Leadership in a small business

In my opinion effective strong leadership is critical to the success of any business but its form depends on a business’s stage of growth. For example, when the business first starts up what is required is hands on approach while larger organisations will have managers who will be less involved in the day to day managing. Their position is much more of a leadership role, setting direction and conditions for success and establishing goals. I think that SMEs occupy the middle position between these two where leaders need to manage actively as well as set direction. My experience of working with different businesses is that they grow leadership style and their approach needs to change and ‘grow’ too. For example entrepreneurial individuals who start companies have unique skills and traits that often do not make them good leaders of larger organisations. I know that one of Sir Richard Branson’s secrets of success is that having started a business, he has always known when to bring in a professional management team to run it. It is therefore important that the person starting the business recognises the right time to handover the reins. My experience has been that this is often problematic as the person who started the business often doesn’t want to let go This is where an external person can add real value by challenging the business owner to prepare a plan for succession. They can also help to find the right personal fit with the CE or owner that is critical. The cost of making the wrong hire can be devastating! For a family run business I would normally expect the successor to be part of the family and expect it to remain in family hands. However, for the entrepreneur with no skilled or willing family members, it can be complex and emotional to identify successors. The best way I have seen this happen is to have a deputy ‘learn the ropes’ until the right time is to hand over. This provides both parties with opportunity to check that it works for both of them. While at its core leading a small business is no different than leading a large organisation there are some critical differences dependent on where the business is in terms of its stage of growth.