owner operator

Incentive Alignment

Personal wealth is directly tied to the performance of the company, which ensures a high level of commitment. The person in this position is highly motivated to protect the value of their asset.

Conflict Potential

Difficulty arises when the needs of the business require a person with different skills than the owner possesses. An individual might hold onto a managerial seat long after they have reached the limit of their capacity.

Transition Barrier

Selling a company becomes complicated when the owner is the primary source of all technical and managerial knowledge. A buyer will often demand that the seller stay in the role for several years after the sale to ensure continuity. This requirement can be a high cost in hours and energy for someone ready to retire.

The firm is often less valuable if it cannot survive the departure of its creator. Moving from operation to pure ownership is a difficult psychological shift for many.