Who leads in a founder-owned business?
The answer, more often than not, is simple: the founder.
“So what’s wrong with that?” you might ask.
Well – nothing, to begin with. But over time, it becomes one of the biggest hidden risks in growing businesses: leadership stagnation.
If leadership development isn’t part of your plan, decision-making can become fragmented, the energy can start to dip, and even the best people can lose sight of where the business is heading. And when there’s no clear pathway for the next generation of leadership, growth slows, clever people leave – and the whole business risks getting stuck.
The good news is that you can change this. But it starts with stepping back and asking, “Who will carry the baton next?”
Why leadership succession matters – even when you’re not ready to let go
In many founder-led businesses, all the leadership decisions still sit with one person or a small board. And that can work brilliantly, for a time.
But eventually, whether through choice, circumstance, or sheer exhaustion, the founders will need to set down the reins – and the business won’t wait for them to be ready. However uncomfortable it might feel, the future needs planning now.
That doesn’t mean stepping back tomorrow. It means:
- Spotting future leaders early – while the business is still thriving.
- Investing in their development – so they’re ready before they’re needed.
- Sharing leadership more widely – so the business can survive (and thrive) without leaning entirely on one or two people.
It’s not about stepping away from leadership – it’s about building leadership into the business itself.
What to look for in your future leaders
In an SME, leadership isn’t just about confidence, charisma, or shouting the loudest. (In fact, it’s often the quiet, consistent performers who are the ones to watch.)
Future leaders are people who:
- Understand the business’s financial and strategic goals – not just their own tasks.
- Motivate others – especially when things get tough.
- Make decisions thoughtfully and take accountability – without waiting to be told what to do.
The right people often show signs long before they’re ready to lead formally. But they won’t get there without support.
How to start developing leadership from within
You don’t need to send everyone on expensive external courses. Leadership development in an SME can (and should) be hands-on, practical, and rooted in your business’s real needs.
Here’s how you can start:
- Mentorship – Pair promising employees with experienced mentors inside the business.
- Leadership training – Short, sharp workshops on real-world leadership skills: decision-making, communication, project leadership.
- Project ownership – Give people the chance to lead initiatives – not just tasks – before they step into bigger roles.
Real leadership development happens through doing, not just through learning. Give people opportunities, support them well – and watch them grow.
What about flat structures?
Many SME founders (especially in family-owned or values-led businesses) aim for a ‘flat’ organisation – one without heavy hierarchies.
It’s a lovely idea. But in practice, a completely flat model often leads to confusion about who’s responsible for what, and that can kill motivation fast.
The alternative isn’t old-fashioned hierarchy. It’s clarity.
- Make sure everyone knows where decisions get made.
- Build people’s confidence to step up and take ownership.
- Show them clear pathways for growth, so they can see a future for themselves inside the business.
Employee-owned companies are good examples here. Many of the most successful EO businesses actively develop leadership skills at all levels – through rotational leadership roles, structured programmes, and clear routes for progression.
Flat doesn’t mean leaderless. It means many people learning to lead well, together.
Closing thought
If you want your business to thrive beyond you, building future leaders isn’t optional – it’s essential.
By identifying, developing, and empowering leadership talent from within, you’re not just securing your company’s future, you’re building a living, breathing organisation that can keep growing, innovating, and inspiring – long after you’ve passed the baton on.