An Overview of Small Business Leadership… Motivation & Inspiration

If you Google the word “leadership,” you’ll find definitions, quotes, inspirational stories, movies, books, devotions, planners, and the like. Leadership is a big deal, but I rarely find anything about leadership in a small business setting. Sure, I can read corporate success stories, mountaintop experiences, and tragic circumstances that raised up and inspired leaders. Yet, I rarely find anything written about small business leaders by small business leaders. Therefore, I want to give you an overview of small business leadership from a small business owner’s mindset. Through this new mini-series, I want to show you what effective leadership looks like in your company and how it can raise the value of your small business.

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Podcast Time Index for “What is Leadership in the Small Business Setting?”

00:25 – What is Leadership in the Small Business setting?
01:09 – Leadership from a Small Business Owners’ mindset
04:15 – What is Leadership?
06:32 – Definition of Leadership
07:49 – Qualities of Leadership
12:02 – Why is Leadership important?
13:45 – Who is the Leader of an organization?
15:17 – Multi-Directional Leadership
15:59 – Levels of Leadership
20:27 – Summary

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To drive up the intrinsic value of your business, you must improve each of the 8 foundational components of your business. Having just finished my deep dive into strategic planning, I’m ready to dive into leadership – the second fundamental aspect of your business. 

What is a Leader?

Leaders come in many forms and fashions. A leader could be someone an organization or a group of people places in charge of operations, activities, people, or decisions. Yet, does putting people in charge of operations or others make them good leaders? Not necessarily. Okay, then you can say that a leader is someone who directs a group of people in an organization to accomplish a common goal. That’s true, isn’t it? Sure. But just because you stand back and bark orders doesn’t make you a good leader, either. Dictators can be leaders, but that’s not the type of leader I want to follow in my small business. So maybe a leader is someone who pushes others forward or pulls them up. That’s a fair definition, right? Of course.

Although each of the definitions above are true, I find them less than inspirational in the small business setting. I don’t want someone who may or may not have leadership skills put in charge of my small business affairs. Additionally, I don’t want a “leader” demanding compliance from my team members or me, nor do I want someone leading by force or passive aggression. People can be placed, born into, or raised up into leadership roles, but that doesn’t make them good leaders. What I’m looking for in my small business is good leaders and good leadership. But how do I find good leaders or know what good leadership looks like?

An Overview of Small Business Leadership Characteristics

Well, Chinese philosopher Lao Tzu once said, “A leader is best when people barely know he exists. When his work is done, his aims fulfilled, they will say, ‘We did it ourselves.'” In a similar vein, American President John Quincy Adams reportedly said, “If your actions inspire others to dream more, learn more, do more, and become more, you are a leader.” The commonality in these quotations is the goal of leadership – to bring out the best in others.

To me, the ability to bring out the best in other people makes someone a good leader, especially in the small business setting. Personally, I believe that good small business leaders motivate others to reach their full potential by casting appropriate visions and missions, by taking responsibility for their actions and decisions, by maintaining authority through mutual respect, and by solving problems strategically, creatively, and capably.

Essentially, my definition of leadership specifies the types of qualities I believe good leaders should possess if they want to increase the value of a small business. My characteristics for leaders are:

• Charismatic
• Innovative
• Capable
• Responsible
• Respectful
• Able
• Strategic
• Visionary

Who are the Leaders in Your Small Business?

Who, then, are the leaders within your small business? Are they the owners, the Chief Executive Officers, the members on the Board of Directors, the managers? Absolutely, but leaders don’t always carry fancy titles or badges, and some that carry titles or badges aren’t always leaders. Leadership doesn’t always flow down from the top. Sometimes, “rank and file” employees lead from the bottom up.

In fact, Jim Collins, author of Good to Great, claims that leadership is multi-directional in a small business setting. He says, “We found that for leaders to make something great, their ambition has to be for the greatness of the work and the company rather than for themselves.” In other words, he believes that people who work for the good of the company rather than for their own good are leaders within the business no matter what their titles or positions are. He believes leaders appear in five different levels of a business.

Level I Leaders

First, Collins says that individuals in entry-level positions are leaders if they make contributions to the company with their talents, knowledge, skills, and work habits.

Level II Leaders

To become a Level II leader, individuals must progress beyond their desire for self-promotion and self-focus to a place where they seek to accomplish something greater than themselves within the company. These leaders acknowledge and pursue group objectives.

Level III Leaders

Once you pass Level II leadership, recognized leaders can become competent managers or individuals who organize people and resources toward the effective and efficient pursuit of a predetermined objective.

Level IV Leader

After they become managers, leaders can become key managers or managers of the other leaders. These individuals show a commitment to the pursuit of the company’s vision, and they inspire others to reach their full potential in order to pursue that vision, too.

Level V Leader

Finally, individuals can become executive leaders within the business. These are not the people who start the business and become leaders in name only. These are the people who have walked through the levels of leadership to prove their effective leadership skills and to prove their commitment to the company as a whole. The Level V Leaders can articulate clear and compelling visions and inspire others to work toward those visions as hard as they do.

Why is Leadership so Important in the Small Business Setting?

So who are the leaders in your business? Are your managers the effective leaders, or are your entry-level team members more effective? Who is inspiring your team members to reach their full potential? Who is motivating them to work toward company goals?

To drive up the value of your small business, you want to place good, effective, proven leaders in managerial and executive roles. You want those who naturally inspire others to lead them in deed and in title. If you don’t promote those who show leadership qualities and rally those near them around one objective, then you’ll have division within your team members. Your employees will work against each other which will undercut your business’s vision and mission that you worked so hard to develop in your strategic planning sessions.

So that’s it for this article. Be sure to join me for my next one, The Top 10 Things Small Business Leaders Do!