As a small business owner, honing your leadership skills will help you to provide a vision for your business and motivate your employees to excel in whatever task they’re assigned.

What Makes a Good Leader?

There are many important qualities of leadership, but the fundamental skills that make strong leaders are the same. Effective leaders:

  • Have the ability to inspire others and develop a vision
  • Set clear goals, stay focused, and communicate well
  • Give and receive feedback
  • Know the strengths and weaknesses of themselves and team members
  • Know when to ask for outside help
  • Are approachable, honest, and committed
  • Know how to successfully execute a strategy
  • Have a strong focus on problem solving
  • Have high emotional intelligence and think empathically

Having any of these strong leadership qualities can lead to some form of success, but you will need all of these skills in order to run your small business effectively. Read on to learn more about each important leadership quality and how to develop them.

1. Develop a Vision for Your Small Business and Inspire Others

The first step to develop a vision for your business is to decide if the vision pertains to the entire business or a certain aspect. For example, you could be creating a vision for how your customer service will operate, how you can use packaging to enhance your product, or a membership discount program that customers will love.

Once you have the scope of the vision determined, you need to further develop it. Here are a few questions you can ask yourself to help develop your vision.

  • What problem am I solving in people’s lives with this vision? What needs of my customers am I fulfilling?
  • Will this change people’s lives? Could it possibly even save someone’s life? If so, how?
  • Has anyone ever done anything like this? If yes, who was it? How long ago was this done? How did customers, competitors and partners react? If no, why hasn’t anyone done this?
  • What personality traits does this vision capture? Does this vision position my company as being charitable, personable, innovative or playful?

Once you have further developed your business’s vision you can give it a timeframe. Predict where your vision will be, what the reaction will be, and how it will impact your company and customers in 6 months, 1 year, 3 years, and 5 years.

RELATED: 6 Things the Most Successful Business Owners Do First Thing in the Morning

If you’re having trouble developing your vision – or coming up with one at all – look at successful companies.

Think about a great experience you had with another company. Did you buy an electronic device and find that it had a 100% charge right out of the box so you could use it immediately? Did the vacuum you purchased have a neat infographic that explained 30 pages of instructions in one easy to understand chart? Think about these great experiences and what they made you think of the company and how they impacted your life.

Traits of a Good Leader: Share Your Vision and Get People on Board

It’s easier to share your vision if it is clear to you. Creating a written document for your vision is helpful, but it wouldn’t be a vision without some visuals. Sketching up your products, office, services in action or website can help you showcase where you will be going with your business. You can also incorporate written text into this visual representation because people often learn best through a combination of visuals and texts.

Make sure that whatever the finished piece you’re putting your vision into only takes about 2 minutes to observe, read and understand. From here, develop a 2 minute description that you can recite which relays the vision for your business. This is what’s called an “elevator pitch.” The idea is that if you were in an elevator ride with someone who could potentially help your business, you would want a 2 minute, well delivered description of your company to convince this person of why they should be interested in your business.

2. Communicate Like a Strategic Business Leader

How to be a good leader

To have effective communication, you first need to acknowledge that different people understand ideas better through different mediums and methods. Some people will learn better through:

  • Lectures
  • Written instruction
  • One-on-one instruction
  • Visualization
  • Hands on approaches

It’s helpful to recognize first which methods you learn and understand best from.

Do you understand instructions better when they are written or presented through a one-on-one tutorial? Perhaps it’s through a combination of methods such as lectures and then hands on approaches. Here’s a quick way to determine what style of learning may work best for you.

When consuming content from the internet, which of the following do you prefer:

a.) Reading an article
b.) Listening to a podcast
c.) Watching a video
d.) Looking at an infographic
e.) Experimenting with a technique and then discussing on a message board or social media

You may find that you prefer multiple approaches to consuming content. For example, reading alone may not suit you. Reading an article that has short videos sprinkled throughout, however, may be your ideal.

RELATED: My 10 Favorite Quotes on Small Business Leadership

Once you know how you learn best, it’s easy to see that others, such as employees and partners, will need different channels for communication.

