Wednesday, November 18, 2009

Does a Small Business Need Leadership or Management?

The answer is both. Have you ever heard the expression “Too many generals and not enough soldiers?” Well it works both ways. Too many soldiers without a strong general will surely find themselves fighting the wrong battles.

Businesses with too many leaders fail from their inability to manage and implement day-to-day business issues. Likewise companies with excellent managers fail because they did not innovate, motivate, change nor watch for strategic threats.

It’s important to develop managers who can lead and leaders who can manage. So what is the difference?

For example great managers manage costs, inventory, cash flow, processes, information systems, facilities and operations. When it comes to leadership, great businesses lead their people, drive the company vision, guide their team and customer perceptions, and ultimately generate a positive and productive corporate mindset and culture.

As the business owner, you are responsible for leading your business to success and getting your people excited about your vision for the business.

Too often leadership is seen as defining a step-by-step business strategy and expecting people to follow the steps or suffer the consequences. Coming up with a strategy and relying on your position as business owner is not enough.

That model fails you, your team and your business. People will learn to do just what they have to so that they can meet expectations and not lose their job. True leadership is the art of understanding and rewarding your team so that they are motivated to make your business a success. It’s important to recruit competent people who can manage the day-to-day tasks and operations so that you can lead your organization forward.

The final test of your success as a leader is the financial statements. Financial statements are the final result of the accounting process, and accounting can be simply defined as the quantification of business activities. Perhaps business owners should give consideration to changing the name of their income statement from “Results of Operations” to Results of Leadership”.

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