How do you know when it's time to go? Check out these five instances in which you may want to question yourself.
The simple reality is that sometimes what your venture needs to get to the next level is not what you want to do nor is it what you’re good at.
But it is extremely difficult to accept the idea that you should walk away. Nevertheless founders volunteer to give up the CEO job and many of them stick around after their successor comes in.
So how do you know when it’s time for you to quit? Here are five tip-offs.
1. Can’t get customers.
You started your company because you saw an unsolved problem and you designed a product that you thought was the solution. You got some capital from your friends and family and you’re still working on getting your product right before you put in the hands of customers.
In the meantime, you are burning through your venture’s cash. And when people ask you what you’re doing to get customers, you tell them that once you get the product right, those customers will beat a path to your door and the cash flow problem will evaporate.
If this sounds like you, it may be time to hire a CEO who understands the technology and the market and also knows how to get customers to pay for a product that they find valuable. You can still be of great value to the company by thinking about the venture’s future product direction -- but only if you are willing to let go and give the new CEO a chance to run the company.
Otherwise, your investment in the venture will be better off without you there anymore.
2. Can’t raise outside capital.
If you started your venture, built its first product, and convinced customers to use it, you have performed a valuable service. But unless those customers have the prospect of paying for your product, then your venture is likely to run out of cash.
You can see clearly that your product has great potential. But when you try to convince investors, they ask questions that you don’t want to answer:
- How big is the market that you are targeting with your product?
- Why will customers buy your product?
- What market share do you think you can take and by when?
- How will that market share translate into profits?
- How much capital do you need in order to turn those projections into real numbers?
- How long before you can pay back that investment?
If you don’t feel like it’s worth your time to seek out potential investors, meet with them, and answer these questions, then you might be able to hire a chief financial officer who does.
3. Can’t attract and motivate top talent.
Let’s say that your venture has not only been able to get customers but it’s succeeded in raising capital as well. At this point, you might be thinking that you have what it takes to bring your company to the promised land--an initial public offering or a sale to a big company like Google.
That may be true, but only if you can attract and motivate top talent. However, if you are only able to hire B players and you have to do that by luring them in with higher salaries, then you have a class A problem. And if you are able to attract top talent, but those A players leave after six months, the problem may be with your leadership skills.
You could get help fixing your venture’s culture, or it might be time to leave and let someone else attract the talent that you are driving away.
4. Can’t let go of product design.
It’s not unusual for me to talk with company founders who stick with their ventures after a new CEO has come in. And most of those founders are excited to be around their venture and happy that they have brought in a CEO with the skills that these co-founders lack in performing tasks that they do not find interesting in the least.
You might be like these venture founders. They loved working on the design of the product. And as the company grew, they were always tinkering with the designs that their engineers were developing. And in the process, the founders were throwing wrenches into the carefully constructed time lines that their product managers had developed.
These founders had no interest in supporting the efforts of their product managers. They wanted to build the new generation of products themselves, not manage other people who were doing that. One of these company founders gladly took a new role training new hires to be valuable contributors.
And with a new CEO in place, he can help the company he co-founded in ways that he finds stimulating while letting someone else take primary responsibility for boosting the value of his venture’s equity.
5. Can’t adapt to change.
If you have developed a product that has taken hundreds of customers by storm, you might conclude that you are the greatest entrepreneur who ever lived.
But if your venture is losing ground because you are a one-trick pony, do yourself and your shareholders a favor and step aside.
Stepping away from your start-up is tough, but if you fit in one of these five categories, not doing it is sure to be more painful.
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