There are several top-line and reductive data points a business owner can use to measure business growth such as turnover, margins, profitability, and value creation. We all appreciate that success never happens in straight lines, but if monthly, quarterly, and annual business expectations are actually delivered there appears to be no need to hoist any red flags.
Looking back at my time either running my own business or holding leadership positions in SME’s I realised early on just how fragile and superficial this situation was especially when business growth can be so easily constrained, disrupted, or distracted. Often the origin of these unwanted gate crashers is internal and often preventable. How a business owner or Board responds to these challenges, including seeking support and advice, will reflect on the future success of the business.
Among my first-hand observations as to why business experiences constrained growth is a combination of the business leadership style by the owner, an ineffective board of often unmandated board members or a split board. This article shall place a spotlight on a business owner’s leadership style. Being a business owner, or an entrepreneur is among the most challenging and risky career options to pursue. According to a study by the Carnegie Institute of Technology of leaders, they determined that 85% of business financial success was down to the personality and a leader’s ability to communicate, negotiate and lead. Only 15% is due to technical knowledge.
Business ownership has a singular mandate to achieve the desired outcome, often over a given period and ensure that along the way the governance of all departments and personnel in an organisation that you have created operates in a state of “performance” rather than “crisis”.
Business leadership is a complex task, and the consensus is that natural leaders are one-third born with leadership traits and the remaining two-thirds are learned by acquiring the necessary techniques, practices, and life experiences. Successful business owners tend to always have an innate self-awareness and fully appreciate that their words and actions have a ripple effect that impacts others. Of the most constraining business leadership styles is that of the “autocrat” who has difficulty in recognising the economic value of building trust, decentralised decision-making process, being receptive to new ideas or showing empathy towards others.
The role of the NED is to work with this business owner to uncompromisingly challenge the current view of the business and creatively unlock this constraint by demonstrating that people can work well together and often exert extra effort and confidence in what they do when their values are aligned and recognised. A transformational change in business leadership style can not only help you to grow your business but also have mental health benefits.
Upcoming Inspire events
On Wednesday 7th December we have next our monthly webinar providing a round-up of economic news and our forecasts for the UK economy and how it impacts the business community. Sign-up here.