When considering buying or running a business, a crucial question arises: should you be an owner operator or an owner manager? Each of these approaches has its own advantages and disadvantages. This article explores both of these roles to help you determine which is best suited to your goals and situation.
Introduction
Running a business can be done in different ways. As an owner, you can choose to be actively involved in day-to-day operations or take a more strategic role by overseeing management. Understanding these two roles will help you make an informed decision on how best to run your business.
Owner operator
What is an owner operator?
An owner operator is directly involved in the day-to-day operations of the business. This role involves making operational decisions, managing employees, overseeing processes and resolving day-to-day issues.
Benefits of being an owner operator
Direct control
Being an owner operator gives you direct control over the operations of the business. You can immediately influence the direction of the company, respond quickly to challenges and ensure your vision is implemented.
In-depth knowledge of the business
Working at the company on a daily basis, you gain in-depth knowledge of its operations, employees and customers. This knowledge can help you make more informed decisions and identify opportunities for improvement.
Disadvantages of being an owner operator
High workload
The day-to-day running of a business can be extremely demanding and time consuming. Owner operators can find themselves overwhelmed by operational tasks, which can limit their ability to focus on long-term strategies.
Risk of burnout
The stress of day-to-day management and problem-solving can lead to burnout. It's important to find a work-life balance to avoid burnout.
Specific roles and responsibilities
As an owner operator, you will be involved in the day-to-day management of the business. This includes :
- Employee Supervision: Direct and supervise staff.
- Management of daily operations: Ensure that operational processes run smoothly.
- Rapid decision making: React quickly to problems and opportunities.
- Interaction with customers: Ensure customer satisfaction by being present in the field.
Managing owner
What is an owner manager?
An owner manager takes a more strategic role and oversees the management of the business without being involved in day-to-day operations. This role involves establishing the company's vision, making strategic decisions and overseeing the management team.
Benefits of being an owner-manager
Focus on strategy
By focusing on strategic aspects, an owner-manager can plan and implement long-term initiatives that promote business growth and sustainability. This allows a focus on innovation, expansion and strategic partnerships.
Less operational stress
Owner-managers delegate operational responsibilities to a competent management team, reducing the stress of day-to-day management. This allows you to maintain a better balance between professional and personal life.
Disadvantages of being an owner manager
Dependence on the management team
The success of an owner-manager depends heavily on the competence and reliability of the management team. It is crucial to recruit experienced and trusted managers to ensure that the business operates efficiently.
Less direct control
By not being involved in day-to-day operations, an owner-manager may have less direct control over certain aspects of the business. It is essential to have effective reporting and communication systems in place to stay informed and engaged.
Specific roles and responsibilities
As an owner-manager, your role will be more focused on long-term strategy. This includes :
- Supervision of the management team: Recruit and supervise competent managers.
- Strategic decision making: Develop and implement long-term plans.
- Growth planning: Identify and exploit growth opportunities.
- Financial supervision: Ensure the financial health of the company through strategic decisions.
Concrete examples
Owner operator
Let's say you own a restaurant. As an owner operator, you will be on site every day, managing staff, supervising the kitchen, and interacting directly with customers. You will make immediate decisions regarding inventory orders, staff schedules and customer satisfaction. Your constant presence allows us to respond quickly to problems and maintain a high level of service.
Managing owner
Let's say you own a chain of stores. As an owner-manager, you will focus on chain expansion, long-term marketing strategy and overseeing your store managers. You will set up reporting systems to track store performance and make strategic decisions based on these reports. You will focus on planning growth and optimizing operations through strategic decisions.
Impact on organizational structure
Typical organizational chart
In an owner-operator business, the owner sits at the top of the organizational chart, reporting directly to department heads or employees. In an owner-manager business, there is a layer of managers between the owner and front-line employees.
Reporting mechanisms
An owner operator receives direct reports from each department, while an owner manager receives consolidated reports from managers, allowing him to focus on key performance indicators. Reporting systems must be clear and effective to ensure smooth communication and informed decision-making.
Management tools and systems
For the owner operator
- Inventory management software: To track inventory in real time.
- Point of Sale (POS) Systems: To manage transactions and sales.
- Scheduling software: To organize employee schedules and daily tasks.
For the owner-manager
- Performance management systems: To track strategic objectives and key performance indicators.
- Management dashboards: To visualize key data and make informed decisions.
- Strategic planning software: To develop and track long-term growth plans.
Financial impact
Cost of management
Owner operators can reduce some costs by taking over management tasks themselves. Owner-managers often need to invest more in a competent management team, which can increase costs in the short term but potentially improve performance in the long term.
Financial performance
An owner operator can directly influence profitability through daily adjustments, while an owner manager can optimize performance through long-term strategies and effective resource management. It is important to consider the costs and benefits associated with each business model to determine the best option for your business.
How to choose the best option for you?
Evaluate your skills and experience
Think about your skills and experience. If you have strong experience in operational management and enjoy being directly involved, the role of owner operator may be more suitable. If you have expertise in strategy and business development, the owner-manager role may be preferable.
Consider your personal and professional goals
Your personal and professional goals play a crucial role in this decision. If you're looking for work-life balance, or want to focus on long-term growth, the owner-manager role may be a better fit. If you prefer to have direct control over operations and are willing to take on a high workload, the role of owner operator may be the best choice.
Assess the size and complexity of the business
The size and complexity of the business also influence your choice. Small businesses may benefit from an involved owner-operator, while larger or complex businesses may require an owner-manager approach with a dedicated management team.
Consider available resources
Assess available financial and human resources. If you have the means to recruit and maintain a competent management team, the role of owner manager may be more viable. If resources are limited, being an owner operator can allow you to better control costs.
Detailed procedures for switching between models
Transition from owner operator to owner manager
- Delegate responsibilities: Identify daily tasks that you can delegate to other employees or managers.
- Recruit a management team: Hire competent managers to oversee daily operations.
- Establish reporting systems: Establish reporting mechanisms to track business performance.
- Focus on strategy: Focus on strategic decisions and long-term planning.
Reverse transition
- Resume daily operations: Resume daily management tasks as necessary.
- Reassess the management structure: Adjust the management structure to reflect your increased involvement in operations.
- Ensure a smooth transition: Communicate changes clearly to the team and employees.
Frequently Asked Questions (FAQ)
What are the signs that I should move from owner operator to owner manager?
If you feel overwhelmed by day-to-day tasks, want to focus on long-term growth, or the business has become too large to manage effectively alone, it may be time to transition into an owner-manager role.
How do I assess whether my management team is sufficiently competent?
Evaluate the skills of your management team based on their experience, past performance and ability to make informed decisions. Regular assessments and feedback can help identify strengths and areas for improvement.
What are the most effective tools for managing a business as an owner-manager?
Effective tools include performance management systems, management dashboards, strategic planning software and automated reporting systems. These tools help track key performance indicators and make informed decisions.
Conclusion
Choosing between being an owner operator or owner manager depends on many factors, including your skills, goals, business size and available resources. By understanding the pros and cons of each role, you can make an informed decision that best fits your situation and career ambitions. Whether you choose to become directly involved in operations or take a more strategic role, the important thing is to have an effective management structure in place to ensure the success of your business.
