CEO vs. Owner: Key Differences

View all blog posts under Articles | View all blog posts under Online Master of Business Administration

A CEO addresses the board of directors.

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

When it comes to comparing a 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 and interpersonal communication skills. Their positions share certain crucial responsibilities, such as hiring employees for high-level roles in their organizations.

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, who focus largely on market opportunities, competitors, and partnerships. As a result, CEOs are more likely to 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 their careers and professional profiles.

Comparing Owners and CEOs

According to the IRS, a business with assets of $10 million or less is considered a small business, while one with more is recognized as midsize to large. Whether the business is a brick-and-mortar organization or an internet company with a global reach, size matters because it determines the entity’s management structure.

For example, employees in large companies ultimately report to their CEOs. But CEOs also work for someone else — they are accountable to their company’s board of directors and, in publicly traded companies, to shareholders. On the other hand, owners are typically in complete control of their small businesses and accountable only to their customers.

The CEO is typically appointed by the board of directors and is the person in charge of the overall day-to-day management of a company. Owner, as a job title, is earned by sole proprietors and entrepreneurs who have total ownership of the business but do not have to be in charge of company management. The job titles CEO vs. owner, however, are not mutually exclusive — CEOs can be owners, and owners can be CEOs. And CEOs are not always accountable to a board of directors.

What Does a CEO Do?

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 loyalty. Such legal responsibilities are intended to promote transparency and trust and to protect key stakeholders of the 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 the business.

CEO Salary

A variety of factors can affect a CEO’s salary. From the size of the business to the location or type of industry, salaries for CEOs can vary broadly. According to the U.S Bureau of Labor Statistics (BLS), the median annual salary for chief executives was $185,900 as of May 2020. With higher salaries come increased responsibility, and the majority of CEOs have a wealth of education and experience to draw from to be able to face business challenges and guide their companies.

What Does a Business Owner Do?

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. In a nutshell, 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 need to develop strategies to drive revenue growth. As the business expands, owners may need to hire other executives to run key operations, 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.

Business Owner Salary

As the size and scope of businesses vary broadly, it is difficult to pinpoint an average business owner’s salary. Depending on the size of the business, percent of ownership or profit shares, and expenses, the salary from one business owner to the next can be vastly different. According to the compensation website PayScale, small business owners earned a median salary of about $64,800 per year as of October 2021, with the highest reported earning $156,000 per year, a figure that often increases with medium to large businesses.

The Value of an MBA for CEOs and Owners

Businesses find themselves in a world that is 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. The continuing digitization of information throughout the world is one example of this building complexity.

Additionally, a recent survey by Deloitte revealed that 77% of CEOs reported the COVID-19 crisis “accelerated their digital transformation plans,” making digital competency an essential skill for CEOs.

An MBA can provide relevant learning experiences for CEOs and business owners, helping them strengthen management and other key skills. While the duties and responsibilities between a CEO vs. owner vary, an MBA can prepare both for real-world challenges.

According to a 2018 survey report from the Graduate Management Admission Council, 81% of participating companies indicated they planned to hire MBA graduates. The rising popularity of the MBA is further evidenced by data from the Department of Education, 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 — this is an increase from the previous year’s number, which was 29.

Become a Leader in Business

Working at the helm of a business is exciting and challenging. While there are advantages and disadvantages to being a CEO vs. owner, both can become market leaders, making a positive difference in the lives of employees, customers, and various stakeholders. With a well-rounded education, CEOs and owners can become innovators and guide their teams to success.

Recognized as one of the “Best Online MBA” programs nationally, the Online Master of Business Administration at Ohio University teaches valuable skills such as critical thinking, entrepreneurship, innovation, and leadership — all competencies that are crucial for leaders and holistic thinkers who want to make a difference in the world.

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.

Recommended Readings

10 Steps to Starting a Business

MSM vs. MBA: Which Degree Is Right for You?

Reasons to Get a Master of Business Administration

Sources:

Deloitte, “A Case of Acute Disruption”

Forbes, “The Digital Imperative Is a CEO Call To Action

Graduate Management Admissions Council, “Corporate Recruiters Survey Report 2018

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

Houston Chronicle, “Legal Relationship Between Shareholders & CEOs

Internal Revenue Service, Small Business and Self-Employed Tax Center

National Center for Education Statistics, Graduate Degree Fields

PayScale, “Average Small Business Owner / Operator Salary

U.S. Bureau of Labor Statistics, Occupational Outlook Handbook “Top Executives

U.S. Bureau of Labor Statistics, Occupational Outlook Handbook “What Top Executives Do