Creative control.  Two simple words, yet within them are the self-righteous seeds spawning countless spats and arguments – be they contractual demands from big screen stars or from carte blanche designers building hip new cars – each wanting a say in the power play pitting one persons’ grand vision against another’s.

For many small business owners, the phrase “creative control” elegantly summarizes the reason they went into business in the first place.  Feeling trapped or unappreciated at their last job, they decided to reject the default notion of bland resignation that Henry David Thoreau summarized as, “Leading lives of quiet desperation,” and instead determined it preferable to sink or swim based on their own merits and ambition.  The problem comes when what started as a virtuous saying, turns into a vicious cycle.

Whereas the desire to retain creative decision-making authority of a company or initiative is pretty straightforward, the idea of retaining control is a moving target and thus, inherently elusive.  Because of this, the arc of control within small businesses usually follows the same predictable, albeit unfortunate, script.  When first launching a firm, the entrepreneur must necessarily be in complete control of every facet of the company, because he alone is responsible for the design and delivery of a specified value proposition.  As the startup begins to succeed and scale, it is normal for the founder to continue to want to exert control over each task and decision, as these activities had been exclusively his, making him the most qualified to continue taking the lead.

Where businesses get into trouble is when the company reaches the Second Stage of growth (around 20 – 40 employees), and the owner still feels the need to be intimately involved in every aspect of the firm, having failed to delegate the responsibility and authority for some of these decisions to subordinates.  At this size, the company has exceeded the physical limits of a single person to be on top of every detail related to running a business, so instead of being an asset, the owner starts to become a liability to his own firm.  Why?  Because his maxed out bandwidth is no longer able to handle the volume of data and decisions necessary to run an organization this size, and his insistence on maintaining historic levels of control have turned him into a human bottleneck for continued growth.

It is at this point that entrepreneurs need to seriously consider the benefits of small business investors, for the simple reason that, while they may still own the shares and legal paper proving they control their company, chances are they have already LOST control of what matters most – their health, their relationships, and their mental well-being – in short, the things that really matter!  True control is about having options, like the ability to retire next month, to liquidate positions, to get a payout that would create generational wealth, or to simply take a year (or a month) off to just relax.  If a business owner doesn’t have the luxury of choosing from a variety of appealing alternatives, then the obvious question should be, “Do you control the company, or does the company control you?

The rising popularity of private capital investors within this Second Stage market is due in part to entrepreneurs deciding they are tired of trying to do it all, and are willing to barter exclusive control of their company in exchange for getting some immediate cash in hand (effectively taking some cards off the table and reducing their risk profile), and conceding complete creative control for the opportunity to benefit from the experience and expertise that small business private equity firms have in financing the capital gap, scaling internal operations and infrastructure, and growing small firms into much larger and more productive and profitable organizations.

 

About the Author: Stephanie is a writer with expertise in small business marketing, particularly in the digital arena. Her specialties are in SEO and copywriting. When she isn’t reading marketing blogs, she can be found reading in Central Park with her dog, Darcy, or exploring vegan restaurants.