Sometimes when we think “business owner” often only one ”type” comes to mind, the business owner who leads the company as president or CEO, but today I want to talk about what I have discovered over the course of the past 12 years in business consulting – that there are actually THREE types of business owners.
And I am not talking sole proprietorship, partnership, or corporation, nope! This is way more important (IMO).
Knowing the difference between them – and more importantly what type of business owner you want to be can have an exponentially large impact on your success (and bottom line) – and the success of your business and team.
And if you don’t have that clarity it can also sink your business and team, so let’s dig in shall we?
I am going to share a client story that really shows the different types of business owners and more importantly, why it is SO critical to think through which type of owner you want to be so you can set yourself, your business, and your team up for success.
Not that long ago I was brought on as fractional COO to a multimillion dollar company that had been formed as a partnership, with 2 majority owners and two minority owners.
They had grown rapidly going from about 40 team members to over 150 in the span of 2 years and to be frank, things were breaking right and left and the team was a hot mess… hence why they called me in.
Through the course of my diagnosing, several things popped up as red flags but the one I want to talk about today is mismatched ownership expectations.
If you have been follow me for a while you have probably heard me say, mismatched expectations are nothing more than premeditated resentments, and this was no exception.
Two of the owners, one major, one minor, were doing the lions share of running the company and they were on the verge of burnout.
The second major owner was not involved in the day to day, in fact, dare I say outside of his expertise about where to invest the companies resources in the market they are in, he knew little to nothing about the team or the day to day.
The fourth partner worked in one of the departments as a manager but was even greener and less qualified to actually be in high level leadership conversations, but felt he had a right to be there because he was an owner…tricky situation to say the least.
Now that I have set the stage, here they are…
The Three Types of Business Owners:
- Owner
- Owner Operator
- Owner Leader
I am going to start from simplest to most complex.
First, owner.
This simply put is someone who owns a portion of the business, is not involved in the running or day to day but gets a portion of income from the business as either a disbursement or a set amount (generally a percentage). I see this a lot when partners “retire.”
They tend to be involved in any business having to do with selling the business or big investments, otherwise they don’t oversee or touch much of the business.
In the client example I shared moments ago, we do not have any of these types, but I will come back to this one in a moment.
The second, is owner operator.
This one is a tricky bedfellow. This is the one that I lovingly call CEO – not a true CEO but a Chief Everything Officer. This is someone who is generally wearing multiple hats, trying to navigate leading the team, and stuck way down in the trenches of doing the work. I see this with a lot of service based businesses that I work with and that pesky curse of knowledge.
The third type of owner is, owner leader.
Some might call this the visionary. It is generally the person who is responsible for the direction and vision of the company. They work alongside a second in command to make sure that they have the team support and resources to execute on the high level strategic vision the owner leader aka true CEO has.
So if we take my client as an example. Where do you see everyone slotted in?
For me, it went like this:
Majority owner #1: Owner Leader (CEO)
Minority owner #1: Owner Operator (CFO)
Majority owner #2: Owner Operator
Minority owner #2: Owner Operator
When we go back to my client, the CEO, although more in the trenches than either of us would like when I started with them, was doing a great job of being that agile visionary leader. Creating the company direction and then asking what resources in time, team, and money are necessary.
The minority owner (wearing the hats of CFO and HR) falls squarely in the Operator box because he is in the weeds day to day.
Now I know that most of you know that my speciality is getting business owners out from under their business and shifting out from operator to owner, but in this specific case, he wants to be in the weeds, he loves the work of it.
This is a prime example of if I elevated him out, he would fail. He doesn’t want the bigger leadership responsibility (not to mention he doesn’t want to lead) and is more detail thinking than big picture, so it would be a case of wrong butt, wrong seat.
I say this because it is OK to stay as owner operator with this one caveat.
You HAVE to have a good leader in the company. It doesn’t have to be you, but it has to be somebody. With my client, we have that person, so that means this owner can stay and play in the sandbox.
I encourage you to take a moment and ask yourself: do you enjoy the doing or do you want to get out of the muck and mire to lead. That question will determine which “owner” is best for you.
While this was a very uncomfortable question, and might take a few hours, like it did with us in the boardroom, what will result is some very important clarity around roles and accountabilities.
And ultimately some tough question answers to determine what ownership box you really want to be in. (if you need some help laying it all out, our free resource, the Golden Key Scorecard is a simple and easy way to do just that, and get massive clarity!)
Knowing the answer to this question, whether you have partners or not, will help you know more clearly where you are going, how to get there, who you need in your corner, and even avoid a lot of resentment and drama in the business.
So don’t be shy about asking yourself the tough question upfront of “what type of owner do I want to be?” and based on that answer adjusting expectations.
I share this story to peel back a curtain but also to hopefully help you miss a pothole or two on your business owner journey. I sometimes joke that business ownership is personal development with a paycheck but I think it is more true than we realize.
Being a business owner, a great business owner, is humbling. And being able to be humble enough to have these conversations and admit that you don’t want to be the leader takes guts. Not ever owner needs to lead, nor should they.
So, if you are having these tough convos with yourself and your team, I applaud you.
If you aren’t, I invite you to start.
Your business, your team, and yourself with thank you.
And of course it goes without saying, if you would like an unbiased third party’s support, my door is always open.
That’s it for this week’s post. Thanks so much for being here.
If anything I shared sparked something in you, I’d love for you to share this post with your friends and fellow business owners.
Remember, friends don’t let friends WebMD their business.
Until next time.
p.s. 🎧 Have you tuned in to The Biz Doctor Podcast yet? 🎧
