Key Learning Outcomes

  • Outline the different perceptions of “leadership” in a business.
  • Distinguish between management and leadership, and examine the role of both in your business.
  • Learn how to determine if you are a successful leader.
  • Describe the characteristics that good leaders may have in common.


For many owners and managers of small- to medium-sized businesses, leadership is something that has been thrust upon them rather than something they have learned and developed over time. Many view managing the day-to-day running of the business as leadership, while others may feel that simply being the “boss” means they are a leader. Often a true leader is not the person taking all the credit, but instead is using their skills and influence to encourage the best from those around them.[wlm_ismember]

Management versus leadership

The difference between management and leadership has been the subject of many academic studies and theories over the past decades, with academics and business gurus, such as the late Peter Drucker, defining the difference between the two in many books and academic journals. Drucker suggests that you can manage things such as workflow, results and processes, but you also need to lead people.

It is important to remember that leadership and management go hand in hand and both are essential for business success. The difficulty for those in a smaller business is that often as the head of the organisation you need to be both a manager and a leader. While this is not an impossible task, it is important to understand the difference between the two functions so you can work on improving skills in both of these areas.

Leadership is people oriented. A leader is focused on developing and building their team. They motivate their team and are looking for opportunities to empower those around them. They think strategically, setting the long-term vision and direction for the business.

Management is focused on shorter term details and results. A manager sets policy and spends time directing people and ensuring standards are maintained. Handling operational issues such as staffing and project management are functions of a manager.

Many small business owners can become reasonably effective managers through running their businesses on a day-to-day basis. However, if you are looking to take your business to the next level, it is essential that you develop your leadership skills.

What makes a good leader?

Great leaders have a number of qualities and traits in common. The following are some we feel are vital for those leading a small- to medium-sized business.

Team building – In a smaller business, results from the efforts and contributions of every team member are more noticeable which makes the ability to build an effective team an essential skill. Your ability to mentor and empower others around you to perform at their best will reap rewards in both your business and personal life.

Honesty – Good leaders place a high value on their ethical behavior and of those around them. They will choose to make the right decision even if it means making the harder one. They behave in a manner that employees can be proud of and do not say one thing while acting another.

Act decisively – A good leader is able to make decisions with confidence. They understand the need to act when required and use various decision-making techniques. This is particularly important in a small business where decisions can have a greater impact on the overall business. This ability to act decisively gives confidence to employees.

Communication – The ability to clearly communicate to your team is an essential leadership skill. Great leaders are able to communicate their message and vision to others ensuring that they gain a shared understanding of what is required to get the job done.

Empathy – Great leaders have a high level of empathy for others and their situation allowing them to get the best out of people. They seek to understand why things might not be going right and look for solutions rather than placing blame.

Accountability – A good leader has a high level of accountability for themselves and others. When performance is substandard, a good leader will look to themselves and their strategy first and seek areas where they can improve or make changes before looking to others as the reason.

Enthusiasm – When you have a small team it is essential to lead from the front. A good leader shows a great deal of passion and enthusiasm for their cause. Employees will often lift their performance and effort when the leader shows a high level of enthusiasm and encouragement.

Confidence – Just like enthusiasm, confidence can be contagious. A great leader shows a high level of confidence in everything that they do. Being confident in your decisions and advice makes employees feel safe and secure in their environment.

Vision – A great leader is able to look forward and create a vision for the future. They are able to think strategically and formulate a clear way forward. They are able to communicate effectively and are able to use this as a means to inspire others to act.

This is by no means an exhaustive list of the qualities and traits of great leaders. Certainly things like innovation, self-awareness, determination and passion all come into play. The one thing that you will find all good leaders share is the ability to be big picture thinkers, to be able to think beyond the current reality and to create a clear direction for the future. For a small business owner this means spending some time working on, rather than in, the business along with taking some time to develop their leadership skills.

Is a leader always the boss?

Certainly the business is likely to be more successful if the boss is also a great leader, but it is not always the case. Don’t forget that leaders can take many forms in a business. There may be someone who is in a relatively low-level position who shows natural leadership abilities. Look for these people in your business and work to develop their strengths. There may also be someone in the team who can lead a particular project or area of the business, or someone who can inspire the team through their actions or attitude.

Lastly, it is important to keep in mind that while there may have been some natural leaders throughout history, for the majority of us being a great leader takes a lot of effort. It is important to look at your strengths as a leader and work on those areas that need improvement. When things don’t quite go to plan, step back and evaluate what you could have done better and what you would do differently the next time. Even great leaders make mistakes – the key is to learn from them. You may find our articles on self-leadership and personal SWOT helpful in enhancing your leadership skills.[/wlm_ismember]

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