Start by offering instructions and descriptions both through writing and verbal communication.

3. Be More Effective at Giving & Receiving Feedback

In order to be more effective at giving and receiving feedback you must create a forum for discussion. There are two important channels for feedback when running a business. The first channel is from the customer to you. The second channel is from your employees and partners to you. This second channel goes both ways, with you also providing feedback to employees and partners.

How to Handle Customer Feedback

It’s important that you have an easily accessible venue for customers to voice their feedback about your product – whether it is praise or criticism. One of the biggest innovations that provided in customer relationships is the reviews section on products. Here, customers can voice their praise and criticism of a product.

This can be as simple as a message box on your website that customers can fill out and immediately send to you, or it can be a Facebook page that customers can post on. The more easily customers can get their opinion to you, the better. In fact, being accessible to customer feedback is a hallmark of good customer service. Simply being available for immediate feedback may turn some customers’ sour opinions to be more favorable.

Qualities of a Good Leader: Give and Receive Feedback With Employees and Partners

If you want to build trust and effectively give and receive feedback with employees, partners and vendors then you need to maintain a regularly scheduled discussion with them. These meetings should be as personal as you can make them. If a sit down meeting is possible, make that your scheduled routine. If employees, vendors or partners aren’t able to regularly make the meeting then go for a skype session or conference call.

Regularly scheduled meetings to give feedback are important because it keeps your team moving towards your goals based on minor adjustments in direction. If the meetings aren’t regular, then the chances are that you will only call the team together to dramatically change course. This will create disarray and destroy productivity and morale. Even if things are going well, you should have the regularly scheduled meeting.

Feedback, both positive and critical, should always relate back to the company goals. The best way to determine what to say is to ask yourself, “How does this put us closer to our goals?” Did an employee move you closer or further from your vision? Tell them!

RELATED: 5 Essential Strategies You Need to Use to Motivate Your Best Employees at Your Small Business

Remember too that your employees, partners and vendors are assets you need in order to achieve your vision. If there is something that you’re doing that is deterring them from their goals, then you need to recognize that.

Some employees, partners and vendors may be hesitant to provide you with feedback. This is why it’s important to ask them questions. Try asking the following in meetings, personal conversations or even questionnaires:

  • What do you hear others (competitors, customers, prospects, anonymous colleagues) saying about our company?
  • What do you like the most about your job and what do you like the least?
  • What would you do if you were in my position?

4. Know Your Business’ Strengths & Weaknesses

qualities of a good leader

The best way to know your business’s strengths and weaknesses is using the SWOT analysis. The SWOT analysis helps you identify Strengths, Weaknesses, Opportunities, and Threats. This analysis can be used for products, locations, projects, business ventures, industries or even individuals. This method helps you look at opportunities and shortcomings in your own business as well as outside of your business.

The following is a list of questions you can ask yourself and your team to begin the process of finding your strengths and weaknesses.


  • What can you do better than any of your competitors?  Perhaps you can offer a more personal level of customer service, or you can provide the best blog for your customers to enjoy, or you’re able to offer same day delivery to customers in a certain location. Even if it is something as seemingly unrelated as running an ice business and being good at violin, you should make note of what you can do that your competition can’t.
  • What resources do you have access to that your competitors don’t?  For example, do you have family members that can provide discounts to raw materials because of their jobs or connections? Do you have a larger amount of savings from a previous job or an inheritance than your competition might?
  • What do customers see as your selling points and strengths? Do customers compliment you on the added features that your services provide? Or perhaps they’re awed by your educational background. Ask yourself what it is that brings customers in to your business, but also what brings them back.


  • What resources do your competitors have access to that you don’t? Does your competition have a better location than you? Or perhaps they’re a well-established business that has become familiar with several generations of the surrounding community.
  • What do you think you could improve upon? If you were to give a demonstration of your product, services and operations, which part would you be uneasy about discussing? Is your customer acquisition not up to par? Is your product not as dependable as it should be?
  • What are the weaknesses in your company? Do you lack experience in comparison with competitors? Do competitors have better educational experience? Do they have more employees or employees with more experience?

