Key takeaways
- Consider factors like team experience, project urgency, and company culture when choosing a leadership style.
- Build a strong foundation for future growth through strategies like employee development and a positive work environment.
- Invest in personal development, seek feedback, and be open to new ideas to stay effective as a leader.
Are you constantly wondering if your leadership efforts are effective for your business? If you are, it’s probably time to take a step back and reevaluate the way you lead your team.
According to Resume.io, keeping your members highly engaged can increase team performance by as much as 27%. In this article, we’ll discuss how you can revamp your leadership style for your small business.
4 Key leadership styles for a small business
A leadership style guides you in making decisions, managing employees, and navigating challenges for your business. It’s important to understand which type suits your company and team dynamics, as it greatly impacts group morale, performance, and overall business productivity.
There are four key leadership styles commonly found in small businesses. Learn each one’s strengths and weaknesses to determine which one is best for your team.
1. Democratic leadership
The democratic leadership style supports collaboration among group members. In this approach, while the leader has the final say in business decisions, they encourage their colleagues to share their opinions, ideas, and feedback.
This method is perfect for businesses that thrive on creativity and innovation. It’s also effective in environments that prioritize team morale and engagement.
Pros
- Encourages creativity and diverse ideas
- Builds trust and loyalty among employees
- Helps with team buy-in for decisions
Cons
- Makes decision-making take longer
- Not ideal in high-pressure situations requiring quick decisions
Example scenario
A small tech company working on new software might benefit from a democratic leadership style. The team leader motivates developers and designers to contribute their thoughts on improving the product before finalizing the features.
This allows them to address different areas through other members’ perspectives and gather diverse insights, resulting in a well-rounded product.
2. Autocratic leadership
Autocratic leadership is the total opposite of the democratic style, and its main goal is fast decision-making. The leader makes judgments independently and expects the team to follow without seeking their input.
This style often works well in crises that require clear and immediate actions, as there’s no room for debate or delay.
Pros
- Quick decision-making, especially in emergencies
- Clear direction and expectations
- Strong control over operations
Cons
- Restricts members’ creativity and morale
- If overused, employees may feel undervalued or disengaged
Example scenario
During a financial setback, a small business owner might apply autocratic leadership to decide quickly on layoffs, cost-cutting measures, or strategy changes. A swift and clear course of action is needed in these cases, as fear and uncertainty can easily disrupt operations.
By making an immediate judgment, the leader gains control of the situation and provides a plan to navigate through the crisis.
3. Laissez-faire leadership
Laissez-faire leadership gives group members the freedom to decide and manage their work on their own. Leaders who use this technique trust their employees to handle tasks independently without constant supervision.
This approach is ideal in businesses with highly skilled or experienced teams who perform well when given autonomy. It’s also best for companies that expect their employees to come up with new ideas or solutions.
Pros
- Promotes originality and autonomy
- Fosters a high level of trust between the leader and their team
- Leads to high employee satisfaction
Cons
- Lack of direction can lead to confusion or missed deadlines
- Some employees may feel unsupported without enough guidance
Example scenario
In a small marketing agency, the leader might delegate ad campaign management to the team. They stay hands off, trusting the members to decide on strategies and execution, and only stepping in when needed.
Using this type of leadership creates a safe space for employees to trust and develop their problem-solving skills. It also emphasizes taking accountability, which motivates them to deliver their best work.
4. Transformational leadership
The transformational leadership method consists of inspiring and motivating members to unlock their highest potential. With this style, leaders foster an out-of-the-box mentality and set high standards for their team while supporting their professional and personal growth.
Pros
- Motivates employees to go beyond expectations
- Supports reinvention and long-term growth
- Builds a strong, positive work environment
Cons
- Might be unrealistic if goals get too ambitious
- Some employees may feel overwhelmed by high expectations
Example scenario
A small, family-owned café operating the same way for years can be reinvented using transformational leadership.
