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Episode 198: How To Transition From Founder To C.E.O. – with Kate Carney and April Beach

Kate Carney SweetLife Entrepreneur Podcast April Beach

This episode is for those in Phase 1 – 2 – 3 – 4 – 5 of the Lifestyle Entrepreneur Roadmap™ Not sure what Phase your business is in?

Episode Bonuses:

Grab Kate’s 5 Strategies For Scaling

Who This Episode is Great For:

Established entrepreneurs in Phases 3 of my Start To Scale Up Business System”. You’re ready to grow your team. If you’re ready to hire, grow and transition from doer to leader in your company, but you struggle to know where or how to start, this show is for you. 

Summary:

If it’s time to grow your team and stop being the one that does all the tasks, but you struggle with how to delegate, how to create culture, and how to move from founder to CEO, this episode is for you. Together we dive into why entrepreneurs struggle to transition from founder to the CEO role, And the importance of aligning your goals with your strategies and objectives, and how to go about doing this, before you hire critical team members.  We talk about the hard things like mindset shifts from doer to leader, And why some entrepreneurs should never be the CEO of their own company. 
Kate Carney is our guest expert and guides you through the process and practical shifts to move and grow your business. This episode also includes an amazing bonus worksheet that details 5 Strategies For Scaling your company right now. If you’re ready to hire, grow and transition from doer to leader in your company, this show is for you. 

Highlights:

  1. Understand what the transition from Founder to CEO really looks like
  2. Identify the importance of outlining your goals and objectives before hiring key team members
  3. Have practical ideas of how to create the culture you want for your team members and contractors
  4. We even talk about how to pay people and bring them aboard with equity in your company before you can afford a full-time salary, and what to watch out for if you do this!

Resources Mentioned:


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Full Show Transcript:

You’re listening to the suede life entrepreneur podcast, simplified strategies to grow your service business and launch a life you love faster with business mental and entrepreneur activator a probate Back to the show. I’m April beach, the host here at the Sweetlife entrepreneur business podcast and my company this week life company, and this podcast is all about helping offline companies scale online and helping entrepreneurs,

experts, and small businesses create your signature offers and launch your business. We are super excited to chat with you again today, and we have an amazing guest in the house. I’ll introduce you to her in just a second, but let’s go ahead and dive into what we’re talking about today and why it might be important for your business today. We’re talking about how to grow your team and transition to that CEO role.

You know, oftentimes new businesses struggle to move from that place of doing all the things to building the team that you really need to grow your company. So entrepreneurs and creatives, it’s a constant struggle for almost every single one in the beginning of your business, that you just automatically might not come wired with strategies and systems in mind. And you love your business so much.

Your hands are in every aspect of your business. It can be really hard to delegate and bring other people aboard. The problem we face is it’s going to cause issues with scaling your business. And when it’s time to really grow, we need you to be able to build your team and to bring the right people board so that you can take on the CEO role.

But here is the kicker. You maybe shouldn’t be the CEO of your company. And in today’s episode, our guest and I dive into that as well. She even shares an example of how one founder knew that she didn’t want to be the CEO of the company strategically in the beginning and built her team around that. And why you actually have permission to operate in your growth of your business.

However you want. There are no rules here, but let’s face it. Not all entrepreneurs are the best leaders in their company, but if you have a growth mindset, that’s a critical part to help you learn and develop the new skills that you need and want to become the leader. You can be an amazing CEO of your business. So in today’s show,

we’re talking about three steps to transition from this founder role into the CEO role. We’re talking about understanding what this transition looks like and what it means to you to go from a doer to a leader. We talk about aligning your objectives with the strategies that you want before you ever hire your first team member. And we’re talking about creating a culture within your business.

Even if you have independent subcontractors, here is the other little special question that I asked our guests today. I asked her what if a company is ready to grow, but you really afford to hire a full-time team member. And you’re considering giving equity in your business in exchange for having an advisor or somebody come aboard. And our guest today answers that question.

You get some really great wisdom as well. So today’s guest expert is Kate Carney and she’s an experienced business consultant, lawyer and strategic advisor. And she helps female founders scale businesses and reach profitability. She works with businesses in a founder centric approach to performance, focusing on leadership, talent strategies, and organizational design. And she believes that alignment in these critical areas,

results in a culture that supports sustainable growth for your business. I’m super excited to introduce you to Kate Carney, and let’s go ahead and dive into today’s show all of the show notes and the resources we talk about can be found by visiting Sweetlife co.com. And this is episode number one 98.<inaudible> Hi everyone. And welcome back to my conversation today with Kate Carney.

