Leadership Models For Small Business Owners

A barber business owner leader confidently smiles while leaning on a chair.
| 09.22.22
Susan G.

Lead, follow, or get out of the way. But as a small business owner, leadership is more than a choice—it’s a necessity. You set the tone for everyone! Work culture has been pushed to the forefront of how to run a successful business, and your leadership style can help or hinder your business’s work culture. 

The leadership model that works best for your unique small business may differ from someone else’s. By becoming familiar with these models, you can target the right one for your situation, your business, and your team. Some people draw from different models situationally, and some people evolve their leadership over time. We’ll break down the basic leadership models for you here.

Small Business Owner Leadership Models

Transformational Leadership. Are you driven to inspire growth through innovation within your small business? This is a popular leadership style, especially for high-energy small business start-ups. Perhaps you’ve heard of agile workplaces? Those are likely led by transformational leaders who like to be role models. Businesses can move fast in transformational work culture, and some employees might have trouble getting their footing.

Strategic Leadership. As a small business owner, being strategic may be completely natural for you. Strategic leadership involves keeping a big-picture mentality and sharing long-term goals with your team. As a strategic leader, you set the vision for your company! You don’t get bogged down in the details. Sharing your vision will lead to greater employee satisfaction and engagement. But avoid this model if your team can’t manage details for themselves.

Strengths-based Leadership. If you’re the lucky small business owner to have a team with well-defined and applicable strengths, then strengths-based leadership could be an ideal model. As a strengths-based leader, you empower your employees to lean into their strengths and really deliver. One caution is that sometimes you have a valuable employee that can do anything. Asking such an employee to focus on a set of strengths may impact them negatively.

Adaptive Leadership. Small businesses in the tech field or other fast-paced, changing fields benefit from adaptive leadership models. With this model, you do the work to give your employees a supportive framework that can respond to change quickly. You’re willing to pivot when needed, and you help drive results. This kind of leadership works well in concert with transformational leadership.

Democratic Leadership. Is collaboration the name of your game? A democratic leader values involving the team in making decisions. You can even vote on decisions if you want to, but really this model comes down to considering the different views of your team. A team can feel very motivated by being heard! But don’t leap into this model without ensuring your team has the information they need to make good decisions. And if your leadership goes as far as being there every step of the way alongside your team, you might be more of a Collaborative Leader!

Authoritative Leadership. If the idea of democratic leadership makes you wince, perhaps you’ll recognize yourself as a more traditional authoritative leader. Small businesses that use this leadership model have very clear roles and responsibilities. As the small business owner, you drive the decisions, which flow down through managers. As you might guess, this isn’t the most popular style with employees, and you may have trouble retaining talent.

Transactional Leadership. If your team works best within more rigid structures, transactional leadership is a natural fit. Order and structure are the goals, and rewards are the means. Some small business owners have firmly set weekly goals to meet. If your team meets those goals, they are rewarded! For example, your floral business may have a goal of two weddings per week. If you meet that goal, perhaps it is pizza for all! Employees who prefer flexibility will not do well with this leadership model.

Laissez-faire Leadership. Are you more of a delegator than a DIYer? Is your team very qualified and comfortable with self-direction? This leadership model is hands-off and places value on letting your employees have the space to complete their work in the best way for them. You have to be comfortable providing little guidance, and your employees need to be comfortable not being led step by step. The downside to a laissez-faire leadership style is that sometimes no one takes ownership.

Servant Leadership. As a small business owner, do you feel you are in service to your employees and not just your customers? This is servant leadership. The business owner is at the bottom, supporting employees at the top. You’re right there in the trenches empowering your workers and helping to meet your small business goals. The result is employees that feel valued. And valued employees perform better! 

Leadership models are here to help you be an effective leader and lead to better outcomes for you and your team. Think about who you want to be as a leader and what leaders you admire. Before you started your business, did someone lead you in a way that helped you be more successful in your role? Do you see that kind of leadership in the models we’ve talked about here? Try it on for size!

A leadership model can’t just fit your size, though. It has to be right for the types of people you are leading. Both need to inform your leadership model choices. The good news is that you can set your small business culture and evolve it with leadership to great results! We hope this has given you improvements to consider.

Work culture has been pushed to the forefront of how to run a successful business, and your leadership style can help or hinder your business’s work culture.

About the Author

B2Z Insurance is a small business insurance company that provides coverage for on-the-go business owners: simple explanations, easy application, digital quotes, and mobile claims. A product that is easy-to-use and helps you assess the unique coverage needs of your business with confidence—freeing you up to grow your business.