In business, there are at least three main roles – the owner (the entrepreneur), the manager (the boss), the expert (the professional). Especially at the period of setting up a business the three roles flow into one another. Why is it necessary to differentiate between the role of the owner and the role of the manager? When is the right moment to do so?
A lot of self-employed people, owners of micro and small companies as well as owners of medium sized companies do not often realize two most important things.
At first, there are certain milestones in the development of the company. For example, working as a self-employed person is different from being an owner who employs two or three people who can be effectively managed by the owner and it is also different from running a company with 10, 15 or even 20 employees who can hardly be effectively managed by one person.
At second, the owners are not aware of the fact that the requirements for the leading person of the company gradually change. There has been a training in this area for many years which is call company management.
At the beginning, everything is on the shoulders of the owner
As it has already been mentioned, in business, there are at least three basic roles. The owner, the manager and the expert. But especially at the period of starting a business all three roles flow into one another. This is a role represented by the owner, founder of the company. The small business owner is responsible for everything – work execution as well as the company management. There is no one who can conduct planned work, but the entrepreneur themselves. If the entrepreneur does their job well and the company gets successful, it is about time other employees were hired.
The owner and the manager – what is the difference between them?
The major difference can be explained this way. The owner keeps asking what is best for the company, what needs to be done for the company to be prosperous. The manager conducts various tasks to make everything work. With medium-size to bigger companies, the role of the owner is about thinking, testing, looking for the ways (one may call it visionary) and giving space to people who accomplish the tasks.
There is one essential thing the owner cannot be substituted in. It is the control. It means that planning, saying what needs to be done next and activity control are the owner’s domain. Some people may say it is philosophizing rather than real work. We can come across this type of mockery especially in companies, where the owner is exhausted and bitterly disappointed at their own destiny. They will never realize and admit the fact that it is their own fault.
Companies which get over milestones are led by the owner who gradually realizes that it is necessary to make a step forward. That it is necessary to give assignments, to plan and to control to be able to achieve a higher step in the company development. At this moment, work which has been done by one person is divided between the manager and the owner.
The owner starts to work ON the company, not IN the company
The owner runs the business, but the major part of the operating work in the company is conducted by the manager and the specialists (technicians, experts). The owner starts to work on the company, not in the company. That is the key difference between the owner and the manager. The company has the chance to develop, as there is one who is thinks about how to make things better, in a different way, more effectively. Only the owner can do this. If the owner is not able to think in this way, the company gets stuck at a particular level.
The truth is, you can hire a person for the managing position, but not for the position of the owner. Unless you stop thinking as the owner-manager, you will not only be overworked, but the company itself will not be able to develop, as you do not supply it with the space and comfort necessary for its development.
How to be able to recognize the right moment when it is necessary to split the owner-manager role
There is not one specific moment, at which a new person should take over the role of the manager and the owner can be promoted to a more strategic role, which, when is done properly, has better impact on the company efficiency than the production itself. However, there are some indications that the situation in the company is ready for the further development stage.
A well-designed business model is one of the essential indications. It means that the economic indicators show you make profit, you have a financial cushion, which means your gain is higher year by year. The number of clients is increasing. Another indication is that you are overworked, you do not know what to do first, you spend too much time at work which is inversely proportional to the results. The most obvious indication is the financial situation itself. If you do not have enough money to hire a manager, you can hardly afford two independent roles – the role of the manager and the role of the owner. You must go on doing everything yourself.
You can afford to hire a manager, but you do not do it.
On the other hand, there are situations, in which the owner can afford to hire a manager but does not do so in order to save more money. It may seem to be a good strategy from the short-term view. But from the long-term perspective, it enables the company to develop and to form a reliable management. With the one-man-show style management, companies tend to stagnate. No one can run the business themselves endlessly. Owners often say: I must support fifty employees. Is it the owner who is supposed to support the employees? Or are the employees supposed to support and to develop the company?
Of course, after years of doing everything by yourself, it is not easy to make a sudden change and to start thinking as an owner and to run the business from another perspective. You need to get over this change mentally. It can be the secret to the further development of your company.
It there a difference between being the owner of a small- or a medium-size company?
Nothing in this world is just black and white. Let alone in business. If we checked diaries of the owner of a small- and medium-sized company, we would definitely find differences. The diary of the small-company owner spends little or no time with the employees, there are no meetings, a lot of appointments or much time spent in the production. It does not matter if you build fences, sell goods, or run a bakery, etc. Most probably you will find a sweaty owner conducting work. To make it clear, there is nothing wrong if you make cakes or buns. But if the same person makes cakes and manages the company, who does the managing work while they make cakes?
The owner of the medium-size and bigger company – devotes a lot of time to the control and coordination of the company. A lot of duties and priorities are crossed, so based on Pareto optimum, the owner chooses just the most important and the most effective ones. All appointments and tasks in the diary are ranked strategically. The time spent at the production is limited because there are more important things than some cakes. The owner is aware of the fact that the company will only be successful if they are good at planning, organizing and running the company. The priority is not to be the best baker in the region.
Giving assignments – the way to success
The self-employed person or the small business entrepreneur must go through periods in which they lack financial sources which would enable them to hire somebody who would manage the company. Most important is the idea of giving assignments to people in the company. In fact, this is the only way how the company may grow.