I’m super excited to be here and have her as a guest because we’re talking about something that I know a lot of our listeners struggle with, and that is this transition, not only mentally, but within the systems and the structures of your business, when it’s time to change from that role of being the founder of your company and doing maybe even like the Jack of all trades,

doing a lot of things into the CEO role and delegating. And that can certainly be a struggle. So we have Kate Carney here on the show today, she’s our expert, and she’s going to be diving in with you and giving you the strategies to go through this transition a little bit more seamlessly than maybe you have been doing so before Kate, welcome to the show.

Thanks so much for being here. Thank you for having me. I’m excited to be here. I am super excited that you’re here. Tell us a little bit about you and help our listeners get to know you a little bit. Sure. So I am a lawyer by practice. I know lawyers, but I am. I worked with corporate and mostly hedge funds for 12 years.

And in 2016, I quit with no plan in place, a new mortgage over my head. I just needed something different. I wanted to be challenged by something I really wanted to learn, and I had no idea what that was. And so I spent most of 17 figuring out what that could look like. And you look back on your career and you find one common thread.

And for me, that common thread was always serving as the right hand to whoever is in power, whether that the CEO or the senior partner at a law firm, that’s where I always slotted in. And it was for my judgment really, and my ability to give opinions that are reasoned with information when asked. And so, you know, what does that translate to?

I wasn’t really sure. I ended up going to a co-working space to do because I wanted to get out of my house. And I started going to events and I met a bunch of entrepreneurs and I loved hearing their stories and what they were doing. And I thought it really great to be part of this future economy and around really passionate people that I vibe with.

And so I made the transition into doing legal work for startups. I had been introduced to a gentleman who had started a boutique firm that focused just on startups and high-growth companies. And so it was the beginning of 18. I moved over to work with them and I got to work with startups mostly on any corporate legal matters from formation through, you know,

sales transactions and everything in between. And that was great. And I got to see, you know, when companies were doing well and growing and, you know, clients that didn’t get anywhere. And I served as an outsource general counsel for one client. And I went in their office twice a week and all the fed and they were falling apart. And you see all the reasons why this founder kind of fall apart or not be able to make the transition.

And I did a lot of research and I talked to a lot of founders and I, you know, I looked at all the stats around female founders and I just thought this was an area where I could add a lot of value because it poles not only my beagle rational, analytical mind, but it also pulls in some of the executive work I’ve done on senior teams and a lot of the strategic work I’ve done and it kind of pulls them all together.

So I moved on to coaching founders and I love it. I love that story. And so you were in a really unique position, so you have seen, and you, like you said, you’ve been at like the right hand of some of these really powerful and prominent leaders. And you’ve seen that and they’ve trusted you for your advice. And then you totally scaled down if you will,

to this beginning route in this beginning of seed of this entrepreneurship, and then you see the struggles there. So you have a really unique advantage point of seeing what it looks like in the end, and then coming back and seeing where people fail in the beginning. I love your story. And so in this process, going through and realizing that when a founder is in this place where they’re ready to grow,

what are some of the problems that you’ve seen that people run into mental problems and strategic problems? Why is this transition from founder to CEO and your experience so hard? I think a little bit, if we can talk about that, need to control, you know, it’s your baby and people struggle to go from it’s your baby to it’s a business, right at the beginning.

It’s an extension of you who you hire the teams, how things get done. It tends to be about personal achievement at the beginning, like the winds of the company or your wins. And you need to move into this place where the business stands on its own. And that means hiring people, putting together teams, removing yourself from the middle, and that’s scary,

right? You think nobody can do it as well as I can do it. I know my market best. I did the research. I know my product or service better than anyone, but if you want to scale, you’ve got to remove yourself from that center. And I think founders just struggled to get there. And I think part of it is,

you know, a challenge of taking on the new role and understanding what the new role is. And some of it’s just this, I can’t let go mentality. Yeah. Yeah. I agree with that. And, and we’re so emotionally charged and the things that we’ve created, it is hard to let go. And it’s hard to have trust in that.

And so what are some of the things that founders should be doing to think about their role differently when they get to this transition point? I think it’s important to fundamentally understand the different, you know, as a founder, you tend to be the execution person, the ideas person, there’s this notion if your head’s down and you’re hustling and you’re the middle of it all.

And to be a CEO, I think it’s about culture, right? Setting the right culture and developing your culture. It’s about hiring and developing your managers. It’s about promoting collaboration, putting some systems in place and then serving as the key connection to all your stakeholders. So whether that’s internally with employees or vendors, or most importantly your customers, and so that’s a big role,

no doubt about it. And honestly, most people aren’t suited for that role if they haven’t done it before. And so there’s this panic, they’re this, they’re a failure. Am I smart enough? Can I do it by let people down? Particularly if you’ve taken on venture capital dollars, will you let people down? And I think the starting point is having this growth mindset.

