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How to go from reactive to an inspirational leader in small business

Updated: Aug 2, 2023

So you run a small business. You have a team. Do you consider yourself a leader? Have you ever thought about developing your leadership skills?

My experience shows there are two main issues limiting the quality of small business leadership in Australia – and probably elsewhere in the world!

1. Business owners don’t think of themselves as being in a leadership role. They’re caught up in doing the business, in sales and operations. But if you’re running a team, you are by default a leader.

2. They see leadership as an innate quality, not a collection of skills which can be developed and improved. Changing this mindset and helping business owners see themselves as leaders is often the first essential step.

So, what does leadership in small business look like?

The four levels of leadership

I see four different levels of leadership expertise. The first two are ‘below the line’, the second two are ‘above the line’.

· ‘Below the line’ leaders think the issues are all with their team. They blame their team for issues and wish they had better resources.

· ‘Above the line’ leaders focus instead on what they can do to lead the team better. How to lead, inspire and create a positive culture. They think about the potential they see; which tasks to give to whom, and how to create a feeling of ownership.

Which stage are you at right now?

Level 1 Leaders

At Level 1, everything is reactive. You’re often very stressed and spend your time putting out fires. Thinking is short term – it’s about what’s in front of you now. Another big thing is that you avoid confrontation with staff and try to keep everyone happy.

Level 2 Leaders

At this stage you get a little more confidence. You may be more authoritarian. You still have a tendency to blame others, but now you face challenges and give feedback. Feedback is the key – you’re moving from keeping people happy to wanting them to improve. You’re more resourceful, but you still don’t see yourself as a leader, as the one guiding people to a different way of doing things.

Level 3 Leaders

When you move to Level 3, that’s when you move to above the line thinking. You start becoming a responsive leader - someone who leads by showing how to do it.

At this point, you’re working with your team and they’re starting to perform well. You notice and acknowledge your team and what they do, but you’re still holding on to the day-to-day tasks. You’re still in the trenches with them.

Level 4 Leaders

These are the truly inspirational leaders. So few people get to this stage. Usually, you need outside support and feedback on your leadership to reach Level 4.

At this stage, everything is about seeing the potential in others – even before they know they have that potential – and creating opportunities for them to grow. In this way, you’re leading for others to grow, to lead. That's your biggest goal.

John Maxwell says, ‘The leader knows the way, shows the way and goes the way’. Your end goal is a leadership style where others will be inspired to lead. Trust is a huge factor. You have to create a trusting environment. You have to trust yourself. And you have to trust them - that they are going to lead. That’s where the magic happens.

Moving your small business leadership to the next level

Surface level change is the easy stuff. Actions. Quick wins. Things you can implement or structures you set up.

Making change at the core is more challenging. You have to change your identity and build belief in yourself as a leader. That can be a long journey towards self-love. You need to understand what you bring to your current role; the masks that you wear; the levels you go to in order to protect yourself.

Why self-love matters for your leadership

You may never have thought of self-love as a part of leadership, but that deep core is the challenge. When you love yourself, you're connecting with your true self. You’re not wearing masks, not hiding behind layers. From this place, you can lead and see the growth beyond developing yourself. That flows through to your team so everyone grows and develops.

For example, you might be a very perfectionist type. If that’s you, then standards are so high that your own self esteem will always be low. Nor will your team ever be able to come to you with great ideas. When you lead from perfectionism, people in your team aren't willing to take risks, and it almost stifles creativity.

The path to better small business leadership is very individual, but it always starts with your core, your identity. You need a good relationship with yourself before you can connect with and lead your team.

Identifying model leaders and leadership behaviours

Start by thinking of who you want to become as a leader. Look for the gaps. The reality you’ve created around you shows the difference between what you’re actually valuing and what you want to value.

Think about who else you know who’s a great leader. What structures and systems are they using? What are their beliefs? How could you change to become more like that person?

Changing what you value day-to-day will change the end results. Leadership is a long-term thing, but you have to start doing the little things now. That’s how you build momentum. You take action daily. You take little steps. In my leadership coaching, I work with people through a four-step framework to make that change happen. We look at your environment, your attitudes and beliefs, your systems and structures. We plan what to put in place – and we check on what actually gets implemented, because there’s always a gap. It all comes down to creating shifts in people, starting with yourself.

A final tip to build your leadership

Becoming a better leader means you have to grow, have to change. You have to move out of the comfort zone and into the courage zone.

There are hurdles on the way. Habits. Limiting beliefs. Fear. But you have to step forward and start. And it won’t be easy straight away.

So remember,

When you're feeling the discomfort, that’s when you’re growing.

Kath Prior is a guest writer and speaker for Growth Gen. She runs a Successful Leadership coaching business called Successful Leaders Coaching


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