Julia Langkraehr’s Blog


When to hire a managing director

Successful entrepreneurs like starting businesses. They like coming up with a great concept. They like doing deals. They like negotiating.

And they like seeing their businesses grow.

And these qualities make them a business’ biggest asset.

But once the business starts to thrive there often comes a point when they stop being its biggest asset – and may even become its biggest liability.

That’s when they need to take a long hard look at themselves and decide whether the best thing for both them and the business would be to step back and hire a managing director.

They need to accept that they are the Visionary in their business, but Visionaries are not necessarily the best person to run the day to day business– what is needed is what we term in EOS, an Integrator.

It’s an experience I went through myself after I set up my first business Retail Profile.

I’d established the business in 2001 and it had been going for about six years. We were doing brilliantly – in that time we’d grown to be a company turning over £4.9 million.

I was the managing director and was very hands-on: I had responsibility for the company’s day to day finances, client and staff management, and business development in the UK, as well as negotiating an expansion into Russia.

It was too much. I was exhausted and burnt out.

So my chairman suggested I take some time off and get away from the business. I chose to go to Equador and Peru, trek Machu Picchu and go the Galapagos Islands. It was the first time I’d take 21 days off since I started the business.

He hoped I’d come back refreshed, but being away gave me the chance to take a long hard look at the business and where I wanted to take it.

I decided the best thing for the business would be for me to step back and hire a managing director to run the day to day and continue to grow it.

Although scary at the time, it was absolutely the right decision. As a result, we expanded the company to both Russia and Germany and within four years the turnover of Retail Profile Europe had grown by 43%.

There are two major reasons why a founder might need to employ an Integrator:

  • New businesses often grow organically meaning the founder – the Visionary – takes on more and more responsibilities rather than delegating
  • The skills needed to found a business and those needed to run it aren’t always the same. Some entrepreneurs don’t necessarily make the best managers

It’s not an easy decision. For me, it was very emotional. My business was my baby and I had total control. To step back meant I had to be prepared to give up that control to someone else.

When considering hiring an Integrator, you have to look at the consequences of not doing it. You need to recognise when staying in charge is really about your ego vs growing the company and the good of the company.

For me, it really helped that I knew what I was planning to do next: concentrate on the international expansion of Retail Profile. This totally played to my talents and strengths – going out and starting a new business in a new geographical area.

When hiring an Integrator, you want to find someone with management experience, who has been a professional managing director.

Click here to find out the right structure for a business 

Here are five key questions to ask:

1. Is it the right time?

Is it the right time, both for you and the business?

Is the business growing, is the market mature, how big is your team? Once a business reaches a certain scale, it is best to have a professional manager running it.

Depending on your financial position, it is possible to take on a professional manager, either part time as a fractional employee, or if you can afford it, a full time executive.

When we decided to take on the managing director, the business was stable, we had a growth plan, we were expanding internationally, so it was the right time for us.

2. Are you hiring the right person?

It is important to select a candidate who matches your core values, understands your business and industry sector, and who buys into your vision.

We used a very specific brief and knew the skills, experience and expertise we were looking for. We wanted a strong day to day manager, who could not only manage the UK business but take over the client relationships.

The Integrator we found at Retail Profile loved our mission and values and wanted to develop and build on our concept, rather than change everything, and he was absolutely the right fit.

3. Have you prepared a proper handover?

It may take six months for your Integrator to really be in a position to take full control, and you need to be prepared to step back, let the new boss run the business and take decisions.

If you hand over and still want control, it’s not a handover, so you really need to develop a mind-set which will allow someone else to manage your business.

Equally important is the staff: they need to make the mental switch and be happy to report to the new managing director rather than you.

When our new MD took over, I reduced my hours from 60+ a week down to 30 and focused on growing the international side. This meant I was out of his way and he had the freedom take control.

4. Have you defined your own role clearly?

If you’re still going to be involved, the last thing you or the business needs is for you to be hanging around the offices, not really knowing what your position is.

Either you move on to new challenges, or you have a clearly defined role within the business. 

When I stepped down, I retained responsibility for new business, leading Retail Profile’s expansion into Russia and Germany.

5. Do you want to make it work?

If you’re not committed to its success, there’s no point making the change and setting someone up for failure. If you don’t have the desire to make it successful, you might meddle, undermine initiatives, create divisions and you might do more damage than good to the business.

If you’d like to learn more about how to make a smooth transition when you hire a managing director, and carve out space for yourself as a Visionary, then contact us today on +44 (0)7795 667480 to arrange a complimentary 90-minute meeting to explain it to your leadership team.

Tagged in
  1. Entrepreneurial Operating System
  2. EOS
  3. Integrator
  4. Managing Director

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