5. Know When to Hire Consultants & Contractors, and When to Outsource

strategic business leader

The best jobs to outsource are those that are not indicative of your brand’s identity. If your business is in need of a facelift, a consultant may be the way to go. And if you have a large scale project that your current staff can’t handle, hiring a contract may be the best decision.

When to Hire a Consultant or Contractor

Great leaders know when to hire a consultant. If your business is struggling and you don’t know what to do or if you do know what to do for your business, but you don’t know how to do it, hiring an outside consultant can be a great business strategy.

Consultants provide insight into how you can operate your business differently. For example, if your barber shop is being threatened by a larger, franchise barber shop that moved in across the street, a consultant will be able to help you develop a strategy to stay competitive.

There are also consultants that operate in certain niches. For example, you may want to start an email marketing campaign for your floral shop. Instead of slugging through miles of unhelpful content on the internet and trying to become a master of email marketing, you can hire a consultant who specializes in email marketing. The consultant won’t do any of the work operating the email marketing campaign, but he or she will tell you what you need to do and walk you through the process. You basically pay for their expertise. There are consultants for every niche: seasonal staffing, employee issues, financing, franchising, etc…

When to Outsource Work Versus Hire a Contractor

The difference between outsourced work and contractor work is that outsourced work remains property of the outsourcer and contractor work remains property of whomever hired the contractor. For example, a car wash business will hire a contractor to build a website and the car wash business will own the website. An electronics company will outsource its customer service operations to another business that has a call center. The electronics company does not own any of the call center’s employees, efforts or services.

You should only outsource work that falls out of your company’s expertise. For example, if you run a bakery, then outsourcing any sort of IT needs would make sense. If you’re an IT company, outsourcing your IT work would look terrible. Outsourcing should be done to keep you and your employees from losing focus on your areas of expertise.

Lastly, you should always calculate the cost of doing jobs in house versus outsourcing. Say you determine that you make $40 an hour running your laundry mat. It takes you 15 hours a week to handle customer inquiries about your services. And a call center can manage your customer inquiries for $150 a week. Then it would make sense to outsource to the call center. Handling the customer inquiries would cost you $600 because your time is worth $40 an hour.

RELATED: 10 Things Your Employees Expect You to Know How to Do to Lead Them and Run a Successful Business

6. Be Approachable, Committed and Honest

Being a great leader means being approachable, committed, and honest. You can appear more approachable by keeping your office door open and you can show your commitment by being the first one in and the last to leave at your office. You can be honest with your employees by following through on what you say will be done.

In this section we’ll take an in-depth look at how to become a successful leader by becoming more approachable, committed and honest.

How to Become More Approachable

True leaders don’t have to try to be the “cool” boss or be anyone’s best friend, but there are simple ways to become a more approachable boss. Start by smiling and saying hello to your employees when you see them for the first time during the workday. From there out, smile and make eye contact every time you see them. This simply shows that you acknowledge them and even though you may be running to a meeting or a conference call, you still see them as important.

The next step to becoming a more approachable boss is to keep your office door open at all times (unless you’re in a private meeting or on a call). Often, managers, business owners and bosses will ask, “then how am I supposed to get anything done if people can freely barge in?” Well, if an employee is coming to her boss with a question, it’s obviously something that needs to “get done.”

The final step is responding to emails as quickly as possible. You may not even be able to get to them within the same day, or two days, but you must make sure that you respond to every email that your employees and partners send to you. Ignoring employee emails shows that you don’t deem employees’ questions as important.

How to Become More Committed

It may seem odd that you would have to become more committed to your own business, but showing employees and partners that you place the business (essentially your employees’ financial futures) highly on your list of priorities is pinnacle. Here is a list of ways you can show your employees that you are committed to your business.

