The Founder’s Trap
Business owners who launched their companies in the 1990s often approach me with a request to increase revenue (and profit) while minimizing the personal time they spend on day-to-day operations. After more than 20 years of hands-on management, this is a perfectly natural goal for any founder.
An initial diagnostic reveals a painfully familiar scenario: authority, power, and influence are concentrated entirely in the owner's hands. No financial—or significant non-financial—decision is made without their approval. There are no clear, universally understood rules; instead, many outcomes depend on the owner's current mood, their professional development, and how much time they happen to have. As a result, the company loses market share and revenue, even as the administrative workload continues to grow. The owner spends more and more time on the business but struggles to make effective decisions in a timely manner—leading to negative consequences for both the company and the owner’s personal well-being, including health issues.
This is a dead end—what Adizes calls the "Founder’s Trap."
The Fate of Such Businesses
In short, it is unenviable. Depending on their current state and the competitive environment, they may continue to produce financial results out of sheer inertia, but these results are often insufficient and short-lived. Employees, recognizing the company’s limited prospects, are either considering leaving or are already looking for a new employer.
Regarding founder health, I once had a client who, by his own account, had spent 5 years on antidepressants and hadn't taken a proper vacation in over 20 years before we met. After we worked together, he told me: "Why didn't I meet you 15 years ago?"
Typical Founder Mindsets
— They want changes to be implemented without their involvement; — They are ready for change, but only if "nobody gets offended"—a classic "Leopold the Cat" syndrome.
In essence, the founder ceases to be an owner: they become a hired employee in their own company. When they leave unprepared, the company usually folds and loses all value for any potential new owner.
How to Support a Founder: Corporate Governance
The solution is to build a corporate governance system. Its core is separating strategic functions from operational management: moving the founder out of the "hired hand" role and into actual ownership duties.
To achieve this, I conduct a management diagnostic of the organization and develop a transformation plan, which the owner then executes either on their own (very rare) or with an expert’s help (in 99% of cases).
Why hire an external expert? If you haven’t been able to solve a problem on your own over a long period, the choice is obvious. Unlike internal staff, an external expert views the company as an object of management, free from the bias of interpersonal dynamics or the fear of personal fallout from the decisions that need to be made—things an employee within the team simply cannot ignore.
I call this "management alchemy"—the design and implementation of management solutions with minimal financial overhead.
What the owner gains
Personal time to enjoy life, a stable financial income, greater business security, the ability to scale and grow the company, and a significant increase in its valuation upon exit due to reduced dependence on the owner.
To achieve this, the owner must actively participate, at least during the initial diagnostic and system-building phases. Otherwise, it is a waste of time.
For context: my group of companies achieved this back in 2005—and since then, none of the owners have been involved in day-to-day operations.
P.S.
What I find encouraging is that I’m now receiving similar requests from younger entrepreneurs (ages 23 to 45). If they can solve these issues at this stage of their company’s lifecycle and their own personal development, their businesses will unlock enormous potential for growth.
This article was written by Alexander Bachinsky, a mentor at United Mentors and a turnaround and interim manager. He helps business owners build manageable companies that are not dependent on the owner’s micromanagement.