The importance of leadership in SMEs

It is essential for leaders to be able to inspire, motivate and provide a clear direction to their team. All businesses need a strong leadership backing, but it is especially important for small and medium businesses (SME’s).

The decisions, strategies and practices leadership takes will be determined by a company’s period of growth. Therefore, the key to understanding the leadership requirements of SMEs is to be aware that they aren’t a new start-up or a large mature organisation.

Start-ups require hands-on management, with leaders seen more as managers involved in the day-to-day activities, whereas large companies require less day-to-day involvement and leaders who establish the long-term company vision and the required strategy to achieve it. SMEs fall in the middle and require leaders need to manage the company dynamically whilst setting a company direction.

Without effective leadership, businesses often grow much more slowly and often lose direction and as a result, fall behind competitors. Therefore, SME leaders need to successfully undertake 3 key roles in order to provide the company with effective leadership.

• To take responsibility for company finances. This is essential as without a healthy financial situation, your business will fail.
• Make good, calculated decisions that allow your business to operate effectively and compete successfully.
• To inspire your team, encouraging them to feel valued and motivated to work hard and believe in the company. This will in turn keep your employees with the business.

Within each of these roles leaders need to ensure that there is clarity and consistency of the company vision. There needs to be continuous communication across the business and ongoing engagement amongst all teams. Leaders need to involve the entire organisation in helping to overcome any challenges and in turn, reward them when they do. And lastly, leaders must invest in their people with training and development opportunities in order to uphold them as a valuable productive resource. 

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