What is a Business Owner?

Definition: A business owner is the legal proprietor of a business. An individual or group that owns the assets of a firm and profits from them.

What Does Business Owner Mean?

The owner can be the same person who directs the business and controls its day-to-day processes or he can choose to have a Manager for that purpose, or even name a Board of Directors to do it. The corporate governance applied in a particular firm largely depends on its size and operational complexity.

In spite of the company’s size, the owner has the ultimate control on its company and therefore decides whether to delegate or not certain key executive functions on qualified professionals. The business owner can earn a monthly wage but he is not an employee.

In contrast, any other person working at the company is an employee no matter his hierarchy within the organizational structure. In addition, the business owner has the right to take the net profit obtained at the end of every fiscal year or reinvest it in the company.

Example

John Hatish is a 50 year-old man who decided to invest his money in a new business. He wanted to provide cleaning services to office buildings. John Hatish created a new firm, employed ten young individuals and purchased the initial inventory as well as some cleaning tools and equipment.

But Mr. Hatish has a full-time job as an engineer so he has no time to supervise the employees or to meet with potential clients. He remained as the business owner but hired a full-time manager. This manager meets with Mr. Hatish two hours each Saturday to guarantee proper accountability and to discuss together about new opportunities and ideas concerning relevant business issues.

At the end of the first year, Mr. Hatish decided to reinvest all the resulting profit to upgrade the company’s equipment. At the end of the second year of operations he took out 50% of the profit as income and reinvested the remaining 50% to keep funding the company’s growth.