When discussing startups, the roles of founder, owner, and CEO are often confused. Frequently, the same person fills all three of these positions. In some instances, the founder and owner of a startup may be the same person as the company’s chief executive officer.
Now for the million-dollar question: what is the distinction between a startup’s founder, owner, and chief executive officer? Can the same individual play all three roles? Or, should each role be assigned to a separate individual?
What roles do the founder, owner, and CEO play in a startup? Continue reading to find the differences!
Also read: Important Positions in Startup Organizational Structure
CEO vs Owner vs Founder: The Definition
Founder VS Owner VS CEO of A Startup (sourcer: Freepik)
To distinguish between founder, owner, and CEO, we must first understand the definition and function of each position.
Founder
A founder is the person who conceived the first business idea. Hence the term “founder.”
The startup founder is responsible for determining the direction, vision, mission, initial management structure, and team composition of the company.
The role of a founder in a startup is as follows:
-
1. Creating a solid team
A strong team will determine the future success of the company. Typically, the founder will invite their closest friends or people they trust to join their team.
These individuals will provide input and compensate for the founder’s shortcomings.
-
2. Define The Company’s Vision
Without a clear vision, the organization will never accomplish its goal and may become disoriented along the way. Therefore, the founder must establish the company’s vision from the very beginning.
Establishing the company’s vision calls for prudence. Founders must conduct extensive research, focusing on the viability of the product, the market, and consumers.
Also read: What is Startup Founder, Definition and Roles
-
3. Developing a business plan
Without a detailed and well-thought-out business plan, a company’s vision cannot be realized, regardless of its quality. The founders contribute significantly to the writing and development of the business plan.
In the business plan, all aspects, including production and distribution, the strengths and weaknesses of each strategy, marketing, and funding, must be carefully considered.
-
4. Financial Management
In the absence of a Chief Financial Officer (CFO), the founder is also responsible for the company’s finances. Until a competent financial manager is identified, the founder will serve in this capacity.
-
5. Looking for Funding
During the startup’s early stages, it will undergo a costly development phase. Therefore, a founder must consider funding a crucial factor.
Investors, loans, or the company’s founder may provide financing.
Also read: 10 Skills That Every Startup Founder Must Have
Owner
The term “owner” in the startup industry refers to the individual who owns and finances the project. They are often referred to as the “big boss.”
Multiple individuals may hold the title of owner in a startup business. There may be individuals or groups. For example, investors who do not participate in daily operations are also referred to as owners.
Being a business owner, like being a founder, is not an easy task. They must fulfill specific responsibilities and roles for the organization to function as intended. Here are the owners’ responsibilities and roles:
-
1. Leading the Company
The owner must initially be capable of leading the business. To ensure that everything goes according to plan, he or she must possess strong leadership abilities.
This responsibility is delegated to a director or manager because not all owners are able to assume it. This occurs frequently in the startup industry.
Owners must actively communicate with employees to avoid misunderstandings that could result in losses.
-
2. Creating the Company’s Rules
The owners are also responsible for drafting the company’s policies, which must be followed by all employees. The formulation of these policies was preceded by a thorough analysis of the company’s current situation and potential future risks.
The owners are therefore authorized to issue “Warning Letters” to employees who violate company policy.
-
3. Taking Responsibility for the Company’s Losses
The majority of a company’s losses are attributable to the company’s owners. Even though business losses are unavoidable, owners must be able to minimize them and find foolproof solutions.
Moreover, they are responsible for evaluating and implementing a specific strategy to prevent future losses.
-
4. Providing Funding
The proprietor is responsible for funding the business’ operations. The owners must ensure that sufficient funds are available for the business to continue operating in accordance with the initial plan.
-
5. Administrative Tasks
The owner must also perform administrative duties, such as writing financial reports and other types of reports. Even though administrative tasks may seem insignificant, if they are not performed correctly, they can hinder the growth of the business.
Also read: Chief Executive Officer: Definition and Roles
CEO
Now that we understand the meaning of founder and owner, let’s learn more about the chief executive officer. The acronym CEO stands for chief executive officer. This is the highest position available within the organization.
As the company’s chief executive, it is the CEO’s responsibility to make significant business decisions. The CEO is also responsible for the daily operations of the company.
Moreover, the CEO is the company’s public face and the link between the organization and society. Here are some of the roles of the CEO:
-
1. Implementing the Company’s Vision and Mission
If the founders establish the company’s vision and mission, it is the CEO’s responsibility to implement a strategy that is consistent with them.
In order for employees to comprehend the company’s direction, the CEO must translate the company’s vision and mission into short- and long-term goals.
-
2. Maintaining Communication with The Company’s Director
Typically, companies have multiple directors. There are numerous directors, including the president, marketing, and finance. The CEO ensures that each director shares the same understanding of the company’s direction and other crucial decisions that may contribute to the organization’s future success.
-
3. Oversee the Company’s Growth
As implied by the title, the CEO is responsible for overseeing the company’s operations and identifying potential partnerships with organizations that share a similar vision.
-
4. Communicating with External Parties
As discussed previously, as the company’s public face, the CEO must also represent the company in the eyes of the public. This includes fostering relationships with government officials and other influential members of society.
Also read: The Difference Between CEO and Director in A Startup
So, What Are the Differences Between Founder, Owner, and CEO?
Founder VS Owner VS CEO of A Startup (sourcer: Freepik)
Now that we understand the roles of founders, owners, and CEOs, let’s examine how they differ.
-
Company Ownership Status
The founder’s role is irreplaceable, even if he or she sells his or her stock shares to other investors. Depending on the company’s stock ownership, owners’ status may fluctuate periodically. If the CEO owns company stock, he or she may also be the company’s owner.
-
The Jobs
Examining the duties of these three positions closely reveals distinct distinctions. A founder must lay the company’s foundations, particularly in terms of legality.
In the meantime, the owner and chief executive officer roles begin once everything is prepared and the company begins operations. The owner is primarily responsible for business operations, whereas CEOs are expected to make profitable and risk-free business decisions. The CEO needs the director’s assistance to lead the company and ensure daily operations run smoothly.
That is the distinction between founders, owners, and chief executives. Founders will always be founders, whereas owners and CEOs are interchangeable and subject to change. Founders may also serve as the company’s owner and chief executive officer, but juggling all three roles simultaneously will be difficult. Each position has a distinct function within the organization that must be fulfilled.