The business owner might start by introducing a new seasonal menu. However, rather than simply telling the team what to do, the leader holds meetings where they urge members to brainstorm menu ideas or experiment with recipes.
This supports the idea that they’re active contributors to the business’ transformation instead of being passive workers. Through this approach, the owner develops a team that’s inspired to suggest more improvements for the business.
How do you become a successful leader?
There isn’t an absolute step-by-step guide to becoming a successful business leader. However, there are various strategies you can implement to enhance your leadership style.
You can choose to use them all at once or mix and match them to see what’s practical for your business.
Short-term strategies for leadership success
Set clear and achievable goals
To lead effectively, define what success looks like for your business. Set clear, actionable goals that your team can work toward.
This ensures your members understand the objectives and their role in achieving them. It also motivates them and aligns their efforts toward common outcomes.
Address immediate challenges
Leadership requires quick decision-making when problems arise. In the short term, focus on addressing immediate roadblocks with decisive action.
Whether it’s managing a difficult client or responding to a sudden business downturn, acting quickly ensures that issues don’t escalate further.
Delegate tasks to prioritize effectively
Assign operational or routine tasks to trusted team members. Delegation is critical to staying focused on your most important leadership responsibilities.
Other than that, this approach empowers employees and makes them feel valued because you trust in their ability to deliver.
Organize team-building exercises
Find team-building activities that foster trust, improve communication, and strengthen collaboration. These could include problem-solving challenges, group brainstorming sessions, or social events to build camaraderie.
By investing time in team bonding, you create a more unified team that works well together in both good times and challenging situations.
Provide regular feedback and mentorship
Consistently give your team constructive feedback on their performance, both positive and areas for improvement. Mentorship can also help with employee development, as they learn from your experience and receive guidance in their roles.
Communicate your vision effectively
A strong leader needs to inspire their team by sharing a clear vision for the company’s future. Communicate effectively your business goals, values, and expectations. When your team sees the bigger picture, they’re more likely to stay motivated and engaged.
Promote innovation and adaptability
The business world is constantly changing, so it’s helpful to encourage your team to think creatively and adapt quickly. Through building an innovative work culture, you can keep your small business competitive and responsive to market demands.
Maintain transparency and trust
Trust is the foundation of a strong leadership relationship. Be transparent with your group members about challenges, goals, and changes. This openness builds trust, helps your team feel included, and empowers them to contribute to the business’ success.
Long-term strategies for leadership success
Create a leadership culture
Nurture a culture where leadership is encouraged at every level. With this method, you support employees to take initiative and lead within their roles. This creates a strong, self-sustaining team that thrives even in your absence.
Support professional growth
Investing in your team’s professional growth benefits both the individual and the business. Provide training, mentorship, and skill-building that allows employees to grow in their careers. This way, you can improve retention and morale in the long run.
Use tools for leadership development
You can employ task management software and leadership coaching to streamline your responsibilities and develop your skills over time. The former helps you stay organized and prioritize effectively, while the latter provides you with ongoing guidance.
Recognize and reward
To maintain long-term team engagement, regularly acknowledge and reward their hard work. Celebrate milestones, big or small, and offer incentives to keep morale high. This recognition boosts motivation, cultivates loyalty, and maintains a positive environment.
Tools and resources for effective leadership
Let’s explore various tools and resources that can help you put these theories into practice.
Books on leadership
- “The 7 Habits of Highly Effective People.” This book, authored by Stephen Covey, focuses on proactive thinking, personal and professional growth principles, and intentional listening.
- “Leaders Eat Last.” In his book, Simon Sinek introduces the idea that creating a safe space in the workplace helps employees achieve success with their tasks.
Leadership development courses
- Coursera. This platform offers numerous leadership courses, including those focused on strategic thinking, emotional intelligence, and team building.
- LinkedIn Learning. LinkedIn provides plenty of online courses on leadership, management, and communication skills.
- Local business organizations. Take advantage of leadership training programs and workshops held by your local business organizations.