  • Show up first and leave last. You should be putting in more hours than any other employee. If your business has a day and night shift, show up before the day shift and stick around for a bit with the night shift. Swap out days occasionally so that you are on for the entire night shift.
  • If your operation is small, you shouldn’t have any benefits that your other full time employees don’t have. If everyone parks on the street, so should you. If you have a nice ergonomic chair, your employees should have something comparable.
  • Don’t take off stretches of vacation that you wouldn’t allow your employees to take. If you’re stingy about letting employees use their vacation time to take off 2 weeks in a row, then you shouldn’t be allowed to do it either. Likewise, if you’re open for business on a holiday then you better be in the office too.
  • Invest in your employees by providing learning experiences to help them get better at their jobs. By investing in them, you show them that you’re committed to keeping them around for a long time.

How to Be More Honest With Your Capabilities

Being honest with your employees and partners means delivering what you promise, and not promising what you can’t deliver. When you’re honest about your capabilities, your employees and partners can schedule accordingly, and won’t be let down by you if you over-promise.

Follow the steps found below on Setting a Goal and Executing a Strategy as well as the section on Knowing Your Strengths and Weaknesses. These sections are helpful for learning what your capabilities are and when you’ll be able to deliver. Here are a few quick tips to get you started.

  • Don’t feel obligated to immediately say when you’ll be able to turn around a deliverable or project. It may feel like you’re being assertive and hardworking to commit a deadline immediately, but often you’ll over-promise and fall short or mangle your schedule. Instead, say, “That’s something I can do. Let me assess the time frame it will take to do it and get back to you in 24 hours.” By promising when you’ll get back to the person, you still have the impression of assertiveness, but you now have the time to assess your strategy and deadline for the project.
  • If you commit to something before assessing if it can be done, back out as soon as possible. People have a habit of committing to something (especially social events) knowing full well they don’t want to go or can’t and then delay cancelling until the moment of the event. You can always use the line from the tip above to let someone know that you need to reassess your commitment. And remember, the sooner you cancel, the better for everyone.

7. Manage Your Expenses Like a Strategic Business Leader

what makes a good leader

Some of the best ways to manage your business expenses involve automating repeated transactions, filing your receipts digitally, syncing your money management software with your accountants and knowing what your time is worth. Following these tips will help you manage your money better and be able to relax and focus more closely on only your business’s top priorities. Here is a closer look at how to do each of these activities to help manage your money better.

Automating Repeat Transactions

Automating routine personal and business transactions is one of the easiest ways to relieve “bill-pay-anxiety.” Most banks have online software that allows you to manage your savings and checking accounts. Within this software you should be able to find an option that will automatically write out and mail a check to whomever you choose. Just getting the mortgage, car payments, and insurances payments automated should remove a lot of stress.

Filing Your Receipts Digitally

Filing your receipts digitally is as simple as snapping a photo of it with your smartphone. Now it’s automatically dated and stored. Digital and printed copies are just as credible as original receipts when it comes time to file taxes. Back the photos up to cloud software or email them to yourself so you have multiple digital copies.

Syncing Your Money Management Software With Your Accountants

If you’re a small operation then you’re probably responsible for day to day book keeping. Even if you’re able to hire someone in-house to manage your money, it’s a good idea to use the same software that your accountant who does the heavy lifting uses. This will make tax season simpler for everyone and reduce the chances of inconsistencies between your books and your accountants.

Know When to Spend Money

You can’t grow your business if you don’t know how to correctly spend your money. Knowing when to spend money is just as important as knowing when to save it. Here are the 5 best ways to spend money that will pay off the most when starting a business:

1. Branding. People dedicate their entire careers to developing and designing brand images, logos and identities. Don’t assume that you can do this for yourself.

2. An accountant. Good accountants will save you more money than they cost.

3. Tech Support. Unless you run a brick and mortar store that sells goods or services, you should outsource your customer tech support almost immediately.

4. Market Research. Make sure there’s actually a market for what you’re selling before you begin to invest.

5. Employee Pay. Only monkeys work for peanuts. You’re going to spend money on employees anyways; hire some that will actually make that money back for you.