So always start with the mindset and then sort of the tactical. But I think the growth mindset is critical, right? If this belief that with hard work and learning, you can develop new skills. And if you want to learn something, you can read about it, or you can learn from people who have the necessary experiences. And this is where I think you can hire coaches,

find mentors, go to leadership programs, find peer to peer networks to build your leadership skills and to learn about all these other areas that are really important to being a CEO and have the conversations with others that have either done it successfully, or can guide you through the process. And some of the things you struggle with. But I also think it’s if honesty and self-awareness that you have to stop and say,

okay, what am I really good at? What are my strengths? And what do I like to do? And then what are my weaknesses and what don’t I want to do? And you might be great at something, but you also may not want to be CEO. And that’s okay to admit. And I think some founders struggle. I had a client who has a COVID her business was taking off.

She hadn’t had a patent, it was taking off. And she said out of the gate, I do not want to run this company. I want to hire somebody first step. I want to be in the MOC in there in the weeds executing. And so that’s really important to know. I have another founder that just held on to the very end and destroyed what was a company and ego kept him there.

And I think that he plays a problem. And so he’s got to know what your strengths are. You don’t have to be good at everything. Right. Nobody expects you to be good at everything. You don’t have to do it all. Yeah. Right. And I think, I think that we, we do. I mean, yeah, we,

we certainly expect ourselves to at least know how to do everything at first. And, and I think that’s an important part of being able to delegate, but I love those two examples and I love how that founder, she knew right away, Hey, listen, this is, I love what I do. It actually reminds me of Michael Gerber’s book, the E-Myth,

you know, where he goes through and just really defines the entrepreneur, the technician and the manager different roles. And we do as business owners and as entrepreneurs fit into those really differently. And if you guys haven’t read the E-Myth, it’s a great, you know, beginning business, you know, creating systems book, we’ll put a link to that in the show notes for you.

And I love that awareness that she had. And I think that most business owners do kind of feel like, well, this is my company. I got to run it. And I love the freedom and how beautiful that wasn’t her thinking, Hey, you know what, no, I want to be in here. I want to be creating, this is what I do.

And this is what I love to do. So when you’re going through that transition period, you got to make those first hires and you have to build that team and you have to start somewhere and it can be really scary to hire your first person. And so how do you recommend our listeners? You know, some of our listeners have teams, smaller teams,

mid-size teams, how do you recommend people that haven’t ever started? They haven’t made their first hire yet, or they’re ready to make their first big hire, whether it’s to, you know, a C, M O or somebody that’s really going to take on a bigger role. And there’s going to be a lot of trust required. How do you recommend people go about doing that?

It starts with being very clear on your strategy. You need that in place first. And then you can break that down into specific objectives on how you’re going to get and work forward. And then break that further down into specific skills and experiences you need to execute. And you’re going to be creating those functions. If it’s, let’s say to grow revenue from a hundred K to a million or something,

find who’s done that, or has experienced growing sales teams, perhaps. But if you’re really clear about the role and the objectives, and you put that out, you’re more likely to attract the right person, know what you expect them to do the first 30, 60, 90 days one year, particularly right now, you know, it used to be that talent was hard to find,

but now the market is flooded. And so it is going to take some weeding. So be very clear about what your expectations and what the job actually is. And there are certainly challenges whether that is to hire too soon before you really have the job in place. And so you’ve got this nice list of roles and responsibilities, but they don’t kind of exist when you bring the person on.

That’s frustrating, but more often, I see it’s waiting too long to hire somebody. And you certainly don’t want to be in the position where you’re scaling quickly and you just need somebody to come on and you make this really quick hire. And it’s probably for many people to end up that way. And you may have to fire that person and you just don’t want to get in that position.

