Over the past couple of months, I have challenged business owners with the following question:

“Are you acting as the owner of your business or as an employee of your business?”

When I ask this, the business owners pause, look a bit confused, and struggle to come up with a definitive answer. In response I explain the distinction as follows:

Acting as an Owner means you are the person who has invested significant capital into building the business into a valuable asset.  As an investor the focus is about the return on investment – is this business giving you better returns than other available investment opportunities?  For most SMEs, this means you should be expecting a return on investment from 15% to 35%.  The question you will be constantly asking: “Is my money working hard enough here, or should I put it somewhere else?”

As an owner, you will be making decisions about where to invest your available capital that maximizes your return.  The irony is this means the owner will be taking a short-term view on whether the investment is paying off.

Acting as an Employee means your thoughts will be about job security, career development, and long-term sustainability. The focus will be on whether this “job” (even though it’s your business) offers good prospects, reasonable hours, and growth opportunities. The decisions will be based on ensuring the business is around for the long term of the next five or ten years.

The problem? Most business owners want both a good return on their investment in the business AND the job security the business will provide.   However, in my experience, owners will concentrate their focus on the mindset of being an employee while neglecting the role of the owner.

During a recent conversation with a business owner about the role they were playing, the owner realised he was operating with the mindset of an employee focussing on the ability of the business to pay him a regular salary on an ongoing basis.  In that moment, he admitted all he had done in creating the business was bought himself a job.  He felt bound to the business in the same way he felt bound to jobs earlier in his career – obligated, trapped, unable to step away.

The owner posed the question: “How do I change the role I am playing?”

My response was the question is not which role is better – it’s whether the owner is consciously aware which role to play or are they letting circumstances choose for them.   The key is recognizing an owner must play both roles consciously. There are business decisions that require the owner to wear the owners’ hat: “Will this investment give me the returns I need?” There are other decisions that require the owner to put on the employee hat: “Will this ensure the business is sustainable and provides me with meaningful work?”

In closing, the most successful business owners I help create the business and life to which they aspire have learned to be aware of when the business needs them to wear which hat – sometimes thinking like an investor demanding returns, sometimes like an employee building something sustainable. The magic happens when the owner is consciously choosing which hat to wear in response to the needs and challenges of the business.