In general, most founders and business owners consider themselves as the automatic CEO of their companies.
However, without the right skills and expertise, they often lack the much-needed experience of being a company’s CEO. Or it may simply not be the role that excites you the most.
Remember, it is all about maximizing the full potential of the company and mission, without letting your ego get in the way. Therefore, as an entrepreneur and business owner you need to ascertain the fact that your company needs a professional company CEO.
This might be right from the start, or a year or two into business.
The Ultimate Guide To Pitch Decks
Why is a CEO Important?
There is a misconception that a CEO or Chief Executive Officer is only hired as the top leader of large, established, and multinational companies.
However, this is not completely true. Small and medium-sized companies need a CEO just as critically as big organizations.
Although they are not always owners or founders, the CEOs are considered the most dynamic and influential people in the organization. With high-level expertise and extensive experience in their respective field, a CEO is a key decision-maker in a company.
According to the most successful business founders, there are four things that dominate their time and role as CEOs:
- Fundraising and making sure the company doesn’t run out of money
- Hiring and interviewing new hires, like CEOs and other executives
- Instilling the vision and curating company culture
- Managing the exit and sale of the business
The CEO leads in these areas, making high-level decisions, and setting the tone for everyone else. They are also often the scapegoat if things go poorly.
See How I Can Help You With Your Fundraising Efforts
See How I Can Help You With Your Fundraising Efforts
The Difference Between the Business Owner, the Founder, and the CEO
The business owner may or may not have been one of the original founders. It could be a new individual owner, a corporation that acquired the company, or a pool of private or public shareholders with varying percentages of voting rights.
The company founder or founders are the individuals who started the business from scratch. He or she is the conceiver of a particular business, product, or service idea. Through proper business planning and hard work, the founder grows it from scratch to create commercial value.
The CEO or Chief Executive Officer is the highest-ranking executive manager or top leadership position of the company, aside from the board of directors and controlling shareholders. He or she can be the founder or owner as well.
Together they work to administer and oversee the various business functions and activities. Their prime goal is ensuring the survival and growth of company operations in alignment with the company mission.
Hiring a CEO for Your Business is Critical
Deciding when to hire a CEO for a company can be a little confusing for a new entrepreneur. It’s a critical decision. One that most successful entrepreneurs say that they wish they had made earlier.
The selection process of a CEO varies from company to company. Some organizations opt to elect a CEO through the voting rights of their directors and other primary stakeholders. While some other companies decide on hiring a CEO through a recruitment process. Especially, when there are no external investors involved yet.
The decision to hire a CEO varies according to factors such as:
- Size of the company
- Stage of business
- Growth rate
- Financial health
- Other time demands on the founders
- The wishes of major shareholders and investors
The next big challenge faced by a business owner or company is hiring the right CEO. With such a high stake job description, the right person can make or break your company, brand and future.
Especially when you are looking to raise a financing round and want to look as buttoned up as possible towards investors. In this regard, keep in mind that in fundraising, storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
When to Hire a CEO
The timing and decision to hire a CEO is a critical challenge. It should be considered with careful analysis, strategic evaluation, and the input of trusted advisors.
While there may be perceived financial constraints or pressure from the board and investors, it is never too early or late to hire a great CEO.
Here are some of the specific triggers that may spark that decision.
The Founder Lacks Business Experience and Industry Know-How
The founder may be a great entrepreneur with some magnificent ideas and concepts but, coming up with the right strategies and plan of action to transform that idea into a successful business may be beyond their existing skillset.
If a company owner lacks the practical experience and specialized expertise in a given industry, they might end up destroying the company.
For this purpose, they need professional experience to execute their plans. CEOs are mostly individuals who have extensive practical experience of years and have done it before, at this level.
Sometimes, founders and business owners also lack the communication skills to reach out to employees and investors. The CEO can also be a helping hand in that scenario.
Or an experienced repeat entrepreneur may even be moving into a new industry, where an experienced CEO can help bridge the gaps in their domain knowledge.
The Founder Is Too Busy
Some founders start new startups, get them running and move on to new ventures. Or in some instances, you are already working elsewhere while starting new companies.
In such situations where a founder is unable to give his dedicated time and attention to a company, you need someone experienced, professionally skilled, and industry adept to cover the leadership role.
In other cases, the founders may have the incredible technical knowledge and high IQs but are vitally needed in product design, scientific testing, or other development.
