What Are MBA’s Good For?

It’s a common story. Entrepreneur starts company. Company gets too big for one man to handle. Professional managers take over. Business tanks. Original (or new) entrepreneur takes over. Business is saved.

I’ve seen it from afar and have experienced it firsthand.Here’s what you need to remember. At some point in the growth of your business, running it yourself will be “beyond” you. (That point usually comes when you have about $10 million in annual sales or more than 50 employees.)

Your overwhelmed operational people will fall behind, your overburdened marketers will start making costly mistakes, and your customers will complain more and respond less. Refunds will rise. Sales will slip. Profits will dip.

You’ll be swamped with problems, complicated problems, and you won’t have time to solve them all.

You will feel the need to bring in a strong administrator — an MBA or experienced accountant — who can bring order out of chaos and rescue you from the stuff you hate to do (and don’t do well).

This is a good instinct. But don’t make the mistake of putting that person in the CEO position. An MBA can do a great job of managing the business for you — but make him or her CFO or COO, not CEO.

You are the person who best understands your business and your market. So the CEO position must be yours.

A business manager’s job is to create efficiency. A CEO’s job is to keep the business profitable.

[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]