The Difference Between Owner and CEO

If you started the business a number of years ago, you became the CEO by default, whether you used that title or not.  Somebody had to run the organization; there was no one else to take on the leadership role. It had to be you. And you’ve been in this role ever since.

In those start-up days you wore a lot of different hats. Certain facets of running the business you liked and were good at, others not so much. Sales, manufacturing, accounting, human resources, it all fell on your shoulders.

Fast forward to the present. The business has grown (hopefully), as has the customer base and the number of employees. You may have expanded geographically, perhaps even internationally.

Not only the business has changed. The role of the CEO has changed as well. At least, it should have.

Owning the business does not automatically mean that you should be the CEO as well. There is a difference between CEO and owner.

Ownership is essentially a legal status. It simply means that you hold most or all of the company shares. On the other hand, CEO is a functional title, with a day-to-day role, duties, and responsibilities. The functional org chart has a spot for the CEO, not the owner.

To make this more clear, think about a publicly-traded company. The shareholders are the owners, and the CEO is an employee held accountable by the shareholders through the Board of Directors. Of course, the CEO may have stock in the business, but they typically don’t have majority ownership of the firm.

In this CEO vs owner consideration, it may be helpful to think of yourself as two different people. One is the owner, the other is the CEO. Granted, it is rather difficult to objectively take both perspectives, but it’s necessary to create clarity about the roles and responsibilities of each position.

Now, put on your “owner” hat and ask these questions: “How is the CEO doing? Has the CEO been able to achieve the goals and objectives for the business set by the owner?”Remember, the chief executive works for the owner.

As the owner, are you able to objectively evaluate the CEO’s track record? Or are you going to give the CEO a passing grade, no matter what the performance, just because the CEO is you?

Would a professional CEO bring the right mix of skills,  experience, and education to the organization to take the firm to the next level? Keep in mind that what’s best for the business is, ultimately, best for you, the owner.

Hiring a professional manager for the top executive position does not mean that you’re giving up ownership. Remember, there is a difference between CEO and owner. It is possible to run a business without being the owner and you can own a business without running it. Nobody can take ownership away from you until you decide to sell.

Another option is to see if there’s someone among your top-performing employees with the aptitude, skills, and experience to become CEO. Or, you could hire an outsider to be the professional CEO to bring a fresh perspective and new energy to the management team. You need to consider what’s best for the business. In the end, that’s best for you, the owner.

Keep in mind, a good CEO will take their fiduciary responsibility very seriously. They will run the company to the best of their abilities to meet the shareholders’ goals.

Hiring a CEO doesn’t mean that you’re turning your back on the business. As a matter of fact, just the opposite. You’re bringing in someone with the experience, expertise, and education to grow the business. And, from the owner’s perspective, that could be a very smart decision!

Have your skills, attitudes, and mindset about the role of the CEO developed and matured as the demands of the business changed over the years? Has the way you work evolved in pace with the business?

Or did you stay in your comfort zone, spending (too much) time on the work floor, putting out fires, very much hands-on, and basically doing the same things you did in the early days of the business? Are you still wearing all those same hats?

Which skills, experience, training, and aptitudes are needed to take the company to the next level?  If you were interviewing candidates for the CEO position, would you hire yourself?

If you’re the person with those qualifications, great.  But, if you’re totally honest with yourself, and realize that you don’t have what it takes to be the CEO, or you lack the interest, then it’s best for the business, and ultimately best for you as the owner, for a professional manager to step in and take the helm.

If your long-term goal is to sell the company, you need to make sure that the organization can run without you. Otherwise,  what are you selling? No one is going to buy a business if the most important person in the organization is going to walk away after the sale.

If you find yourself seriously thinking about your performance as CEO, there are a few things you can do to improve your skills and get a better understanding of what your role in the organization should be:

• Work with an executive coach – An executive coach can help you develop a better understanding of your personal strengths and weaknesses as well as which role in the organization is best for you, if any. Also, with the guidance of a coach, you can come to grips with the purpose of the business and what’s next. Insight into your personal goals and motivation will lead to the answer to the ownership vs. management question and a solution that’s best for you as well as for the company.
• Attend seminars or take some business classes – Through seminars and business classes you’ll be able to enhance your formal business and management skills and learn what it takes to grow a business. This could be the knowledge you’re lacking to become the CEO you always wanted to be.
• Join a CEO peer group – Learn from other CEOs and business owners who have walked this path before you. Their experiences will shed light on what you need to pay attention to, the options you have, and where the pitfalls are. You can learn from these executives how they dealt with a situation similar to yours.

In the end, you have to make a decision. Are you the best person to lead the company? If so, excellent and good luck. If not, hire someone else to run the business for you.