Running a company is not an easy job. Especially when it is growing. As an owner, you need to ensure that all operations and functions are running smoothly. If you as a founder remain stuck up in the day-to-day affairs of your company, who is going to focus on long-term development and operational management?
This is where a CEO comes in. They can look after the company affairs as a top-level manager while you as a technical founder can focus on innovation, growth, and development.
You have to have sales, fundraising, and hiring happening right from the beginning. You probably don’t have time for that and coding or developing new IP.
Two of the biggest challenges for every startup venture are credibility and visibility. That struggle can go on for years.
Now imagine you could hire Warren Buffett, Larry Ellison, Bill Gates, or Richard Branson as your CEO. Imagine the immediate difference that would have across your venture.
This is another common time to bring in an outside CEO. Often one with turnaround experience. Someone who has been through the times before, and knows how to handle layoffs, restructuring, and managing through tough times.
How to Hire a CEO
Identify the Skills and Job Expertise of the CEO
Now that a need has been assessed, the company founder should now work on what exactly a CEO needed to do.
This should include all the required professional skills, practical experience, job history, networks, personality traits, values, company culture fit, and other characteristics that you need in an individual to qualify as a CEO of your company.
With the job requirement and specifications in place, the process of recruitment will be much more logical and enable you to hire the right person for the job.
Decide the Sources and Places to Search
There are a number of ways you can search for an appropriate candidate for a CEO. Among the most effective resources, the following are the best.
- Use Professional Assistance or Headhunters
There are several human resource companies and recruitment agencies that specialize in finding the right candidate for you. They will not only help weed out the inappropriate individuals but will also vet the qualifications and capabilities of the chosen ones.
- Use Your Network
As an entrepreneur, you have regular interactions with other business people and entrepreneurs, as well as your investors. Spread the word around in your network that your company needs a CEO and many candidates might pop up.
- Advertise the Vacancy
This is the conventional way to advertise your job opening for a CEO. Do not forget to employ digital media resources for advertising your job proposal.
Identify the Lead for the Selection Process
As a team, you need to keep some key members of your company on the selection board. List down the names of the key persons and stakeholders within your organization, who will fulfill vital roles in the CEO recruitment and selection process.
Attract & Approach Candidates
After you have launched an active search into the market, you are likely to get some options in hand. Several candidates might approach you for the job vacancy.
The crux of your efforts should focus on not just looking for a candidate but also having the ability to attract the attention of good candidates to your CEO slot.
While interacting with them through interviews and telephone calls, make sure to present your company as a promising opportunity for the candidate.
Keep in mind that effective recruitment is always a two-way process. As much as you want a candidate to be the right person for the job, the candidate also wants the company to be the best for them.
Top-ranking CEOs in the industry are likely to receive unlimited offers from companies regularly. As an organization, you need to make yourself stand out and offer then the best opportunity among all.
Screen the Candidates and Shortlist Your Choices
Screen and evaluate your candidates based on the skills, job description, and job requirements you have designed.
Narrow down your list into a small number to make the process less time-consuming and productive.
As a CEO position is risky and high stakes, you need to perform your due diligence thoroughly.
Use your networks and social connections to search for company feedback and references for the candidates.
You may also wish to carry out some level of psychometric and personality analysis. These assessments will help ensure that the candidate can fit into the company’s culture and leadership roles.
Conduct Final Interviews
This is almost the final stage of the hiring process. Make sure you have designed and drafted a set of competency-based questions. This will help you analyze the candidate’s given skills much more effectively.
The questionnaire should allow you to rank or score the candidates based on their answers.
Final Due Diligence
Although all the candidates have been screened initially, make sure to embark on a thorough and deeper due diligence on the candidate that you finally select.
With their consent, and within the legal boundaries of your jurisdictions, check for identity and profile parameters, criminal records, negligence claims, lawsuits, past directorship decision outcomes, disqualifications, and track records of working as a CEO.
At this point, you may conduct a financial credit check as well.
Make the Final Offer
Once you are sure of your selection, it is time to make the final offer to the candidate. All the relevant stakeholders should be on board with this decision. You need the full confidence and support of your team to make sure the CEO is productive for your company.
On the video below I cover how to position the team in your pitch presentation and this includes the CEO that you will be recruiting.
Hiring a CEO for your company can be a challenging task. As a business owner, you should be looking for someone who is not only professionally competent but also has the integrity and sincerity to sail your company in the right direction.
With a thorough analysis and robust recruitment system, you can hire the right candidate and set your startup on a better trajectory.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.