CEO vs. Owner: The Key Differences Between the Two High-Level Positions

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Female CEO presenting in front of table

Small businesses and big corporations have one thing in common: the person at the top is ultimately responsible for the success or failure of the organization. For larger businesses, particularly publicly traded companies, the chief executive officer, or CEO, is the highest-level person, while small businesses are typically started and run by their owners.

When it comes to a comparison of CEO vs. owner, there are many similarities and key differences between the two roles. For example, CEOs and owners often need similar traits to succeed, such as critical thinking abilities and interpersonal communication skills. Their positions share certain crucial responsibilities, such as hiring people for the high-level roles within their businesses.

However, there is a big difference between the ways they each handle responsibilities. For example, owners often delegate financial management to others, though sometimes they maintain at least part of this responsibility themselves. This is not possible for corporate CEOs, whose focus is on market opportunities, competitors, and partnerships. So instead, they delegate tactical responsibilities to others in their organizations.

Both CEOs and owners can benefit from a Master of Business Administration (MBA) degree, which can prepare them with critical theoretical business and management knowledge to further themselves professionally.

Considering Job Titles: CEO vs. Owner

According to the IRS, a business with assets of $10 million or less is considered a small business and a business with more than $10 million in assets is recognized as midsize to large. Whether the business is a brick-and-mortar retailer or an internet company with global offices, size matters because it determines its management structure. For example, employees in large companies ultimately report to their CEOs. But CEOs also work for someone else — they are accountable to the board of directors of their company and, in publicly traded companies, their shareholders. On the other hand, owners are typically in complete control of their small businesses and accountable only to their customers.

The title of CEO is typically given to someone by the board of directors. Owner as a job title is earned by sole proprietors and entrepreneurs who have total ownership of the business. But these job titles are not mutually exclusive — CEOs can be owners and owners can be CEOs. And CEOs are not always accountable to a board of directors.

CEO

CEOs often delegate the management of company finances, typically in the millions and hundreds of millions of dollars, to chief financial officers, or CFOs. This is especially true in publicly traded companies where CEOs are ultimately responsible for ensuring shareholders see returns on their investments. With this comes legal responsibilities to shareholders that include the duty of care and the duty of loyalty — intended to promote transparency and trust and to protect key stakeholders in a business.

As the top executive at large companies, CEOs receive guidance from the board of directors as to the vision and goals of the organization. In the case of private companies, CEOs take direction from the owner(s) of the company. Either way, it is necessary for CEOs to delegate day-to-day management responsibilities to other top executives to be able to focus on strategies that will drive the success of their business.

Owner

If a person owns 100% of a company, he or she is the owner of that company. If a person has a partner with equity in the company, then that person is a co-owner. Owners are in charge of everything in their business, from operations to sales to marketing.

To grow their business, owners must be willing to delegate responsibilities. Here is where hiring and developing people becomes an important skill. Like CEOs, owners want to ensure the financial health of their business, so they must develop strategies to drive revenue growth. As the business expands, owners may need to put in place other executives to run key parts, like accounting or marketing functions. Over time as their company grows, owners may take on the formal title of CEO. But unlike CEOs who report to boards of directors and shareholders, owners ultimately answer only to themselves.

The Value of an MBA for CEOs and Owners

Businesses find themselves in a world growing in complexity and scope. They need leaders who are skilled, knowledgeable, ethical, and creative, and who can adapt to global market changes and solve problems. Digitization trends offer an example. The number of CEOs driving and championing digital strategy grew from 57% in 2013 to 73% in 2015, according to a recent survey.

An MBA can provide relevant learning experiences for CEOs and business owners, helping them strengthen their management skills. Worldwide, the popularity of MBA programs is on the rise. Of the 786,000 master’s degrees conferred in the U.S. from 2015 to 2016, 24% were concentrated in the field of business, topping all other fields. Employer demand for MBA students is on the rise as well. According to a 2018 survey report from the Graduate Management Admission Council, 81% of companies participating in the survey indicated that they planned to hire MBA graduates. The rising popularity of the MBA is further evidenced by Department of Education data which shows a steady rise in the number of master’s degrees conferred in business from 1980 to the present day.

An MBA can open opportunities to business leadership positions. In fact, among the 100 top performing CEOs in the world, 32 hold MBA degrees, according to a 2018 report from Harvard Business Review — an increase from the previous year’s year’s number, which was 29. And people with master’s degrees working in business and related occupations had some of the highest earnings in the country: median pay for chief executives is $183,270, according to the U.S. Bureau of Labor Statistics. Average salaries for 2019 MBA graduates are predicted to exceed $84,000, according to U.S. News & World Report.

Learn More

Recognized as one of the “Best Online MBA” programs nationally, the online Master of Business Administration at Ohio University teaches the skills that are going to be crucial for leaders and holistic thinkers wanting to make a difference in the world: critical thinking, entrepreneurship, innovation, and leadership. Learn more about how Ohio University can help prepare you for a potential career as a leader and secure your future in the business world.

Sources

Bureau of Labor Statistics, What Top Executives Do

Bureau of Labor Statistics, “Should I Get a Master’s Degree?”

Bureau of Labor Statistics, Top Executives

Chron, “Legal Relationships Between Shareholders & CEOs”

Forbes, “Owner vs. CEO Management”

Fortune, “Why the MBA Has Become the Most Popular Master’s Degree in the U.S.”

Graduate Management Admission Council, “2018 Corporate Recruiters Survey Report”

Harvard Business Review, “The Best-Performing CEOs in the World 2018”

Inc., “5 Situations Where You Shouldn’t Call Yourself CEO”

Inc., “The Big Difference Between a Business Owner and a CEO”

IRS, Tax Information for Businesses

Ohio University, Online Master of Business Administration

National Center for Education Statistics, Graduate Degree Fields

strategy+business, “Why a CEO’s Digital IQ Matters”

U.S. News and World Report, “Find MBAs That Lead to Employment, High Salaries”