Lack of strong leadership will hold back any business, even if it's not failing. Take the example of the wine and craft beer store and bar Amazing Grapes, in Orange County, California.
When Marcus Lemonis, the business guru behind "The Profit," arrived at the operation a few years ago, the single biggest problem he observed was its absentee owners. There were three primary owners who were just not present enough.
This translated to a lack of leadership, with the store running through six managers in less than two years. Amazing Grapes' foundation was decent, he said, because core employees are outstanding. However, "that kind of turnover creates not only direction changes but the stability of the organization just isn't solid and the employees can't really respond to that."
Lemonis calls this case "a little like herding cats: You have a group of employees who have no leadership and no direction until there's a problem and then the owner comes in and really sets them off in a direction that isn't necessarily right because they haven't been around to see all the facts."
So without a leader giving employees specific direction, staff would perform tasks in other departments, just trying to get things done, and disorganization interfered.
Lemonis emphasizes four qualities a leader should have for small-business success:
- Be a fantastic communicator, whether it's good or bad news.
- Understand the principles of the business: the customer, the vendors, what's happening with the competition, the numbers. Then when you are making decisions on a daily basis, they are based on fact and not just on your gut.
- Be very present and engaged. Show up first, leave last.
- Be a good listener. Customers, vendors and employees will tell you what's wrong with the business.
Lemonis bases his advice on his own mistakes. "Over the years I have been involved with hundreds of businesses and early in my career I made a lot of mistakes. I wasn't a good listener, and I paid for it. I wasn't a good communicator and had high employee turnover. I wasn't as engaged as I should be and things didn't execute as well as they should have."
Winmark Business Solutions, an online resource for small businesses, offered additional methods for improving leadership:
- Be trustworthy, because trust commands respect.
- Be aware of the past, present and future, so as to learn from the past, adapt in the present and prepare for the future.
- Actions speak louder than words. Behaving accountably is a good way to motivate employees to do as you do.
- Be consistent. It's an extension of Lemonis' advice of being present.
- Be relatable with employees. You don't have to be pals, but being in tune with their motivations and frustrations can help everything run smoother.
Many personality traits contribute to being a good leader, according to the Leadership Potential equation developed by Raymond Cattell in 1954. Those include emotional stability, dominance, enthusiasm, conscientiousness, social boldness, self-assurance, intuitiveness and charisma.
Small-business owners and managers don't come equipped with all of the components for good leadership, but the upshot is that lacking traits can be developed.
In addition to the many schools and private institutions offering leadership training, the U.S. government has recognized the job-growing potential of nurturing these qualities. To that end, the Small Business Administration's Emerging Leaders Initiative trains business owners in underserved communities with a mentoring and workshop program.
Just remember, Lemonis advises, to be present and learn from the past.
"Rely on your experience and rely on the path and the mistakes you've made. And if you're not engaged, what history are you relying on?" he said.
"The Profit," a reality series with multimillionaire Marcus Lemonis turning around struggling companies.