The Transition From Entrepreneur To Leader

By Arlin Sorensen, O and Founder of the Heartland Companies which includes HTG Peer Groups

Without a doubt the biggest challenges most small businesses face revolve around people. I see these in two key areas:

1. leadership (or the people at the top)
2. employees (or the people who do the work)

The fact of the matter is that very few small businesses ever grow beyond 10 employees. In fact, U.S. census bureau data shows that barely 10 percent will ever overcome that barrier. That is a pretty staggering statistic. Does it make sense? I think so, and see regularly how it becomes the outcome for most businesses when I am leading peer groups or consulting in small businesses.

Let’s address the first of these major issues — the leadership challenge. Most small businesses are founded and operated by a person with an entrepreneurial mindset. Michael Gerber, in his book E-Myth Revisited calls these folks accidental entrepreneurs. They don’t necessarily set out to create a business. Often they are gifted at sales or service delivery and soon find themselves believing they can do it better than the company they work for currently, or they see an opportunity that is not being filled today. So they start a journey to create a company and serve some customers. Soon they are overloaded so they find another person like themselves who becomes their first employee, and the journey has begun.

Over time they gradually add a few more people all while running the business through direct interaction with each of the team members. You can do that for a while and even make all the decisions along the way. But at some point in time, often in the 5-to-10-employee range, things begin to break down.  The entrepreneur at the top becomes a bottleneck because everything has to go through him or her.  He or she always made all the decisions. After all, it is the entrepreneur’s business. But unfortunately that model doesn’t scale and soon things are really a problem and the staff and customers begin to express dissatisfaction with a company that they were previously very happy with.

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