It’s pretty common for people to be confused between the two terms. How often do you see people drawing comparisons between CEO vs owner? Everyone knows that the person at the top is the one responsible for a company’s success or failure. This is true in both small businesses and big corporations. But who is at the top? This is where you have to think about CEO vs owner.
Typically, in large corporations and publicly traded companies, the CEO is the highest-level person. He has the final say in how everything will be done. But it’s not necessary that he owns the business too. In contrast, small businesses have the same person owning and running the business.
When comparing CEO vs owner, you will notice many similarities between them. But there are quite a few differences too. Confused?
Well, for one thing, both CEOs and owners need pretty much similar traits to make their businesses a success. They cannot go far without quick critical thinking and polished communication skills. They have quite a lot of similar responsibilities too. Yet, they are quite different too. How? Let’s find out!
CEO vs Owners: All Details Explained
Yes, both CEOs and owners have similar responsibilities. But more often than not, how they handle these responsibilities differs significantly.
For instance, it’s pretty common for owners to hand over some of these tasks to others. They believe in delegating and don’t need to maintain most of their responsibility on their own. A CEO has it differently. He has to remain updated with competition and opportunities. Yes, he too delegates his work, but he supervises it all.
As per IRS, any business that has assets of $10 million or less is deemed a small business. And if the asset worth increases beyond this term, the business is either midsize or large. And this is true for every company, irrespective of extent and nature.
Usually, in large businesses, employees have to report to their CEOs. But keep in mind that this CEO is hired too, and he works for someone else. CEOs have to answer to the company’s board of directors and shareholders.
Small businesses are usually run by their owners, who have complete control. They aren’t answerable to anyone for their actions.
Want to know more about the comparison of CEO vs owner? Let’s dig deep into the two terms.
What You Should Know About CEOs
You must be wondering what a CEO does. A CEO is basically the supervisor hired by a company. He delegates tasks and recognizes opportunities. It’s the job of a CEO to ensure everything in the company runs smoothly. And he has to answer to the shareholders when something goes wrong. He is bound by law to promote transparency. He has to protect key stakeholders.
CEOs often get guidance from the board of directors on how things should proceed. He has to abide by the visions and goals of the organization. If it’s a private company, the CEO has to adhere to the instructions of the owner.
The CEO works for a salary. How much this salary will be depends on multiple factors. These include the size and location of the business and the type of industry they work in. Naturally, a high salary means that CEOs have more responsibility.
You cannot hope to be appointed a CEO unless you have education and experience. After all, as a CEO, it will be your responsibility to navigate the business through challenges. And every company’s owner will want someone of a high caliber for the position.
What You Should Know About Business Owners
And now, let’s shed some light on business owners. When someone owns 100% of a company, he is the owner. And if he has a partner, he’s considered the co-owner, as we have seen with Snapchat.
Owners are basically in charge of everything that goes on in their business. They have the final say in everything from operations to marketing and sales. As a business grows, owners delegate some of their responsibilities. They hire people to make the team. Their goal is to drive revenue growth.
Hence, they bring executives on board to run key operations. Sometimes, owners take the title of CEO, but they aren’t answerable to anyone else.
How much a business owner makes is difficult to identify. This varies a great deal on the size and scope of the business. Usually, owners take profit shares.
CEO vs Owner: Key Differences
You now have a clear understanding of what the two terms entail. Of course, you must find them to be quite similar too. But here are the key differences between the two positions that you must know.
- CEO is the highest rank of job title in an organization, while the owner is the person who has complete control of the company.
- CEO is answerable to the board of directors and can be fired and hired as per need. Owners cannot be questioned by a third party on how they run their business.
- Quite often, the company is founded by its owner, like amazon, but that’s seldom the case with CEO as the founder is usually unwilling to assume the position of chief executive officer.
- Business owners are usually fixed on long-term goals. They develop objectives that will help the company in the long run. CEOs usually have to keep their objectives targeted and deliver within a short period.
- A company can have several CEOs within a short span, but the owner pretty much remains the same for the most part unless, of course, he decides to sell.
CEO Versus Owner Summarized
Ownership:
- Owner: An owner has a stake in the company through shares or equity. They may own the entire company or a significant portion of it.
- CEO: A CEO may or may not have ownership in the company. They can be hired by the owner(s) or the board of directors to manage the company.
Responsibilities:
- Owner: The owner is responsible for the overall strategic direction and major decisions of the company. They have the final say in matters related to investments, acquisitions, and high-level strategy.
- CEO: The CEO is responsible for the day-to-day management and operation of the company. They implement the strategies set by the owner or the board and make decisions related to hiring, budgeting, and other operational matters.
Accountability:
- Owner: The owner is accountable to themselves (if they are the sole owner) or to other shareholders (if there are multiple owners). They bear the financial risks and rewards of the company’s performance.
- CEO: The CEO is accountable to the owner(s) or the board of directors. They are responsible for the company’s performance and may be dismissed if they fail to meet expectations.
Appointment:
- Owner: The owner gains their position through founding the company, inheriting it, or purchasing shares.
- CEO: The CEO is appointed by the owner(s) or the board of directors, often through a hiring process.
Tenure:
- Owner: The owner’s tenure lasts as long as they hold a significant stake in the company or until they decide to sell their shares.
- CEO: The CEO’s tenure is subject to their performance and the decision of the owner(s) or the board. They can be replaced if deemed necessary
CEO and Owners: Working for the Benefit of the Company
This is the most significant trait of both CEOs and owners. Both have the welfare of the organization in mind, irrespective of the title. CEO undoubtedly means a highly esteemed position that people dream about. And owning a business is, of course, something that everything thinks about. No matter which path you take, you should be ready to handle quite a lot of responsibilities.
The Difference in Decision-Making
One major difference between a CEO and an owner lies in how decisions are made. Owners often have a long-term vision and make decisions with the future of the business in mind. They might be focused on building a legacy or creating lasting change. In contrast, CEOs usually operate with shorter-term goals and need to deliver results quickly. Their decisions are often based on quarterly reports and immediate financial performance.
While both need to make strategic choices, owners are less constrained by deadlines, whereas CEOs must ensure the company’s success in the short run. This difference in decision-making impacts how each approaches challenges and growth.
