A business owner versus a business operator is a matter of risk and financials. The terms are not interchangeable. If you wish to run a business, an entrepreneur should decide if they want to be a business owner or serve as an operator for someone else’s company. An owner can hire an operator, or an operator can ask a board of directors to establish a formal owner.
What Is A Business Owner?
A business owner is an individual who provides the assets, capital, and management needed to run the business. Usually, the business is in his or her name on legal paperwork, and they are held liable for any potential actions or damages that happen during operations. Generally, an owner holds more power than an operator does.
A benefit of being a business owner is that, ideally, your investments will rise. Then you can either borrow against them for future ventures or use the capital. If you own the assets, you also have more power to use, sell, or manage them otherwise. This is especially useful when owners have to tighten their belts.
You also have the highest amount of control. Because you are the owner, managers and employees need to come to you for approval. This allows you to ensure that products have a consistent output.
One downside of being a business owner is that due to your financial closeness to the business, you may receive a skewed perspective on health and profitability. Specifically, a business owner’s salary relative to the amount of revenue earned can skew profit and losses. If the percentage is low, it shows that the business is potentially healthy when it may run at a loss. Your income is also volatile.
You would rather be a business owner than an operator if you have a personal investment in your operations. These investments can be monetary– contributing the necessary capital– or emotional — this is a passion project. Make yourself indispensable, but ensure that your absence won’t make a business fall apart.
What Makes A Business Operator Different?
A business operator is solely in charge of managing operations. They handle the day-to-day obligations and treat it as a salaried position. Hotels, for example, may have operators in charge of collecting revenue at various locations. They must monitor certain Key Performance Indicators (KPIs) and deliver on them, especially for remote work.
The main benefit of being an operator is that the job has less of a risk. If the business fails, you only worry about losing your position. This is a setback, but only for the short term. An owner has to worry about losing their assets or returns on their investments. They can suffer heavy financial setbacks.
A downside, however, is that the operator has less control over managing assets. This means that an operator has to do what an owner says, with a less flexible arrangement. Usually, they don’t get a return on investments due to someone else owning the assets.
An operator is better-suited for when an individual doesn’t want to invest as much in business. This can be for many reasons; they may not have the funds to provide necessary capital or lack the time to go beyond a standard 9 to 5 job. If you prefer to
Plan For Long-Term Entrepreneurship With DeepSky
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Reach out to us today to get started. Your Financial Wingman is waiting to help you, from streamlining finances to making viable business strategies.