Networking
Connecting with other small business owners provides invaluable insights, support, and growth opportunities. Learn from their experiences and take notes on how they overcame leadership challenges in their own businesses.
Software tools
- Project management tools (Asana, Trello). These help you organize tasks, track progress, and collaborate with your team.
- Communication platforms (Slack, Microsoft Teams). These platforms facilitate seamless communication and collaboration.
Leadership frameworks
As your business grows and evolves, it’s important to continually assess and adapt your leadership style. Here are two frameworks to help you:
SMART Goal Setting
SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound.
This method enables you to establish a clear and attainable goal to meet a certain purpose. By making the objective measurable and time-bound, you can track its progress and ensure its completion is time-efficient.
Example scenario
You’re running a fitness gym and launching a new membership plan to grow your subscriber base. With the SMART Goal Setting, your strategy might look like this:
- Specific. Increase membership sign-ups for your new 6-week fitness challenge plan by targeting young professionals in the local area.
- Measurable. Secure 50 new sign-ups.
- Achievable. Use social media ads, email marketing to existing clients, and partnerships with local businesses to promote the challenge. You can also offer an early-bird discount.
- Relevant. This goal supports the gym’s mission to build a stronger community and expand its reach by offering unique and appealing programs.
- Time-bound. Run the campaign for the next two months, with progress checked bi-weekly to ensure the goal is on track.
GROW Coaching Model
GROW stands for Goal, Reality, Options, and Will.
This model can be used to identify challenges, brainstorm solutions, and develop action plans.
Example scenario
You own a small handmade jewelry business and want to increase your online sales, as most of your revenue currently comes from local craft fairs. You can use the GROW Coaching Model with your staff to improve the online store.
- Goal. Set a clear goal together. For instance, you could aim to boost online sales by 30% in three months.
- Reality. Next, analyze the current situation. Your online store might be:
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- Receiving consistent traffic but has a low conversion rate.
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- Lacking detailed product descriptions and high-quality images.
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- Underutilizing social media accounts to promote new designs.
- Options. Then, brainstorm potential strategies with your team. They could suggest the following:
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- Collaborate with local influencers to showcase the jewelry on their platforms.
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- Enhance product listings with professional photos and complete descriptions.
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- Use targeted social media campaigns to promote the store and its unique designs.
- Will. Lastly, set specific actions the group needs to complete to achieve the goal:
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- Contact influencers and offer the collaboration deal in the next three weeks. Then, monitor the online store’s analytics weekly to track visibility progress and adjust strategies.
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- Update all product listings within two weeks.
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- Launch a targeted social media campaign by the start of the following month.
Case study: How Apple made it
Apple started as a small business in a garage, founded by Steve Jobs and Steve Wozniak in 1976. What began as a humble operation turned into one of the most influential companies in the world.
In its early years, Apple grew quickly, but the company faced significant challenges, especially during Jobs’ absence in 1985. When Jobs returned in 1997, the company was on the brink of bankruptcy.
At this point, Jobs adopted an autocratic leadership style, taking complete control over the company’s direction and decision-making.
He made fast, decisive judgments, from boosting advertising on existing products to cutting off funding for research and development in areas that weren’t delivering results.
With this approach, Apple now had a focused vision that kept the company on track despite financial uncertainty. It empowered the company to design innovative and cutting-edge technology, like the iPod and iPhone.
While some employees found Jobs’ management challenging to work with at times, it proved to be worth it, as the results helped Apple through its decline and led the company to where it is now.
Be the leader who takes their team to success
Developing your leadership qualities requires a lot of work. You’ll need to figure out which leadership styles work best for you and your team. You’ll also experience uncomfortable phases as you work out the right strategies to bring out the best in your members.
However, it pays to be patient, consistent, and to trust the process. You’ll have a successful small business in no time.
Are you looking to promote your business? Explore our separate article on 10 cost-effective marketing tips for growing your small business.
