There’s a big difference between starting a new company and managing a growing one. If you’re a business owner with an expanding company, you might find yourself at a point where you need to start thinking more like a manager. This could mean shifting into a manager role yourself, hiring a manager, reducing the size of your business, or teaming up with a partner with skills and experience in operations.

As Steve Blank describes, the evolution from a startup to a company is like a “Graduation day” – a pivotal moment when the business uncovers a scalable and repeatable model. The transformation from a startup’s flexible search-focused culture to a company’s execution-oriented approach involves restructuring the team into formal departments, such as Sales, Marketing, and Business Development.

This transition often results in what could be likened to a Shakespearean tragedy in the entrepreneurial world. As the potential for significant returns becomes evident, venture capitalists may decide that the original visionary entrepreneur is no longer the best fit for leading the burgeoning company. The founder might be replaced with a seasoned executive who can help scale the operations.

Entrepreneurial Vision to Managerial Structure

My father, the CEO, was the visionary entrepreneur in our family business. His innovative ideas were the driving force of our operations, and I, as the president, shared his entrepreneurial passion. However, as the company expanded, I observed a pressing need for a more structured approach.

Family discussions, often fueled by our firm commitment to the business, began to highlight a growing concern. We were hitting a ceiling, a point of stagnation that demanded a change. Our passion-driven venture needed the discipline of systematic management to reach new heights.

I stepped into a role I hadn’t anticipated–a manager. The objective was not to stifle our creative energy but to channel it into practical and organized workflows. It involved bringing structure, ensuring accountability, and instituting processes that transformed our venture into a well-coordinated operation.

Striking the right balance between maintaining our entrepreneurial spirit and implementing managerial discipline was challenging. During this difficult time, we discovered Gino Wickman’s “Traction.” This book, introducing the Entrepreneurial Operating System (EOS), offered practical tools to help direct our creative energy into a streamlined business model.

Patrick Lencioni’s “The Ideal Team Player” was our guiding light in creating a robust and cohesive team, outlining humility, hunger, and intelligence. His philosophy influenced our approach to team building and personnel decisions.

Balancing Entrepreneurship and Management

As a business advisor, I have seen my clients at similar crossroads in their organizational life cycle, where the need to balance entrepreneurship and management becomes critical. My journey and the transformation in our family business underline the importance of merging visionary entrepreneurship with disciplined management for sustained growth and success.

First, let’s talk about what management is. In simple terms, management is about setting goals and using resources, including your team, to reach those goals. This means a good manager needs to be a good planner, communicator, organizer, leader, motivator, and evaluator.

Management involves taking what you have (inputs), like your team’s skills and company resources, and turning them into what you want (outputs), like a successful product or service. To do this effectively, managers need to understand how their company interacts with the world outside and how different parts of the company work together.

Management is a mix of art and science. The art part is about skills that are hard to measure, like motivating people, leading a team, and using your intuition. The science part involves using logic and analysis to solve problems by observing, classifying, and studying facts.

The Entrepreneur’s Focus

On the other hand, entrepreneurs are focused on possibilities and the future. They are good at seeing patterns, finding new opportunities, and developing innovative ideas. They often do this without worrying too much about their current resources. Instead, they are good at finding and using resources, overcoming challenges, managing risks, and sticking with their new ideas to create change.

In a successful company, there’s a balance between management and entrepreneurship. This means being focused and disciplined in managing the business while being visionary and willing to take risks to create the future. This balance is hard to achieve. Some companies do it well, while others struggle.

As a business owner with a growing company, understanding the differences and similarities between management and entrepreneurship is very important. It can help you decide when to think like an entrepreneur and when to act like a manager. This balance can help your business continue to grow sustainably.

The Manager

A manager keeps the company’s operations running smoothly. They do this by:

• Directing
• Planning
• Organizing
• Leading
• Controlling
• Staffing
• Motivating
• Budgeting
• Evaluating
• Coordinating
• Supervising

The Entrepreneur

An entrepreneur is a visionary who identifies and acts on opportunities. They think outside the box, see the bigger picture, find potential business opportunities, create new products or services, take calculated risks, make the most of available resources, and lead the way in implementing new ideas. Here are some fun roles they take:

• Tactical strategist
• Forward-thinker
• Seeker of opportunities
• Originator
• Trailblazer
• Prudent risk-assessor
• Resource optimizer
• Agent of change
• Adaptable initiator of fresh ideas

The Entrepreneurial Manager

An entrepreneurial manager combines the roles of a manager and an entrepreneur. They manage ongoing operations while also looking for new opportunities. They adapt to change, always look for ways to innovate, and take calculated risks. Its about:

• Strategic Leadership (Directing, Planning, Tactical Strategizing, Forward-Thinking)
• Organization & Coordination (Organizing, Coordinating)
• Motivational Management (Leading, Motivating, Staffing)
• Resource Efficiency (Controlling, Budgeting, Resource Optimizing)
• Outcome Evaluation (Evaluating, Prudent Risk-Assessing)
• Innovation & Creation (Originating, Trailblazing, Adapting and Initiating Fresh Ideas)
• Opportunity Seeking & Leveraging (Seeking Opportunities)
• Change Management (Enacting Change)

The Entrepreneurial Manager’s Balancing Act

Stepping into the role of an entrepreneurial manager in my father’s business meant finding a balance between creativity and order. We needed to organize and structure our operations while maintaining our innovative spirit. Therefore, we hired a Chief Financial Officer (CFO) to handle our finances better and make informed decisions.

Furthermore, we set up a Human Resources department for better hiring and conflict resolution processes. On top of that, we designed procedures and established standard processes to guide our team and improve our work. Through all these changes, we made sure to keep our creativity alive. This mix of entrepreneurship and management was challenging, but it helped our business grow and succeed.

Once we scaled to over 12 million in sales and over 100 team members, we recognized that to take our business to the next level, we needed the expertise of seasoned executives. We saw this not as a loss but as an opportunity to guide our company’s growth trajectory in partnership with these experienced professionals, preserving our entrepreneurial spirit while adapting to a growing business’s demands.

Conclusion

Balancing entrepreneurship and management is critical for growing businesses. This balance was instrumental in our family business, where we married our entrepreneurial spirit with structured management. Through adopting roles like strategic leadership, resource optimization, and innovative thinking, we managed to harness the benefits of both worlds. This journey and the challenges overcome underscore the importance of being both a visionary entrepreneur and a disciplined manager for sustainable growth and success.

Becoming an effective manager is vital for organizational success, but there’s no one-size-fits-all approach. Different leadership styles excel in various contexts, so understanding your fit within an organizational structure is critical. Please tune in to this episode for valuable insights on effective management and its significance for success. Designing Organization Structure