So thinking very clearly early, Hey, here’s my strategy over the next six to 12 months, this is the objective. This is what I’m going to need to accomplish it. These are the skills. Okay. When do I want to start this process? And it takes a while. So you do want to give yourself time to lead through interview. And I think the biggest thing is going to be,

you want the culture fit and that’s not easy to read very quickly. So you’ve gotta be really clear about what kind of culture you want to develop. One bad Apple obviously can be extremely costly, both for time, energy and a negative impact on the team morale, particularly with small teams, right? If you’re a team of five or six and you have one just negative Nancy,

or, you know, not a team player, whatever it’s going to impact everybody. And they’re not going to want to come to work because it’s just a hostile or not fun work environment. I had a founder say that when he thinks about hiring, he says for every one I hire, I’m going to end up with 10 more, just like it really tells me,

like, is that how you want to grow? Do you like these people in us, listen to your gut. If your gut is telling, you know, ask others that you’ve interviewed with your colleagues and say, did you get the same reaction, right? Or is this just me? You know, maybe it’s something else going on in your own bias in your head,

but ask, but really listen to your gut and trust your intuition more often than not, instead of just forcing somebody into a spot because you mean, Hmm. Okay. I have some questions, but first of all, what I heard you say was you have to take the time to figure out what you want. And I think that a lot of founders,

a lot of startups don’t actually know sometimes what that role that they want to fill. It looks like because they haven’t even actually worked in that before, which is why they’re hiring somebody else to do it. They aren’t an expert at it either. So really taking the time to figure that out, doing the research, getting guidance, wisdom from other people and just taking the time to figure that out.

And my biggest fail. So I own two business consulting firms. And I still remember when I built my first team, it was 2009 or 2010. Finally, I had one woman come to me. We’re great friends today. And she said, April, you are for sure the worst delegator I have ever worked for. And it’s because she would say,

Hey, I want to own this. And I’d say, great, go own it. And then she’d come back and present something to meet. And then, and only then would I take the time to look and see what she did and realize I didn’t want it. It was ultimate entrepreneur leader, you know, creative mind failure. And I knew that,

and I’m so grateful that that’s something that she pointed out. And I have had to actually work to hone in my skills as a leader in a delegator because I was awful at it. And I think there are a lot of business owners like that. Like, they’re not really sure what they want yet. And so they’re waiting for somebody to come in and take it.

But I love that. You said you got to figure it out. You got to figure out the strategy because she was a great person. And she is an amazing asset still to my companies, but she could have just walked away and she didn’t. And so I was really grateful for that. So I just wanted to kind of share that relational story.

If anybody’s saying, how do I do this? If I don’t know what it looks like yet, it’s do take the time to research and get guidance on that and figure out and brainstorm what that means. Okay. So here is my question for you. We have clients that we work with, that aren’t in a position yet where they can hire a full-time employee.

So I have two questions, totally different going in different directions, and I’ll just pose them both. And you can go whatever direction you want to go or answer both of them. The first question for startups or for mid-sized businesses that don’t have the funding yet. It’s more of a statement and I’d love your feedback. I know that there are companies that give advisors a percentage of ownership of that company in lieu of a full time salary to start out.

I would love your take on that. The second question is how do you create culture now that our teams are so spread out and working virtually? Is that a problem that you are seeing new growing companies have actually creating a culture within their teams when nobody’s actually physically together. So I know those are two totally opposite questions, but I would love your expertise.

I’ll talk about culture with this work from home, but on the equity piece, you know, it’s an effective way to reward them on pace them and incentivize them to work with you when you don’t have money at Warren and be careful at the very beginning, you bring on all these consultants are basically people that are working so free essentially. And they start asking for equity and everybody wants to be an advisor.

If you can push it off six months to a year, when it comes to like the high level advisors and see what they actually contribute. Because so many people say I’m going to be an advisor and take a half a percent, and then they do nothing. They don’t make any connections all year that you kind of want to have that, that people are worth whatever equity you’re giving up and it’s okay to give them,

but I would be cautious and moved slowly and assess and evaluate that person before you hand out equity, because yes, it’s very cheap, right? I mean, it’s worth zero when you’re growing a business, but it’s valuable down the road. And there don’t just hand it out like Great advice. And we’ve seen both instances with clients of ours, where they gave it out in the beginning and the people you’re right.

Did nothing. It was absolutely a waste. And then the other companies who have waited for these really top level advisers and they’re worth their weight in gold and they love advising them and they’re super involved and making all these connections. So great advice. Thank you for that. Okay. On the culture side of it, like we were talking about how do you,

how do you create culture within your new company and lead teams in a way that’s effective and really fires people up and helps them to love what they do when everybody’s so separated And new, interesting challenge. And we’re going to say a lot of new leadership styles come out of that and different ideas. And I think that’s very exciting. I mean, again,

it’s going to come down to leadership at the end of the day. I truly believe that your culture comes down to leadership and that, that is how you delegate and how you empower people. That is how you communicate with them. You know, that is how you have those teams working and sort of the processes and systems that you have in place. You know,

those are important too, but for leadership, it’s going to start with communication, right? I think over communicate is what everybody’s saying. There’s probably some happy middle ground, but it is about communication. And it’s not just the town hall that you have with the whole group or the all hands meeting on Monday morning. But it is about specific groups working on projects.

