Small businesses are growing rapidly in the UK.
The number of small businesses grew by 97,000 from 2015-16 and this represents an increase of 2 million since 2000. The SME market is booming however what this data doesn’t tell us is that 4 out of 10 small businesses will fail in the first 5 years.
This is due to a number of factors however poor leadership is often a reason why a small business doesn’t make it past this 5-year mark.
We want to look at leadership models and what works best for a small company.
Autocratic Leadership
This leadership model is becoming increasingly outdated. Essentially it consists of a leader having complete control over business operations with little or no input from the rest of the team.
The problem with this model is that it creates a very unmotivated and unenthusiastic workforce. If employees aren’t engaged in the decision making process and are constantly micromanaged, then productivity and creativity will be significantly hampered. Not many people like to work with someone constantly looking over their shoulder.
While some companies do still adopt this model for small businesses it isn’t a recommended method of managing a team unless there is room to incorporate some form of feedback and engagement.
Laissez-Faire Leadership
On the complete opposite end of the scale from the Autocratic model is a Laissez-Faire attitude to leading a small business.
This involves a ‘hands off’ approach where management, directors and employees are basically left to their own devices and to do their work and make decisions in whatever way they see fit. Warren Buffett is proponent of this model and has used it to great effect.
For this system to succeed especially in a small business managers and employees need to be highly capable in their roles and able to work with little oversight. It might work well in some businesses but it can lead to problems where staff don’t have experience to work almost completely by themselves.
Finding The Middle Ground
The reality is that small businesses thrive when there is a middle ground between the first two leadership models.
Engaging employees in the decision making process while still retaining an element of control establishes the best environment for a small business to flourish. On the one hand you will have motivated employees who contribute to the way the business is run while on the other, as a leader, you still have authority and power.
Finding this happy medium isn’t always easy but it will put you on the path to creating a solid foundation that will stand your company in good stead for success.
Leadership Models For Small Businesses
These aren’t the only 3 systems that you can implement in your small business and many more exist that have been used to ensure the businesses success in the short, medium and long term.
The important thing to remember is to keep your staff engaged in the overall process of the company. Small businesses only have a limited pool of employees to rely on and many SME’s fail because they alienate or ignore their workforce.
Finding that democratic middle ground between being overbearing and not being involved at all takes some work but in many cases it is the difference between a small business finding success and falling by the wayside.
