Most Effective Leadership Styles for Small Businesses

Good leadership is the key to developing a motivated and high performing team. Entrepreneurs and senior managers are responsible for mentoring and developing their team members to ensure goals are met and customers are satisfied. Every leader follows a different approach to keep their team members inspired and enthused. These range from micromanaging employees to creating a collaborative and flexible workplace. How the entrepreneur leads the workforce defines the organisation’s work culture, adaptability, effectiveness of communication and decision making.

It can be challenging for entrepreneurs to follow the same pattern of leadership because of a lack of expertise in the field. They may make mistakes that lead to employee bitterness or increased employee turnover. They must maintain a balance between control and autonomy to maintain accountability. In addition, they have to eliminate stressful situations and criticism that discourages workers. Here are the most effective leadership styles for small business owners that can help them lead with precision and uprightness.

1. Laissez Faire Leadership

Laissez Faire leadership style originates from Adam Smith’s theory of capitalism, which propagates extending the right to freedom of independence to everyone. The leadership approach following this theory believes in offering complete freedom to the workforce. The managers or entrepreneurs inform about the project and exit the process. They return to the game after the work is completed to offer feedback.

This style is used in organisations where the employees are highly skilled, experienced and talented to manage all the tasks responsibly. They do not need guidance or interference from the management to meet deadlines and maintain quality. They are self sufficient and deliver the desired results without interventions. Most new entrepreneurs prefer buying this type of business for sale in Canada because it comes with a trained and competent workforce. It makes the life of the owner easy and comfortable.

2. Transactional Leadership

Transactional leadership is all about getting results by creating excitement for incentives. It involves setting goals and communicating them to the team members. The employees are made to achieve these goals through a system of rewards that are awarded at every milestone to keep them motivated. Leaders delegate responsibilities and set the reward system for all employees.

In addition, they also slap penalties if the team members do not achieve the objectives. This leadership style keeps the employees on their toes and makes them follow standardised procedures to accomplish predefined objectives. It ensures they do not lose focus and stay motivated to complete the tasks on time. It works on the give and take principle and makes both parties happy.

3. Transformational Leadership

Transformational leadership stems from transformation, which means change. Leaders following this approach are involved in constant improvement of the workforce to make them perform better. They evaluate the progress of each team member and identify skill gaps. They train and mentor them to develop their capabilities. Entrepreneurs keep challenging the workforce with complex tasks to enhance their skills.

Many new entrepreneurs look for Canadian businesses for sale that have this type of approach because it ensures the workforce is ready for unexpected situations. Transformational leadership allows the employees to accept the new leader and help with a smooth leadership transition. They are open to change and build an innovative and creative workplace where new ideas flow.

4. Coaching Leadership

This type of leadership follows the principles employed by coaches of sports teams. They work closely with all team members and boost their morale through constant encouragement and support. They provide insights, inputs and feedback to help the employees improve and make progress. These leaders are fully invested in making the workforce a highly skilled team that can take on any challenge.

The leaders support their employees at every step with inspiring talks, motivational speeches and advice. They build relationships with their team members to retain them and enhance their satisfaction levels. It helps to increase the trust and confidence of the workers, and they are prepared to put their best foot forward.

5. Situational Leadership

Situational leadership entails changing the leadership style according to the needs of the business. These leaders believe in experimenting with leadership styles and choosing the best method according to the situation. They maintain flexibility and can switch from an autocratic approach to a democratic one without any roadblocks. They assess the situation before making the choice, which involves analysing the economy, market conditions, employee skill gaps, business performance, sales projections, etc.

They also check the preparedness of the employees to survive in a particular work environment. For example, if the team is prepared to take charge of the projects, the employer can follow the Laissez Faire approach. Conversely, the employer can use the autocratic approach if a disruption has rendered the team uncertain. Aspiring entrepreneurs choose these businesses for sale in Canada to use the best leadership style according to the situation.

6. Democratic Leadership

Democratic leadership is the management approach where the leader makes everyone a part of the decision making process like a democracy. It is based on collaboration, equity and inclusivity principles to increase teamwork and create a cohesive organisation. The business owner uses this approach to engage, motivate and empower employees because they participate in important decisions.

These organisations focus on cross-departmental alignment and fostering strong relationships to create solid teams that complete tasks collectively. The employees learn and grow together while helping and supporting each other. It increases trust among team members, and they feel emotionally connected to the vision and goals. They become better at solving problems, developing empathy and reducing conflict.

7. Bureaucratic Leadership

A bureaucratic leadership style follows a rigid system where the team members are expected to follow strict rules set by the entrepreneur. It is used in organisations that have secured a stable position and steady revenue through a systematic method, and they do not want to tamper with it. These entrepreneurs control the workflows and maintain complete authority over the processes and policies.

The leader sets clear expectations and ensures accountability through supervision and strict schedules. It reduces the risk of failure because employees follow proven and tested methods. However, many budding entrepreneurs are averse to these business opportunities in Canada because these entities become inflexible and do not have room for creativity. They can also discourage the workforce and make them lose their enthusiasm.

Wrapping Up

Leaders are role models who take the business forward with their vision, strategy and motivation. They encourage and inspire their workforce to stay aligned to the business goals and accomplish the short term objectives. They can take any of the above mentioned styles to make their business successful.