You may be the owner of a business, but do you OWN the business? Are you taking on the roles and responsibilities of making things happen? Are you stepping up to understand what’s happening, what’s supposed to happen, and most—if not all—the requirements of running, growing, and being in business?
Let’s Talk OWNership
For anyone who decides to make the transition from working in a large organization to owning a business, or for the technology expert with no experience on the business side of corporate or entrepreneurial life, or even for someone transitioning from being in a key role in someone else’s small business to being “the owner,” the move from employee to owner can be much more than expected. The scope and breadth of change in perspective can be overwhelming and intimidating. There is so much to learn, do, see, and make happen … How are you supposed to do it all?
The Many Roles of Ownership
Truthfully, “doing it all” and “doing it well” may be completely different things, especially if you are talking about attempting to understand everything on Day One. But the truth is: The responsibility and accountability stops with you, the owner. If you are a sole owner creating a business that features you as the “product,” then you may be more comfortable in the lab, behind the desk, writing the book, speaking to a crowd of thousands, than making sure the bills get paid (the ones you get AND the ones you send). You may not be comfortable knocking on doors looking for customers, making sales pitches, or out at networking events. You may not want to worry about whether you received or kept the receipt from lunch with a client. You don’t really want to worry about whether the credit card is a “company” card or a “personal” card. It doesn’t matter to you whether you wrote the check for the mortgage out of the company bank account or the personal account; after all, it’s your business, isn’t it? You don’t want to fool with payroll, so you’ll just pay the person as an independent contractor and let him worry about the taxes … what’s the difference?
You OWN It. Understand It at Some Level or Pay the Price
The difference between classifying someone as an employee or as a contractor can be significant and costly when the IRS walks in the door and determines that you have misclassified someone who should have been an employee as a contractor, resulting in a failure to withhold and remit payroll taxes. How costly? Ask Microsoft or FedEx. In December 2007, FedEx was told it owed $319 million in back taxes for the year 2002 for misclassified workers. This was for a single year, and more years are under review.
Employee versus contractor misclassification isn’t the only area of risk. Don’t forget the question of exempt employee/non-exempt employee status (ultimately, who receives overtime and who doesn’t). This is another area of exposure and costly litigation. The Annual Workplace Class Action Litigation Report shows the top 10 Wage and Hour Settlements (five of them are listed below), demonstrating the ramifications to companies when employees are misclassified.
- Citigroup Global Markets: $98 Million
- UBS Financial Services: $89 Million
- United Parcel Service: $87 Million
- IBM: $65 Million
- Morgan Stanley: $42.5 Million
Lack of Ownership: The Bigger Picture Costs
If, as the owner of the business, you aren’t engaged in making sure things happen, then who will be? You can hire talent to execute and manage the business. They can take on day-to-day operational, strategic, and tactical roles, but ultimately it isn’t their business. They don’t have OWNership; the ultimate accountability, responsibility, and need for the business to succeed and generate a return isn’t going to be as heart stopping, life-or-death as it is for you. It may be their sweat, but it will be your blood, sweat, tears, heart, soul, and dollars invested in the business—to win, return, or lose.
Are You Committed to Success and Learning?
No one will know everything. No one can know everything. No one can do everything. No one should do everything. Having said that, you should be committed to learning enough about everything to be informed about the key, critical, and significant aspects of your business that can or will make or break the business: where the money is made, how it is spent, who the customers are, where customers are found, why a customer is lost, how the big deals are being written, what products and services are in the pipeline, who are the key employees, critical resources, and vendors. You need to know what will make and break your business.
You don’t need to know the tax code and how to prepare every tax form. You need to know what tax codes can affect your business and what a qualified tax preparer should know to advise your business.
You don’t need to know corporate, securities, patent, and other specialized laws. You need to know how to comply with the letter of the law and where to get sound legal advice from qualified, experienced attorneys that do know the details of the specialized laws you have to comply with.
You don’t need to know if it’s a debit or a credit that records an increase to your revenue account. You need to know the balance of your revenue account, where the revenues come from, that they are recorded, that they are recorded in a timely manner, and that they are recorded under the appropriate accounting principles. You need to know you have a qualified accountant to advise you and that your bookkeeper is keeping the records accurately.
What Not to Be or Do as a Business Owner
All too often business owners can be intimidated, especially in the early stages of setting up a business by all that they don’t know. This leads them to become frozen in place, afraid to take any action or to attempt to hand off all responsibility to others (e.g., employees, consultants, contractors) for everything from decisions to execution of those decisions. They want to sit back and be a bystander in their own business. A rare few can afford to take a passive role; they have money to burn and take risks with actions that may be uncoordinated at best, lacking in direction, or unnecessary or costly. In these cases, an open checkbook will lead to open spending without focused, meaningful results. The outcome is an “organization” that may look good, but is incapable of operating productively (picture mahogany furniture, luxury cars, and first class travel to exotic places with no customers, no sales, and no business, no plan—and no profits).
Active Ownership: Learn, Be, Do, and Make Your Own Mistakes
So you don’t know everything. Welcome to the world of being human! Can’t get things right the first time? Welcome again to the world of being human! Not comfortable making decisions? It takes practice. Never hired anyone? Never fired anyone? You’ll learn. Don’t know a debit from a credit? Read a book. Don’t know anything about patents? Read a book; do a Google search; phone a friend. Don’t know much about business? Call a consultant; that’s what we are here for.
Copyright ©2008 Lea A. Strickland, F.O.C.U.S. Resource, Inc.
All Rights Reserved
 Seyfarth Shaw LLP. 2007. Fourth Annual Workplace Class Action Litigation Report. Chicago: Author.