It is about specific one-on-ones that need to happen. It is very much about matching the type of communication with the type of task that needs to get done. And so not everything is meant to be on Slack. That could be for a project that is moving very quickly and it’s a small team, and maybe you do messages if it’s urgent and, you know,

still use email and have expectations. I think communication with the right tool setting expectations and that’s part of leadership. And there is concern that there’s a lot of lines being blurred between personal and professional. It’s easy to set this tone when you’re home, that you should be available 24 seven. And I think it’s the responsibility of leadership to acknowledge that there are breaking points and that it’s okay.

And just be honest about when you’re going to be available and when people should be available. And the little thing like be empathetic. I think we can’t talk about that enough for leadership be empathetic. There is so much going on for your employees that goes beyond just doing their task and their job. There are a whole nother set of pressures that never were before.

And so really listened to them and, you know, ask, how are you doing? You know, how’s work from home, working for you, what isn’t working for you, anything I can do to make the team, you know, working from home any easier for you, ask questions and particularly to your direct report drive. If you’re the CEO,

you don’t have to ask every single person, if you’ve got a big team, your functional heads can ask their team, but start asking questions and remind your team of your mission, right? You still are responsible for setting that vision and communicating it and inspiring your team. And so even if you’re pivoting in some ways, right, most likely the vision hasn’t changed,

how you’re getting there might be changing because of COVID. But most likely, unless like, I don’t know, it was completely wiped out. The problem you’re solving entirely, but most likely, you’re just, you’re changing how you’re getting there. So just remind your team constantly what they’re working on and that vision. And so they feel connected to something that is unifying.

And then of course, you know, you could do the happy hours or the lunch and learns or the game nights and, you know, have a social channel on Slack that the bag wine, or Yeah. I’m like, why? Cause that’s mine, I don’t sell the new irrelevant, But that’s great. It’s something relevant, but that creates a conversation between teams.

I love that. Thank you so much for all your tips today. So today we talked about, you know, what really does that transition look like from founder to CEO and why so many people struggle with it? And thank you so much for your wisdom and what you shared with our listeners on and really how to get through and process that and how to think differently.

The founder is that ideas person, but the CEO is the developing of other people. And it’s totally okay if you don’t want to be the CEO of your growing company, as you shared, which I particularly love that. I think that information and that insight is just gold because I don’t think business leaders actually realize that and give themselves permission to not fill that role.

And then we also talked about, you know, making sure that you have your objectives and your strategies and what you want and what you need to find before you start building your team and growing your team so that you’re setting clear expectations of what you want, what you want the culture of your company to be like, and the person that you want to fulfill that role.

And then you also shared with us your wisdom on really creating that culture through distance. And, and I think that distance is going to stay. And I totally agree with you that there are some boundaries that need to be set. I’ve always worked from home. And so I feel it’s interesting from this vantage point, just to kind of see more traditional businesses that are working from home and you’re right.

I mean, it’s bleeding everywhere. They’re working all the time and then you have kids behind and homeschooling and there’s so many other struggles. And so that’s certainly something that I’m so glad companies are taking into consideration and really processing through. And then for our listeners, I want to share this software with you guys. We love it. We’ve used it for a while.

So if you have a team and you want to create culture and you want it, you don’t want to use Slack. Although we love Slack for a lot of reasons, we also love Voxer. So I’ll make sure we put a link to the show notes and boxer boxers, just a walkie talkie app, basically, where you can send to your team and you can send it out to everybody at once and just say,

Hey everybody, it’s Monday morning, you know, what’s your objective this week. I’m thinking about you. And it was really much more of a personal connection than a typewritten connection. And, and we love that software as well. So we’ll go ahead and share a link to that in our show notes and tape, where can people find you? You know,

somebody saying, Oh, you know, this is really great. I really need help, but I need her strategy and I need her wisdom and her eyes and my company. Where can they find you? You can find me. If you go to my website, you can also download five strategies for scaling. The website is K the number eight Carney,

C a R N E y.com. Or you can just DM me on Instagram at K eight dot Carney. Great. And we’ll make sure that we share all those links for our listeners. So these, you guys can find those in the show notes as well. Kate’s five strategies for scaling, really aligned with what we talked about today. And these are all things that you guys have to do and you have to nail before you can scale your business.

So I would definitely recommend grabbing that from her as well. Kate, thank you so much for your time and being with us today. I loved chatting with you on the show. We really appreciate you being our guest expert this week. Thank you so much for having me. You’re welcome.