Can entrepreneurs lead companies of scale

The question of whether entrepreneurs can lead large corporate-style businesses has become a common debate. Business writer Dan Matthews asks what skills are required and how ambitious entrepreneurs go about learning them?

Many entrepreneurs leave the helm of their business once it hits the corporate big time. For every wily entrepreneur commanding a global behemoth there are thousands who handed over the reins before their businesses achieved its full potential. Most long-standing entrepreneurial businesses are run by seasoned executives with expertise in both management and finance.

There are a number of reasons why business owners decide to leave their rapidly expanding company in the hands of others. For starters, the skills required to lead big and small businesses are quite different. Entrepreneurs generally enjoy the cut and thrust of building a business up from scratch more than they relish patiently guiding it once it has become recognised, established and stable. As such, they might be lured out of the driving seat by investors, once they’ve enjoyed the process of seeing their business idea come to fruition. Others simply prefer not to grow their business past a certain point, instead enjoying the work and income they have generated for themselves and others. And lastly, the reality of entrepreneurial business means that many fail before they have a chance to grow.

For those entrepreneurs who are lucky, skilled, confident, single-minded and hungry enough to build a company of scale, an inevitable decision awaits: do you leave while the going is good, or do you knuckle down and learn how to control the business as it grows even bigger?

Adapt or retire

Andrew Baillie, Head of Management Development at performance consultancy Exemplas, says the “adaptability” of founders to the more measured pace of the corporate world is one of the fundamental challenges to growing a really big business. “It is possible for leaders to make the adjustment, but not all managers of small businesses have the flexibility, skills or even the inclination to make the necessary changes to the way they operate,” he says. “Versatility is everything in this situation,” he adds. “You need to be able to apply your skills and behaviours, and break out of what's familiar and comfortable, from operational and hands-on processes, to more strategy and delegation.”

Baillie believes the same leadership qualities work in both small and large businesses. “Good leaders adapt their style to the circumstances,” he says. Although the same values, characteristics and traits are useful, regardless of the size of business you manage, the need for certain skills are enhanced when a business grows. For example, big businesses are more complicated than small ones, so your ability to take on any task needs to take a back seat in favour of your ability to delegate efficiently and decisively.

Communication and organisation

For the same reason, your communication and organisational skills become more important. The more employees, clients and suppliers you involve in your business, the better you need to become at keeping them happy. “The management skills required in small and large companies are not exactly the same,” says Simon Orme, Managing Director of Emros Partners, a consultancy practice formed of people and companies with extensive experience of business growth. “In a small company, the manager has to be more of a generalist and employ whichever processes seem most appropriate for the task in hand. Sooner or later, the most effective processes become adopted as company standards and roles become more specific.”

Orme believes experience working for other companies can be valuable to entrepreneurs. “Managers who perform best in small companies have begun their careers in large ones where they have learned their skills and are then able to deploy them effectively in a smaller environment.” According to Baillie, other qualities required by big business leaders include: “A clear and strong vision, drive and the humility to know that your success will depend on other people's capabilities. It's no longer just about you.”

Don’t lead from the front

Many entrepreneurs enjoy leading from the front, rattling off ideas on the fly. However this isn’t generally a practical way of working in a corporate environment. With more people involved in the structure of the business as it grows, there will be more at stake from the repercussions of every decision. Ideas must be put to the board: this democratic process ensures that the right decisions are made for the future and security of the business, rather than snap decisions that an entrepreneur or sole trader can take a calculated punt on. A corporate approach means taking advice and working as part of the team.

“It’s about listening and always taking people’s advice on board,” says James King, founder and Managing Director of venture capital firm Find Invest Grow. “Always ask questions and be ready to research grey areas. We are constantly learning from each other and our experiences, so our thinking is always evolving.” He adds, “It also helps to recruit people who will add to your current knowledge as there is always more to learn. Having the right team to support your plans will allow you to effectively manage your business regardless of the challenges that arise.”

Cavalier risk-taking, an ‘I-can-do-everything’ mentality, and a whopping great ego are not required by entrepreneurs hoping to make it big. Instead, focus on management, delegation and communication, and be prepared to take advice. If you adjust your mind-set for the big time, you should be able make a smooth transition from independent entrepreneur to corporate team member. 

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John Carroll - Helping businesses achieve International success. Head of Product Management & International Business, Santander UK