Leadership Structure in Small Business

An effective leader establishes order and structure in the small business. The leader in a small business will most likely be a founder of the firm. As the firm grows, structure becomes a more necessary component. To establish order, leadership and ownership in those who are not the owner/founder of the small business, a decision-making structure places accountability on the founder. Accountability for implementing the firm’s business, holds staff and other senior managers responsible for taking care of assignments based on the mission statement and company vision. The founder/leader needs to communicate to everyone in the firm what the structure looks like and what it means (consequences). A responsible, successful leader implements a strategic plan that includes long term and short term goals. As the entrepreneur manager moves to the professional management role, it is important to look outside of the firm for possible growth opportunities such as new markets, acquisitions, teaming arrangements, joint ventures and strategic alliances. This decision to go beyond one’s personal knowledge base indicates the growth of the leader him/herself. As a leader in the start up phase, the entrepreneur guided everyone with a vision based on his/her professional knowledge base. The transition to the professional management stage necessitates knowledge from other sources; thus, hiring in senior managers to consult and address the growing number of needs and issues. The leader must ensure that the firm’s internal organizational structure is optimal for success. In addition, a strong leader continuously motivates staff and boosts spirits.

The entrepreneur may be very involved in the functions of the small business. It is important for the founder/leader to observe and accept that if he/she must remain deeply involved in the functions, someone else must become the leader(s) to replace his/her role. If the founder wishes to be an integral leader, then relinquishing particular duties is essential. As the small business grows, leader(s) in the firm expect high performance work practices. High performance work practices assist people in involving themselves in the decision-making and problem-solving processes of their work activities. Some of the most frequently used of these practices are quality circles, work teams, job rotation, total quality management, cross-training and information sharing. Job rotation is the periodic shifting of a worker from one task to another. The advantage to job rotation in a small business is that in case an employee calls in sick or workloads increase in a particular area, there is a knowledgeable employee available to complete the work. In addition, leaders understand that this can enhance some employees’ commitment to the organization. Many of these activities are common in small manufacturing firms and can assist any small business leaders willing to implement them.

The leadership style refers to the behaviors and actions a leader presents. A successful leader shares a vision, mission statement and values of the small business in order to get the buy-in of his/her employees. With this following, a small business startup can maintain customer loyalty in addition to employee loyalty. The effective leader exhibits the qualities he/she expects of those within the organization and can directly affect those behaviors (much more than in a large corporation’s CEO). With self analysis and consistent leadership actions, the small business can maintain a small size or grow. In addition, the small business can transition from the entrepreneurial management to the professional management structure as the leader allows others to lead and grow. The success of a small business affects the US economy and the successful leader practices the most effective behaviors to ensure the organization’s vitality. A company’s leader provides a vision, the mission, and the values that will guide the means it uses to achieve its mission while emulating the behaviors necessary for success.