Principles of Effective Small Business Leadership

Whether you know it or not, as a small business owner, you are also a leader. Compare the following two examples:

by Vicki Gerson NFIB.com

A young entrepreneur is spread very thin. In the past five years, he has expanded into two new locations, even though everyone from his accountant to his family advised him against it. Despite his 65-hour workweek, he is not breaking even. His relationship with his spouse is suffering, and his employees constantly wonder whether or not they’ll have a job next month.

A woman takes over her father’s business. After six months she decides that the business needs to relocate from a stagnant downtown area. She sets the goal of finding a location that will improve profits by 25 percent the next year and spends six months researching areas and the different demographics to which they cater. Once an affordable location becomes available in her chosen area of town, she moves and watches her profits improve immensely. Her family and employees are both impressed with the time and effort she has put into improving the business and trust her to make decisions in their best interest.

Clearly, the woman in the second example is following sound leadership principles. Here are six to consider.

1. Budget your time.

Successful businesspeople know time is valuable and it must be divided between many facets of a business. Once you decide how much time you can spend on all of your activities, stick to your schedule. Include time for family, friends and personal activities as well.

2. Set priorities.

Your business can founder if you fan out in numerous directions without establishing objectives and goals. Decide what long- and short-term goals you need to set for your business, and share this vision with your staff.

3. Make logical decisions.

Don’t be too easily influenced by what your competitors are doing–be it expanding your product line or opening a new location. If you decide to expand, add locations or make any other major changes to your business, make sure you take time to thoroughly research your decision and talk the changes through with your staff and advisors.

4. Build on your strengths.

For example, if 60 percent of your business is geared to customers between 20 and 40 years of age, you want to continue to bring in merchandise that this targeted group will purchase.

5. Aim for results.

Successful business leaders are results-oriented. Set goals for your business that can be verified, such as improving profits by 10 percent over last quarter or bringing in five new clients in the next month.

6. Seek qualified advice.

No one expects a leader to go it alone all of the time. Effective leadership means asking for advice when it is necessary. Make sure you have a good accountant and lawyer you can turn to, and stay open to what the friends and family members you trust have to say. Check in with your staff every so often and ask in what ways they’d like to see the business improve. This won’t diminish your role as a leader–it will likely make them respect you even more.

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