CEO vs. Owner: What's the Difference?

Business owners can give themselves whatever title they want, whether its “the boss,” company president, or chief executive officer (CEO). It makes sense, then, that there’s often confusion about the CEO vs. owner distinction. While many people use these terms interchangeably, there are differences in the skill sets needed to be a CEO and an owner, though some of those skills certainly overlap.

First,let’s define both terms.

An owner is a person who founds a company or buys a pre-existing business. The owner takes on the financial risk to earn a share of the profits. An entrepreneur who is a business owner chooses the product and the marketplace for that product, builds a team of employees, seeks investors and raises capital, and researches the competition.

A CEO can also be an owner, but an owner isn’t necessarily a CEO. The CEO is the highest-ranking person in charge of business management and employee supervision. The CEO is responsible for keeping operations in line with the company vision and overseeing strategic management duties and is responsible for the business’s success. In a company that has a board of directors, the CEO answers to the board and keeps it updated on business operations. A CEO is also often in charge of hiring and firing employees.

CEO vs. Owner: Education and Experience

If you’re interested in climbing the corporate ladder to the top and becoming a CEO, it’s important to have the right education and the proper skill set. According to Forbes, about 40 percent of all Fortune 100 CEOs have a Master of Business Administration (MBA) degree.

Once future CEOs earn their degrees, many start their careers in smaller firms, moving up within those companies or ascending to more powerful roles by changing firms. Most CEOs earn their way into higher-responsibility positions by first taking on substantial operational roles, such as leading a department or division in a company, before being offered the title of CEO. As an example of a possible career trajectory, IBM’s CEO Ginni Rometty began as a systems engineer, moved into a consulting position at IBM, was promoted to head of marketing and strategy, and from there moved into the company’s top slot.

CEO vs. Owner: Necessary Skills

MBA graduates acquire a wide range of skills that can help them rise through the corporate ranks to CEO and excel once they get there. These same skills are also valuable for entrepreneurs who are interested in owning their own businesses.

One of the most important traits an owner or CEO must cultivate is the ability to lead a team. Team leaders need excellent communication skills, the ability to give instruction while being respectful and fair to subordinates, and a high level of personal integrity. In addition, team leaders must be confident in themselves and their teams, must be able to influence others, and must have exceptional negotiation and delegation skills.

CEOs and owners should also be effective mentors. Mentors must be willing to share their skills and knowledge, act as a positive influence on those with less experience, and provide guidance and constructive feedback to their mentees. Mentors consistently set and meet personal and professional goals and are acknowledged and respected by colleagues at all levels of a company or organization.

The ability to strategize and think analytically helps CEOs and owners to make decisions that impact a company’s marketing efforts, customer base, and asset distribution. It also allows them to devise innovative solutions, increase future opportunity, and decode complex market dynamics for a company. Because CEOs are the decision-makers at a company, their ability to analyze and strategize can determine a company’s level of success or depth of failure. Also paramount to a CEO or owner’s success is his or her attention to detail. Whether it’s crunching budget numbers or going over a business’s profits and losses, attention to detail is yet another skill integral to a company’s sustainability and success.

CEO vs. Owner: Work Environment

CEOs and business owners work in various types of environments, depending on what their companies sell or specialize in. While we might often think of CEO positions as office jobs, they aren’t always. For instance, a CEO of a commercial construction firm might spend time in the field at construction sites. An entrepreneur who owns a bakery will spend the bulk of his or her time in a kitchen environment.
Just as work environments can vary, so can owner and CEO salaries. According to the U.S. Bureau of Labor Statistics, the mean wage for CEOs as of May 2016 was about $194,000. That’s a hefty salary; but remember that CEOs in smaller companies often earn much less. For owners, while they are positioned to make a nice profit if their business ventures are lucrative, many businesses are not successful in the long term. Owners take the greatest risk by investing their own capital, and only reap the rewards if their businesses flourish.

Learn More

Find out how the New Jersey Institute of Technology’s online MBA program can prepare motivated, tech-savvy management professionals for success in today’s rapidly evolving global business landscape.

Recommended Readings:

The Essential Characteristics of Successful International Businesses
New Venture Management Tips for the MBA Student
8 Career Specializations for MBA Graduates
 

Sources:

U.S. Bureau of Labor Statistics 
Huffington Post  
Forbes