8. Be Able to Set a Goal and Execute a Strategy

traits of a good leader

In order to effectively execute a strategy, you must pursue one goal at a time. You can have supporting goals, but they must serve the purpose of accomplishing the main goal. Once the main goal or priority is set, you need to develop KPIs (Key Performance Indicators) to monitor progress. After you’ve developed KPIs you should set a check-in and communication flow for yourself and teammates. Last, you need to evaluate the strategy…constantly. Here is an in-depth look at each of the steps needed to execute a strategy.

Defining Your Goal

You’ll be more successful if you set a goal that is specific, achievable, relevant and measurable. It’s helpful to follow the S-M-A-R-T Strategy for setting a goal. The goal should be specific, measurable, achievable, relevant and time-based.

It’s important to develop a baseline before pursuing your goal. For example, if you want to make more sales in a month, you need to first establish how many sales you’re currently making in a month. This may sound obvious, but people rarely take an assessment of their current status before trying to improve upon it.

Setting Your KPIs

A KPI is a metric that is used to determine the success of a strategy. There are three main KPIs that you can focus on. The first is an overall number increase. For example, “we want to acquire X amount of new clients this year.” The second is a progress KPI which is used to describe the amount of work completed towards a goal. This may be used if your business is building a new website. For example, you want the website to be 80% complete within 3 months. The third KPI is a percentage metric. This is typically used to measure an increase. The example above, “increase sales by 10%” is an example of a percentage KPI.

The next step to setting your KPIs is determining your data source. Some of these sources are obvious. Customer and client acquisition and sales data will come from their normal sources, but something like website completion will have to require some thought. If another team or vendor is developing your website, you will need to be in communication with them and have a determined measurement for progress. Additionally, you need to have a set frequency for collecting this data for your KPIs. This leads to the next step of strategy execution: Check Ins and Communication Flow.

Communicating With Your Team About KPIs

As stated previously, you should have regularly scheduled forums for team discussions. If those discussions usually run over their allotted time, create a new meeting in the schedule for discussing the KPIs and strategy for this new goal. The frequency of data for your KPIs is important. The more frequent – the better. Some data requires time before a pattern can be seen, however.

For example, if your business generally only acquires one new client every three months, and your goal is to gain 8 new clients in the year, then having a monthly meeting to discuss progress might be a waste of time. At one month in, you wouldn’t expect to see any new clients sign up. If you did see a client sign up, it might be coincidental.

In contrast to this, if your goal is to increase customer satisfaction scores over the course of a year and you’re measuring this based on a survey that you have customers complete and the number of complaints and compliments you receive, you could meet to discuss this progress monthly – assuming you have new customers who have completed the survey and have received complaints and or compliments from customers.

In short, measuring KPIs should be discussed whenever data is expected to be produced.

Evaluate the Strategy for Your Goal

Once you have determined your KPIs and the frequency with which you’ll be meeting with your team to discuss the data you have collected, it’s time to evaluate your strategy. This is as simple as using the SWOT method discussed above. As stated, the SWOT method can be used to evaluate products, methods, individuals and even strategies.

It’s important to remember that the most effective strategists expect all their plans to change. Changing a plan doesn’t mean quitting or giving up; it’s simply a minor change of course. If you keep the frequency of your meetings as high as the relevant data collection allows, changes to the strategy will appear to be minor adjustments as opposed to major changes in direction.

Leadership skills help provide a vision for any business project and motivate employees to excel in whatever task they’re assigned. There are many different leadership styles, but the fundamental qualities of a good leader stay the same. The best leadership skills for business owners are: having the ability to inspire others and develop a vision, setting clear goals and staying focused, communicating well, giving and receiving feedback, knowing the strengths and weaknesses of yourself and teammates, knowing when to ask for outside help, being approachable, honest, and committed, and knowing how to successfully execute a strategy. Any of these skills can lead to some form of success, but to truly reach your full potential, you will need a strong focus on personal development to work on building all of these skills.

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