Owner Operator Vs. Business Owner

Owner Operator Vs. Business Owner

In plain English, which are you? Owner operator vs. business owner? 

You want the benefits of being a business owner vs. owner-operator. And get frustrated. Why am I stuck in being an owner-operator when I am working so hard to be a business owner!?

Let’s zoom out a bit. What’s the difference between the two?

It boils down to your frame of mind and mindset on “who does the work”. You? Or your team?

Signs that you are an owner-operator:

• You think about “how to do the work” instead of “how to build the team/people/processes that do the work”

• You are “on the tools” the majority of the time, out there doing the work.

• Your labor produces a significant portion of your business’s revenue.

• You answer the business phone

• You do all the estimating (and no one else could do it, it’s all stuck in your head)
• You do all the scheduling
• You do the billing
• You address customer issues and complaints
• The way the business runs is stuck in your head. No one else can do what you do.

Signs that you are a business owner:

• You think about “how to build the team/people/processes that do the work” instead of “how to do the work”
• You are not “on the tools” very much. You focus on building the team that is on the tools and doing the work.
• Your “labor” or time at work, is spent building and honing the team, leaders, processes, culture, and strategy. Your “labor” is not producing a significant portion of your business’s revenue.
• An office admin or salesperson answers the business phone
• Estimating is not stuck in your head, it’s baked into a system and process to the point that even your office admin could build an accurate quote (think software that systemizes your pricing via a budget, templates, and production rates)
• Scheduling is not hinged on some magic potion in your head, there’s a process for how to schedule, manage adjustments, etc.
• Someone else on the team does all the billing, Accounts Payable, and Accounts Receivable. There’s a process that dictates when things get billed, what happens when it’s overdue, etc.
• You have a process to handle customer complaints and issues. You are no longer the chief babysitter. The people on your team are empowered to problem solve and come up with solutions to make and keep customers happy.
• You’ve done brain surgery on your owner-operator days and taken everything from out of your head, and into repeatable systems and processes, that other people can execute.

Here’s the reality, this owner-operator vs business owner thing is just phases in the journey of growing a business.

Every business owner has gone through the owner-operator phase.

The question is just “How long will you stay in that phase?”

Some folks stay in that phase forever.

Some folks are in that phase for just a few months to a year. They skip right on forward to the business owner phase.

It’s not like being in one phase or the other is necessarily a bad thing. It isn’t.

But each of those phases has pros and cons, and problems and frustration occur when you don’t protect yourself from the cons in being an owner operator vs business owner.

Owner Operator:

Cons

• “Break a leg” factor. If you break a leg or stop working, the business stops.
• Tough to take vacations
• Can feel like you’re putting out a thousand fires at once.
• Can feel like you simply don’t have enough time to do everything. The balls get dropped. Family dinners get missed. Your kids don’t get enough of you.
• Usually, people in the owner-operator phase don’t pay themselves enough. Because of the risk associated with YOU being the business, you need to be super profitable and make that business crank out some serious cash. That you then invest in other things, so that WHEN (not if) you stop working, you aren’t left with no income. Too often owner-operators just take a modest salary or profits from the business, enough to live on, but not enough to build up retirement or other assets/sources of income for when you stop working. Too often, people work in this phase for 20-30 years, stop working, and have nothing to show for it. There’s no sellable business. They ARE the business. You find that you didn’t own a business, you owned a JOB.

Pros

• Can run a pretty lean and mean operation from an overhead expenses standpoint.
• Don’t have to focus as much on leadership, team building, and culture. (if that even a pro? I guess it can feel like a simpler life…)
• Some clientele like “working with the owner”. You can offer a level of authenticity and service that few scaled businesses achieve.

Business Owner:

Cons

• It’s harder to build the systems and processes that produce the work than it is to just do the work yourself
• You have to develop the skill of attracting and retaining good people. (this is not a con, it’s just really hard to do. I’m listing it as a con here because many owner-operators look at this and it feels like a con)
• A business that runs without the owner requires a more significant infrastructure, meaning more significant overhead costs.
• Difficult to “capture the magic” and get that 5-star service, authenticity, and truly caring to be administered through your people who deal with the customers, rather than yourself.

Pros

• Building systems and processes release you from the entrepreneurial prison and give you freedom and control of your time.
• You have a sellable asset. It IS the asset you are building, rather than needing to crank maximum cash OUT of the business (like the owner-operator model) to funnel into OTHER assets for your financial security.
• You own a business, not a job. Because of the freedom you’ve earned and built, you can strategically design your schedule, life, and priorities more proactively, rather than reactively. Meaning if you like sales, keep doing sales and build other people, systems, and processes to handle admin, production, etc. If you like the field, stay in the field and build other people, systems, and processes to handle the rest of the business. Do whatever your heart desires.
• You could choose to be an active owner (making salary + net profit distribution), or work your way out of a job, and be an absentee owner (just net profit distribution).

So… what’s my point in all of this?

I intend to make you think and open your eyes a bit. It’s so easy to be in the hamster wheel and never stop to catch your breath and design your life and business to serve your goals.

I’m not saying stop being an owner-operator if that list of pros and cons is cool with you. Just make sure you are earning serious cash while the business is running, and you are investing it into other assets, because the moment it stops running, you lose your financial stability.

I know many many people that never intend to leave the owner-operator phase, and they are knowingly making that choice with their eyes wide open, and happy. However, they have a strategy regarding their financial stability to insulate themselves against the risks.

I know many people currently in the owner-operator phase scratching and clawing their way to the business owner phase, fighting hard to get there. I say scratching and clawing because it truly is more difficult to build the processes that do the work than it is to just hold a simpler life and do the work yourself.

My hope is you’ll stop and think for a hot minute. Talk to your spouse, your team, your mentors, and work to decide what you want.

My goal in writing this is to help someone avoid being in the owner-operator mode by default and then 30 years later when they’re worn out, kicking themselves because they didn’t make the business produce enough cash to provide financial stability for themselves. They worked hard all their life, and now have nothing to show for it.

That’s what I hope I can help someone out there avoid.

What we do

SynkedUP serves both of these phases well. I love helping people on their transition from owner-operator to business owner by using software to implement stable systems and processes.

I also love helping owner-operators make sure their owner-operator business model is cranking out enough cash to be financially secure when they’re ready to hang up their hat.

I love talking about this stuff. Drop your comments or insight into the comments or replies. I’d love to hear your perspective on this whole topic.

Cheers!

Weston