An owner-managed business is a company where the owner has complete control over its operations and decision-making processes. This type of business structure is commonly found in SMEs (small and medium-sized enterprises) or family-owned businesses. The owner is often the founder, however, in some cases may have been acquired via an entrepreneur.
What are the advantages of an owner-managed business?
Owner-managed businesses have some distinct characteristics that generally set them apart from other types of companies. These characteristics can be advantageous, such as the following:
Owner-managed businesses have a streamlined decision-making process, owing to the fact the owner has full control over operations. This means they can respond quickly to market changes, seize opportunities, or adapt to challenges quickly.
Strong customer relationships
Because they are central to how the business is run, owners of owner-managed businesses can develop strong relationships with their customers. This personal touch can improve customer loyalty, build greater trust, and deliver a more satisfying customer experience overall.
A holistic approach
In an owner-managed business, the owner will be involved in various aspects of the business, including strategic planning, finance, marketing, and day-to-day operations. This hands-on approach ensures that they have a complete understanding of how the business works and enables more holistic management to drive the business forward.
Long-term strategic vision
Owner-managed businesses tend to have a long-term strategic vision, driven by the owner's desire to build a lasting legacy. This vision may also extend beyond profitability to include customer reputation, sustainable growth, and other areas of focus.
Motivation and commitment
Owners are personally invested in the success of the business, which usually boosts motivation and commitment. This often translates into harder work, better customer service, higher quality products, and a greater commitment to drive improvements in all business aspects.
Common challenges faced by owner-managed businesses
There are plenty of advantages to an owner-managed business model; however, there are some unique challenges that must also be met if the business is to grow and succeed.
- Limited financial resources compared to larger corporations
- Time and workload management for the owner
- Skill gaps in important areas, such as finance or marketing, which often require outsourcing
- Succession planning to ensure continuity when exiting or retiring
Can an owner-managed business compete with larger companies?
They may be relatively small, but owner-managed businesses can certainly compete with much larger companies. They can do this by ensuring their quality of service is consistently high, that they nurture strong customer relationships, and adapt quickly to market or industry changes.
Tips for growing an owner-managed business
Owner-managed businesses, like any other business type, have the potential to grow considerably if they are run effectively. There is no one-size-fits-all strategy for growing a business, but we recommend looking into the following:
- Have well-defined goals, which are challenging, but achievable
- Build a deep understanding of your target market and customers
- Invest in strategic marketing
- Make sure your finances are well managed
- Focus on providing an outstanding customer/client experience
- Invest in and deploy technology designed to improve efficiency/operations
- Carefully monitor your Key Performance Indicators (KPIs)
- Seek qualified advice where necessary
- Be agile and adapt to changes in the business environment
- Stay well-informed about all legal and compliance considerations
How Shorts can help
Unlike a larger corporation, the leaders of an owner-managed business must meet each challenge head-on. When it comes to areas of finance, accounts, payroll, taxes and compliance, these responsibilities can be an unwelcome distraction from day-to-day business management.
Shorts have a designated, specialist, owner-managed business team who work solely with OMBs and have a wealth of experience working with businesses across all industries.
We believe in building close relationships with owners to develop a keen understanding of the business, its finances, and its goals to provide a tailored accountancy package that works for you. If you are the owner of a business that wishes to grow but lacks a dedicated in-house finance function, our team are here to help.
Liam ButteryView my articles
Tags: Accountancy Services