Imagine you have just been appointed as the new CEO. Before your promotion, there was always someone with more responsibility. Now, however, it is all on you.

So, what are the common pitfalls for first-time CEOs? And how do these pitfalls differ in SME and private equity-owned businesses? More importantly, what playbook helps you get up to speed quickly?

Robbert Bakker is the former CEO of online bank KNAB and Kinly, a private equity-owned audiovisual communications supplier. Today, he uses his experience to coach CEOs of private equity-owned and SME companies. We sat down with him to discuss the role of first-time CEO and why it can be so complicated.

If a first-time CEO calls you for advice, what would you tell them?

I usually begin by asking a few diagnostic questions. These help me understand how someone manages themselves. For example: how do you manage your own schedule, set your targets, and monitor your progress?

Because if you cannot manage yourself, you cannot manage your company.

Then, it becomes fairly simple. Understand the P&L. Understand the drivers. Set targets for those drivers. Make management explicitly responsible for the targets. Also, make sure everyone in the organization knows how to contribute to the P&L target. Finally, create a disciplined rhythm to monitor progress and hold people accountable.

That sounds almost too simple. Why doesn’t everybody do this intuitively?

Being a new CEO is like drinking water from a fire hose. The company or role is new. Everybody wants to speak with you. People also look at you for answers or expect you to fix problems. Within a week, you feel overwhelmed.

As a result, new CEOs can easily become reactive instead of proactively leading the company. This becomes even harder when the organization lacks clear structure and responsibilities. In that case, all questions end up on the CEO’s plate. That makes the CEO even more reactive.

Therefore, my advice is to create structure. Define clear mandates and reporting lines. That way, you only need to take action where it truly matters.

In a Private Equity context, new CEO’s often succeed founders. What makes this transition difficult, and what is needed to successfully navigate it?

As a new CEO hired by a private equity firm, you need to realize that you are not the founder. After many years, or even decades, a founder has built strong fingerspitzengefühl. He or she deeply understands the company and the industry. The founder also has an intuitive sense of what will happen next and where the company stands.

This is the type of CEO who looks into the warehouse and knows how long the company still has inventory. As a new CEO, you do not have that legacy yet.

Also, when companies reach 40 to 50 FTE, an informal entrepreneurial management style often becomes insufficient. At that point, the company needs more structure to continue its growth trajectory. This is also the moment when a founder may sell part of the company to a PE firm. The PE firm then brings in a professional CEO.

As this new CEO, people do not expect you to know as much as the founder. However, they do expect you to bring structure and professionalize the business.

What advice would you give to CEOs of PE portfolio companies who feel tremendous pressure to perform in their first year?

I would not stress too much, unless the company is close to bankruptcy or you are making abrupt layoffs. Your shareholders appointed you as CEO because they trust your abilities. In addition, people often attribute issues in your first months to the previous leadership.

That said, CEOs of PE-backed companies need to look forward. They also need the courage to make tough decisions quickly in the first year. Compared to a corporate context, PE-backed companies can often make decisions much faster.

From a results perspective, the period after the first few months matters much more. That is when you and the PE firm can assess whether your actions have worked.

To what extent do you believe experience gained in corporate CEO roles can be applied in an SME business?

In the end, all businesses are quite similar. It is all about understanding the company’s P&L, its drivers, and how responsibilities cascade through the organization.

However, in a corporate setting, leaders spend less time making actual business impact. Stakeholder management matters much more. In addition, politics and compliance take up a lot of time.

Still, the core of managing a business is not vastly different. And with less time spent on stakeholder management, it is fun to focus on managing the business in an SME environment. So I can truly recommend it.

How do you see your personal future?

For now, I continue to enjoy helping new CEOs become successful. It is fun and fulfilling. However, I cannot promise that I will not go back to running a business. Scaling a company is simply too much fun.

‍