What is the REAL Difference Between a Founder, CEO, and President?
It’s normal for you to feel like you’re doing EVERYTHING at the beginning, and let’s be honest – you probably are. Hopefully, as your business grows there will come a time where you will need to lean in, hire employees, and trust them to execute your business as you envisioned it!
There are three important titles to be aware of when starting a business and when you’re a small business, it is possible for some titles to overlap.
Founder
Did you think up the idea of this company and start it? If this is you, then you are the founder of your company! The cool thing about this title is that it will NEVER change. A founder of a company is the person who came up with the idea and started the business.
Think of Whitney Wolfe Herd, the co-founder and CEO of the dating app Bumble. Wolf Herd previously worked for Tinder, then went off to design a dating app to give women more control over their dating life. According to Forbes she currently owns a 13% stake in Bumble Inc. Yes, you read that correctly! She doesn’t even currently own a majority share and was effectively ‘bought out’. However, if she sold her 13% share she would still be the co-founder of Bumble because she created it.
The title ‘Founder’ can never be appropriated by someone else. This can be protected by customizing and signing a Founders’ Agreement. Within this agreement, you establish who else is a founder, everyone’s roles, how much of the company each of you own, what you plan on each contributing, who owns the intellectual property, under what conditions can the intellectual property be sold, and more!
TIP: Any time you go into business with someone, whether it be a family member, best friend, or stranger, always have an agreement in place!
Chief Executive Officer (CEO)
While some businesses don’t have or need a CEO, they are generally the highest ranking executive of the business. You can be a Founder and the CEO of your business, just like Wolfe Herd, or the Founder can hire a CEO.
The CEO is the ‘big picture’ person. They traditionally execute the vision of the Founder or are sometimes hired to relaunch the company for success and long term strategy to scale up the business. If the CEO is hired, it’s possible that the CEO has to check in with the Founder before making decisions. This may be more common in new small businesses and can depend on the responsibilities and expectations of the Founder. The Founder can be involved in as much or as little of the decision making of the CEO as possible.
There are no rules, per say, on when to hire a CEO or when you can call yourself Founder and CEO, but the position of CEO is often established once the business is ready to scale up and take the business to another level. The position of a CEO is not for everyone and requires, among other skills: integrity, leadership, analytical thinking and sales oriented mindset.
President
It’s not uncommon in small businesses for the role of CEO and President to be held by the same person, or to be mutually exclusive. However, the traditional role of the President is to ensure the CEO and the company are following the company’s vision and mission statement. The President is also in charge of budgets and managing and hiring employees. CEO’s are hired for long-term company strategizing, while the President has more of an active role in the day-to-day functions of the company. The President is often the ‘face of the business’. Think of Dave Portnoy from Barstools Sports. Can you name the CEO of the company? Probably not – but, you know Portnoy from social media as the outspoken and controversial Founder and President because he’s taken on the role as the face of the business (and for the record the CEO of Barstools is Erika Nardini).
So what should you call yourself as a sole proprietor?
As a sole proprietor (one owner or a married couple) you are likely able to call yourself the Founder, since you are the one who legally started it! When you are just starting your company, it’s not uncommon for you to be the only ‘employee’. As a Founder of the company, you wear many hats. You can remain as just the Founder, because, after all, it is a lot of work and your company is your ‘baby’ that you need to protect! After establishing your business, you may also want to scale up. If you want to be in charge of scaling your business for long-term success, then you can call yourself the Founder & CEO. If you want to be the face of your business and be in charge of the day-to-day activities and hiring people, then you may call yourself the Founder and President.
It’s easy to think titles don’t really matter but titles are important for the sake of your business and employees. Titles help to define responsibilities of yourself and your employees, providing credit where it’s due. Titles also impact your employees, their futures, and demonstrate other companies and consumers that you mean business!
Author Credits
Gillian Turvey is a final year law student in the UK and a 2021 EFV Legal Intern, She is specializing her studies towards Criminal and Family Law, and can be found playing with her puppy. Connect with her on LinkedIn.
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