Leadership in business: Is it important in entrepreneurship?

October, 31 2022

Entrepreneurs require an innate leadership ability to run their business, react to adversity or challenges, and spot business opportunities where others don't see them.

Therefore, the importance of leadership in business is undeniable.

In fact, we can have great ideas, all the start-up resources, the structure, a perfect premises, and even the best suppliers, but without a good leader, there's a greater chance for a project to fail.

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What we mean when we talk about leadership

We've heard a lot about this word, but what is leadership?

In business, leadership is the way in which an entrepreneur guides their team to achieve its objectives. Think that businesses have very different professional profiles, and sometimes it's difficult for all of them to go in the same direction due to intrinsic motivation.

People with leadership skills are characterized by knowing how to establish a common, clear, shared and challenging purpose, and to involve and mobilize all departments and employees of a business.


Styles of leadership

The three main pillars of leadership are:

  • Personal skills. They help to control emotions and balance in difficult moments.
  •  Technical skills. Knowledge in certain, specific areas that's essential for leading a project successfully.
  • Social skills. They facilitate the relationship with other people (trust, empathy, sense of responsibility, etc.).

Depending on these skills, we can differentiate between different leadership styles:


"Laissez Faire" Leadership

Laissez-faire is a liberal model of leadership, which aims to create work teams capable of working independently and without the leader having to be directly involved in decision-making.

It focuses on the assessment of work, is related to greater autonomy, trust and recognition, and is often contrasted with the idea of the traditional "authoritarian" leader.


Democratic Leadership

Democratic leadership is characterized by neutrality and correctness, and its dynamics are operationally slower.

It's based on the active collaboration of employees in decision-making, and favors the development of activities in a collective, organized, and responsible manner.


Transactional Leadership

The concept of transactional leadership is based on the idea of a "reward". The worker offers their services and receives a salary in exchange, and the leader indicates what they want to achieve and provides the workers with the resources to achieve it.

This type of gratification-based leadership is more impersonal and adheres to the duration of the exchange.


Transformational Leadership

Transformational leadership, as its name suggests, aims to foster change and creativity in the business.

It's closely linked to employee satisfaction, effectiveness and motivation, has a very positive impact on organizational culture and is the key to survival in the face of global and changing competition.


Situational Leadership

Situational leadership is characterized by adaptability: Leaders take into account the level of preparation of each team member and the peculiarities of each situation.

Situational leadership can be directive (the leader serves as a guide), persuasive (also known as explanatory or coaching), participative (directed to team members), or delegative (the leader supervises).


Skills of a good leader in the company

Some of the intrinsic skills, whether they be soft skills or hard skills, that every business leader must have are:

  • Delegation skills. Delegating to your team allows the leader to focus on correcting mistakes and strategic planning.
  • Coordination and collaboration. Working in a coordinated manner stimulates creativity and allows you to analyze different points of view on an issue in order to find the most efficient solution.
  • Strategic planning. Strategic planning will allow the leader to define clear objectives and create a roadmap for employees to follow as directed.
  • Communication. Proper communication is essential to convey ideas. Therefore, leaders have the ability to communicate clearly, directly, and concisely. 
  • Empathy. Knowing and understanding other people's situation is crucial for the leader to be able to influence their work team. Moreover, empathetic leaders are more approachable.
  • Motivation and inspiration. Leaders have the ability to transmit motivational and optimistic words, which serve as inspiration for their employees.
  • Commitment. Natural-born leaders are very committed to their work, their project, and their employees. True commitment instills trust and makes employees embrace the same position with respect to the business.
  • Problem solving. Leaders have an inherent skill to solve problems. In fact, they're very decisive and face adversities quickly, looking for the best solution. 
  • Resilience. Resilience is the ability to survive and overcome setbacks and traumatic situations. People who are leaders tend to be resilient by nature and face obstacles with a positive attitude. Sometimes, they even take advantage of small adversities to improve or set new challenges for themselves.


Leadership within the franchise

Leadership is one of the key principles for the franchisor and franchisee to work in the same way.

The franchisor is responsible for being a strategic leader for the business. They're responsible for ensuring that the brand and its know-how remain competitive and sustainable over time.

However, the franchisee must also be a leader as well as an entrepreneur. It's key for them to guide their employees on a daily basis in order to boost the management of the business.

At Jeff, we always support all our entrepreneurs. We also analyze and suggest improvements to their management. But the real leaders are our franchisees with their businesses.

Now that you know the importance of leadership in business and franchising, you're certainly ready to start your own business. Contact us and begin the journey to lead your franchise.

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