We get a lot of questions about what company founders do–or are supposed to be doing.
The founder of a start-up has to evolve with the business. The role changes. And it changes a lot.
So to answer the question posed above, we need to know where the business is. What stage it is in.
The Start-up: Self-Funded or Angel Funded
Most start-ups are either self-funded or angel-funded. Both are usually underfunded. Cash is tight. The result is high turnover in staff, lower-quality staff, cheap office space, and careful decisions about what the business can go without.
The founder at this stage will and should be doing everything that they cannot afford to delegate. The founder should be doing those things that use their unique talents the best. That may be everything from developing products to marketing to handing the books and accounting.
Over time, the founder should focus on growing the business vs. working in the business. This means developing the product and finding the market fit. At this stage, the growth of the business is only a small part of the founder’s activities.
The A Round Start-up
The A round start-up is at the stage where it just got its first round of funding. This round may be as little as $1 million. Maybe its $3 million or substantially more.
This is often the first time the company has any real money. The funds are usually used to hire more employees to improve the product and more marketing and sales staff.
These funds should also be allocated to hiring a second in command to help the founder/CEO. Maybe this is a finance director or even an executive assistant.
The second in command should take over everything they can from the founder/CEO. This can include taking over the accounting, to scheduling meetings, to taking over the HR function, etc.
This in turn should free the founder up to focus more on what a founder/CEO should be doing–i.e., steering the ship. The founder should start working through employees rather than being an individual contributor. However, it is appropriate that the founder still takes on some projects at this stage.
The B Round Start-up
The B round comes with additional funds. Maybe it’s $10 million or more. And the company is now making profits. Maybe the profits add another $1 million or more.
These funds should be allocated to making the company appear how a real business should. This does not mean lavish or unnecessary spending, but it does mean making the company appear to fit its current stage. The old run-down office can go now. Upgrading facilities can allow the company to attract more talented staff.
This is important as the company should be looking to bring in higher-level executives to really drive the business. Scaling is key for this stage. Talent is required for this.
The founder/CEO should now be working through employees and employees should be driving the growth and change in the company. Their focus should be on helping executives focus and identify the market opportunity and focusing them on executing to take advantage of that opportunity. The focus is on being a mentor to the executives and getting out of their way at this stage.