Managing Leadership Phases in Small Businesses

Introduction

“Leadership Phases” in small businesses refer to the changing type of leadership needed as a small business begins to grow. As a business owner, it's essential to understand the different phases of leadership and how they affect your business's growth. Failing to adapt and grow as you progress through these phases can limit your business's growth and your personal development.

Phase 1: Doing

When you start your business, you're likely starting from the ground floor with a jack-of-all-trades, bootstrapping approach. In the beginning, you're doing the majority of the work, executing the product or service, and involved in every critical task within the business. This in itself creates a capacity issue for the company. As you realize the need for assistance, you hire some doers – individuals who can help you get things done.

HIRE DOERS >>> COACH THEM TO DO

As a leader, your coaching involves training new hires to complete tasks correctly. You provide explicit instructions on what you want them to do and how you want it done. This approach increases your capacity, but it has its limitations. Your capacity will only grow so much because you can't manage all the training, motivating and the rest of the business’ critical tasks while also trying to continue growing.

You may start to feel frustrated as you need help keeping your team motivated and dealing with staff turnover. It can feel overwhelming whenever you have to train a new employee or retrain an old one. This frustration may signal that it's time to transition to the next phase of leadership.

Phase 2: Managing

If your business has grown to the point where you feel you’ve reached your capacity to lead and manage your staff, it is time to hire a manager. This transition is more complex than most owners anticipate, as the type of coaching required differs significantly. When hiring managers, you must coach them to motivate, train, and supervise your staff. They must do this without experience in the business or authority over the company that you have. You're no longer coaching on executing tasks; instead, you're coaching managers on how to manage. You're teaching them how to motivate the team, provide training, and maintain the desired level of service or product quality.  It is not the same as coaching doers.

HIRE MANAGERS >>> COACH THEM TO MANAGE

This transition allows you to focus on other aspects of the business, as you now have managers handling the day-to-day management of the team. However, you'll still reach a point where your capacity is limited, as you'll still be making most of the critical decisions.

Phase 3: Leading

As a business continues to grow, you eventually move to a position where the majority of your time is focused on setting targets for the company and evaluating your progress. You aren’t managing everyone, but you are paying attention to every part of the business. You set the targets, but you have hired leaders to make decisions on how to hit those targets. These leaders can make decisions in your absence.

HIRE LEADERS >>> COACH THEM TO LEAD

At this stage, you're coaching leaders on how to lead, make decisions, and guide the team in the right direction. You're focusing on the 20-30% of the business you're most effective in, allowing you to put your energy into the areas where you can make the most impact.

The Changes in the Owner’s Leadership Methods

PHASE 1: Hire doers and coach them to do.

PHASE 2: Hire managers and coach them to manage, mobilize, and motivate.

PHASE 3: Hire leaders and coach them to lead well, make aligned decisions, and lead managers.

Transitioning through these phases effectively increases your capacity and allows you to focus on the most critical aspects of your business. By adapting and growing as a leader, you can ensure that your business continues to thrive and reach its full potential. As you transition through these leadership phases, make a list of the skills you need to train at each phase. These lists will allow you to apprentice your new managers and leaders with the skills required.

Understanding the three phases of leadership is crucial for every business owner. As you progress through these phases, your role as an owner changes, and you must adapt and grow to meet the demands of your growing business.