Owning and running a business is complex. You have four primary roles as a business owner, all vital to success, yet each with competing interests. So, what are these roles, and why are they important?

The Shareholder

A business owner is a shareholder (owner) of the business, whether they have full or part ownership. They are the investors/entrepreneurs who risk their capital in the hope of receiving an acceptable return on their investment. If the business succeeds and makes a profit, it’s theirs. If the company fails, they lose the capital invested.

Shareholders invest ‘X’ dollars in the business, and I expect a return of ‘Y’ dollars by ‘Z’ date. If they lose confidence that this will occur, they will limit further investment, and make it harder for the business to grow and maintain viability.

The Director

The business owner is commonly a director of the business where it operates as a company. The director makes sure the interests of the shareholders are protected, and management is operating within the law. In addition, a director oversees the business affairs and approves management’s strategies and plans while holding them accountable for performance.

Suppose the business isn’t achieving an acceptable financial return for shareholders or operates against the law. In that case, the director must intervene and make changes to the management of the business. If they breach their directors’ duties by law, they become personably liable fines and/or imprisonment.

The Manager

The business owner who runs their own business is a manager. A manager is someone who gets the work done through others. They are responsible for creating the strategies and plans to achieve the business’s goals and organise resources accordingly. Managers play a leadership role within the company and hold their staff accountable to achieve set targets and objectives. Typically led by a ‘Managing Director’, they report to the board of directors and are accountable for achieving the business’s set goals.

The Worker

The business owner who performs the actual work is also considered a worker within the business. In most small to medium-sized companies, the business owner still performs some of the work. Workers are responsible for getting tasks done to defined standards while achieving their targets and objectives.

When a worker is not achieving the expected results, their manager should intervene and help resolve the issue so that the group’s performance does not suffer.

The conflict

So, here’s the thing: it’s hard to be the shareholder, director, manager, and worker all in one. Each has competing interests, and it’s challenging to balance them. For example:

• The shareholder needs to achieve an acceptable return on their investment. Yet, it’s difficult when they are also the manager, who requires more investment (money) to solve the problem.
• The director is legally obliged to ensure the company remains solvent. However, when the cash dries up, they require more capital from the shareholder who is reluctant to provide it.
• The manager needs to execute the business plan and achieve its goals, but sometimes things don’t go the way they expect, and the board of directors needs to be patient. Alternatively, a director fears being too lenient, as they may be fooled by an incompetent management team.
• The worker needs more resources than management is willing to provide. The manager hesitates because they want to stick to a budget and avoid cost overruns which makes them look incompetent.

What to do

So, what’s the solution to this complexity? Unfortunately, there is none. The power is understanding and appreciating the different roles, rather than fighting against them or pretending that they don’t matter.

For example, a shareholder only cares about financial returns. A director wants to limit their risk. A manager wants to execute the plan at any cost, and a worker wants to get the job done regardless of cost or time. No one viewpoint is sufficient; they all have their place in running a successful business.

As a business owner, you need to be aware of these four different roles and fulfill each one while tolerating the inherent conflict. Remember, it’s the pressure that creates the diamond, and if there’s no conflict, you are probably not fulfilling one or more of your four roles listed above.