People write about insecure bosses all the time. There are blog posts, articles, book chapters, cartoons, movies, and TV shows devoted to the subject of dealing with a superior who feels threatened by his subordinates. Hey, bosses are people and a vast majority of humanity is plagued by insecurities of various forms and degrees. The authors usually predict two possible outcomes of having such a boss: you will either find a way to overcome the problem and turn this person into your ally, or you get fired. Curiously, in these writings "the boss" in question is usually another hired employee perched on a higher step of the hierarchy ladder. (It has always surprised me, why these advisers never consider a possibility of you finding the way of getting the insecure boss fired.)
However, when your insecure boss owns the company that employs you, it's a completely different situation altogether. Here he (or she, or they) was, the big boss with a business that he's built, thinking that he is the shit, the sharpest tool not just in some lousy shed, but in a suburban Home Depot... Until you came along, with your diverse expertise, broad fundamental knowledge, etc.
Now, you start discovering all kind of stupid stuff. If you are indeed an experienced person, you are not running around like an idiotic show-off screaming that everything is wrong. No, you tread lightly. At the same time you must do your job and, therefore, correct the stupid stuff. So, you say careful things like, "Excuse me, I mean no disrespect, but this and that is not done properly and will result in long-term losses; and, by the way, your accounting doesn't comply with prescribed rules." You have no choice but to reveal painful observations such as, "You know, that operating system you bought just before your hired me (couldn't you wait?) on recommendation of someone you know, sucks! You were misled - it's not an ERP, it's a retarded cousin of a real ERP twice removed."
Moreover, from time to time, things come out of your boss's mouth that are not just silly, they are embarrassingly incorrect. Of course, you can ignore it, and yet you cannot, because if you don't clarify his confusions and educate him, he may say something stupid in front of your bankers, or investors, or auditors. So, you have no choice but to find an appropriate way to straighten him out, raise his sophistication.
And even though you openly express due respect for his entrepreneurial abilities and acute commercial intuition, he cannot avoid feeling inadequate, insecure. It's unpleasant and he doesn't like it at all. Yet, unless you become rude and inappropriate, your job is secure. The idea of firing you wouldn't even come to his logical conscious mind. First of all, he knows that the company (i.e. his wallet) needs you and your improvements. Secondly, you took over quite few tasks, freeing him for business development. Finally, he doesn't have time or desire to go through the search process again.
Still, from time to time the subconsciousness feels pangs of wounded ego. When that happens, he'll do anything to make himself feel better. He will find one or another way to get back at you. If you have an accent (Irish, Italian, Slavic, French), he will interrupt you in the middle of a meeting and ask the outsiders if they understand at least 30% of what you were saying, even though your English is fluent. Your writing skills are likely to be far more superior than his, but he will make you run drafts of emails to important people by him, claiming their "political importance." He may get into habit of reminding you that, considering your compensation, he expects a lot from you, even though you have exceeded all his expectations already. And so on, and so forth...
This behavior is childish. The mere knowledge that it's rooted in his insecurity should help you to brush it off. Don't let yourself to be hurt by it. Don't think, "This is not fair, I am helping his business." Don't take it as an insult. Accept it as a testimony to your superiority.