and being willing to fail and start again—can sometimes become obstacles when the business is established and operational. Let's explore why this dichotomy exists and how understanding the differences between entrepreneurship and management can help founders and businesses thrive.

Personality and Skillset Differences

The success of a business often requires two distinct personality types and skill sets: that of an entrepreneur and a manager. While these roles can sometimes overlap, they demand very different mindsets and actions.

Entrepreneurial Traits: Successful entrepreneurs are typically bold, creative, and proactive. They thrive on the excitement of starting something new and pioneering a vision. However, once the business begins to achieve traction, its early success can become a double-edged sword. The risks that initially enticed investors now affect the livelihoods of employees and the broader community. Failing at this stage can have far-reaching negative impacts, leading to more than just financial losses.

From Risk-Taking to Risk-Mitigation

The transition from an entrepreneur to a business leader involves a shift in focus from growth to securing the operational functionality of the business. Entrepreneurs are more focused on expanding the business and creating new value. In contrast, managers are more concerned with ensuring that the defined processes are followed and that everything operates smoothly according to the plan. While entrepreneurs are inherently energized by creating something new, managers are more grounded in maintaining existing systems and structures.

Skills and Roles

Entrepreneurs tend to be creators rather than managers by nature. Their strengths lie in generating new ideas and driving innovation, but they may not possess the managerial skills required to sustain and scale a business. Conversely, managers are often very proficient at operational processes and ensuring that the business runs efficiently. These two roles can sometimes be in conflict.

Evolution of the Business

Businesses undergo significant transformations as they progress from their initial stages in a garage to dominating a market, establishing a competitive position, and growing profit margins. To navigate these changes successfully, businesses need to evolve their models:

The Growth Model changes as the business scales and evolves. The Operational/Processes Model changes as the business mature and demands shift.

During each stage, the skills and approaches required change. A person who excels in one phase may struggle in another. Entrepreneurs need to recognize the importance of adapting or allowing others to take the lead as the business transitions through these phases.

The Role of Self-Awareness

The most successful businesses often see their founders and leaders evolve with the company. Developing self-awareness is crucial in understanding when a shift in role is needed. For smaller startups, the entrepreneur may still play a key managerial role, but as the business grows, it becomes less critical for the top management to be exceptional. Many successful companies have top management that is not perfect, but their overall market advantages compensate for these shortcomings.

Conclusion

While entrepreneurs can be incredibly valuable in the early stages of a business, recognizing the distinct roles of entrepreneur and manager is essential for long-term success. Entrepreneurs and managers bring unique strengths and skills to the table, and both are necessary for the business to thrive.

Final Thoughts

Entrepreneurs play a vital role in creating new ventures, but as businesses grow, the focus shifts to securing and optimizing operations. Understanding and adapting to these shifts helps ensure that your business continues to evolve and succeed. Keep refining your approach and embrace the challenges as you evolve with your company.