There is a considerable difference between being an employee and owning a business. It is not simply that your position has changed from having your work routine controlled by other to making your own work rules. There are five main areas of difference between being an employee or an owner, although to a certain extent these overlap and it is within these particular areas that the transition process will need to be closely monitored.

1 Responsibility

Perhaps one of the most daunting aspects of change from employee to owner is the responsibility factor. Although employment normally visits some level of responsibility, in most cases this is usually limited to certain key business or task areas.

However, a business owner has total responsibility for all aspect of the business operation and all of the resources that the business utilises, including its employees. For example, instead of having someone else being responsible for your health, safety and performance, you as the owner will now have ultimate responsibility for all of those employed by the business.

Similarly, you will no longer be in a position where you simply follow the strategies and routines that have been pre-determined by management, with no responsibility for the success or failure of these management directions, save to the extent that you are complying with the tasks assigned to your role. As an owner, you will be responsible for creating the direction for the business and identifying the tasks that are required from employees and yourself.

The art of coping with this element of transition is to learn the skills that are required to enable you to effectively cope with the responsibility levels. Part of this learning process will enable you to efficiently delegate those issues that can be dealt with by other employees within the business, leaving you free to concentrate your efforts on issues of responsibility that cannot be addressed by anyone other than the business owner.

2 Decision-making

Employees, when faced with an issue they do not know how to deal with, always have someone of a higher management level you can rely on to make the ultimate decision. Equally, in areas of the business where major decisions are required, such as changes in strategy, policy, product and a host of other departments, the employee normally relies upon decisions made by others.

Owners do not have the luxury of leaving major decisions that affect the business to others. To paraphrase an old saying, for major business decisions “the buck stops with the owner.”

One of the main skills that need to be acquired to ensure that owners make appropriate decisions is learning how to gather all the required knowledge and information needed before embarking upon the decision-making process. All too often businesses fail because the owners have not been aware of all the facts and, more importantly, been unaware of the impact that other factors might have on the decision.

For example, launching a new product without knowing whether competitors have launched a substitute that is both cheaper and more effective could cost the business dearly. Similarly, deciding to expand the business without being aware of the costs involved would be financial suicide.

3 Management

Employees, even those within a management position, are normally only responsible for the management of their own department or specialist process of the business. Although one might say that management is an art in itself and therefore the same rules can be applied across the business spectrum, this is not the case.

Most managers have some level of expertise in the area of the business where they are positioned. For instance, a marketing manager will normally have a background in marketing and a finance manager will possess accounting skills. Where an owner is different is that he or she is expected to manage the whole business, which includes all of the sectors and disciplines that are needed within a modern firm.

To become a successful owner it is important to learn the art of management in a multifaceted situation. As with other aspects of ownership, this will also include being able to delegate those element of management roles to others, perhaps even to people who are more proficient in specific fields than you are. This also means that you need to learn about employee recruitment and selection processes so that you will be able to ensure that you have the right skills in the right places. For example, you may need a qualified accountant to manage the financial department.

Another aspect of good management is learning how to control and monitor the activities of the various business segments. As an owner, you cannot allow any department to reach a position where it considers itself a separate empire divorced from the main body of the business. Each is an integral part of the whole and must be treated in this manner. Therefore, the actions and performance of each department must be managed and monitored to ensure that they are all acting in a manner that will enable the business to achieve its objectives.

4 Investment

A huge aspect of difference between an employee and an owner is the financial commitment that is being made to the business. Whilst it is true that, in many cases, employees might invest in the business they work for through special saving and share schemes, this is not the same as the financial commitment needed to own a business.

An owner is responsible for every aspect of the business finance. They will have to either commit their own funds or borrow from others to start the business and help fund its development. Their personal assets are at risk if the business fails and whom employees expect to pay their wages.

Therefore, it is important for the owner to learn the art of financial management. Part of this means understanding that, whereas before they only had to concern themselves with their personal financial needs, now they also have to consider the business financial requirements.

This means that the owner needs to learn about budgeting. Furthermore, every business financial decision should be based upon resource requirement, affordability and its appropriate use as a business tool. Unfortunately, all too often new business owners make mistakes in this area. For example, the number of people in this position who spend a fortune on a personal car that are too expensive for the business, which can damage profitability, is staggering. Personal choice must be secondary to business needs when owning and running a business.

5 Time control

The final aspect of change between an employee and owner relates to time. Although employees can work overtime, in general they have a set working time pattern. Once they have fulfilled these time obligations, the rest of their time is their own. However, the owner does not have this luxury. Often, due to work pressures, they have to work considerably longer hours than those they employ.

However, the problem that occurs with time during the transition from employee to owner is that too often the latter will overdo it, spending excessive hours committed to the business and its tasks. This can cause serious damage to their personal relationships and indeed their health. What has to be learned and remembered is that, within reason, a business should be able to operate within reasonable hours, leaving owners with much needed leisure and relaxation time. If it cannot do this then there is something seriously wrong with the structure of the business and the way it is being managed.

Owning a business is different to being an employee is all of the above ways and many others. Making the transition from employee to owner will not be easy and can appear frightening to many. However, if this change of status is approached with care and the person making it is prepared to devote the time to learning the skills needed to become a successful owner, it can be achieved with relatively few problems being experienced along the way.