9 Leadership Styles for Entrepreneurs

As entrepreneurs, we wear many hats—CEO, developer, consultant, HR, even janitor.  But no hat is more important than that of “boss”.  As an entrepreneur, you’re not only your own boss, but you may also be the superior to employees in your organization.  And trust us—it’s not an easy role.

Understanding your leadership style is one of the most important steps you can take as a leader in your startup.  By learning about what leadership style is most effective, what type of leader you are and how you can improve your leader qualities, you can help build a positive startup culture. 

President Harry S. Truman once said, “Men make history and not the other way around. In periods where there is no leadership, society stands still.  Progress occurs when courageous, skillful leaders seize the opportunity to change things for the better.”

And if developing leadership skills is that important, than reading this article is mission-critical.  Check out the nine different entrepreneur leadership styles and how they can make or break a startup—which one do you fit?

1.  Transformational Leadership

Transformational leaders are those who, no matter how busy they may get, continue to inspire teams and influence subordinates to improve and/or change.  Imagine an enthusiastic, charismatic, passionate entrepreneur—he or she is also a transformational leader.  This is one of the most effective leadership styles known today because it changes mindsets, social culture and work efficiencies. 

Famous transformational leaders: Sam Walton (Wal-Mart), Herbert D. Kelleher (Southwest Airlines) and Jack Welch (General Electric)

2.  Charismatic Leadership

Charismatic leaders are known to be the driving force that inspires teams to deliver above what is expected of them.  These leaders often use personal charm to lead and inspire and tend to be universally respected and admired.  A charismatic leader is one that knows how to “work the room” and pays attention to the details when doing so.  Charismatic leaders are famously known for their ability to gather a large number of followers.

Famous charismatic leaders: Thomas Watson, Sr. (IBM), Mahatma Gandhi

3.  Participative Leadership

Using participative leadership, entrepreneurs will ask for input and advice from all team members involved in the startup.  This type of leadership makes every team members’ opinion an important one and employees quickly become part of the decision-making process.  This kind of leadership style makes everyone involved in the startup feel appreciate and highly motivated. 

Famous participative leader: Donald Trump (Trump Organization)

4.  Laissez-faire Leadership

Do not get participative and laissez-faire leadership mixed up!  Participative leadership has been proven very successful, while laissez-faire, although similar in nature, often results in startup failure.  Laissez-faire entrepreneurs are often hands-off and allow group members to make all decisions.  This leadership style leads to the lowest productivity among group members.

Famous laissez-faire leader: Thomas Jefferson

5.  Transactional Leadership

Transactional leadership is established by incorporating rewards and punishments in day-to-day work-life.  Using the transactional method usually results in a very clear chain of command.  Transactional leaders often believe that people perform better with a chain of command, a rewards and punishment system and heavy monitoring.  Transactional leadership has been found to be quite ineffective apart from situations where problems are simple and clearly-defined.   

Famous transactional leaders: Joseph McCarthy and Charles de Gaulle

6.  Autocratic Leadership

When an entrepreneur uses autocratic leadership, they are setting themselves up for failure.  Autocratic leaders wield with absolute power and do not listen to employees.  Many entrepreneurs feel like autocratic leadership is the best option since they will have complete control over their idea and their business.  However, this leadership style is often resented by employees and tends to lower self-esteem and office morale.    

Famous autocratic leaders: Some would say Steve Jobs (Apple) was an autocratic leader

7.  Situational Leadership

The situational leadership style, much like the transformational leadership style, is one of the most successful known today.  This type of leader adapts to situations, abilities of teams and his own capabilities with ease.  It’s all about situational adjustment and adaptation. 

Famous situational leader: Dwight Eisenhower

8.  Service-oriented Leadership (or Servant Leadership)

Service-oriented leaders put the needs of their employees ahead of their own at all times.  They often rely strongly on subordinates’ values and ideals and involve their teams heavily in the decision-making process.  Service-oriented leaders are often empathetic, collaborative and ethical.  Entrepreneurs with this leadership style encourage teamwork and long-term goal making. 

Famous service-oriented leaders: S. Robson Walton (Wal-Mart), George Washington

9.  Quiet Leadership

Quiet leaders lead by example, not by telling people what to do.  Quiet leaders are not known for speeches, statements and clear-cut orders.  Instead, they do what needs to be done and inspire others to do the same.

Famous quiet leaders: Rosa Parks and Abraham Lincoln. 

Which leadership style is best for an entrepreneur?  Successful entrepreneurs tend to be a combination of a few leadership styles including transformational, charismatic, participative and situational.  Whatever leadership style you decide to follow, it is important to remember that not all styles will work for the same individual or organization.  Do what’s best and focus on what improves your chances of startup success! 

Follow me! @AllisonThinkBig

8 Things to Take Away From iKC; How to Get Funded

Entrepreneurial growth has steadily been on the rise in recent years since the economy took a turn for the worse in 2008. But this surge in entrepreneurship means growth of businesses and more new jobs. Many startups have great ideas that aim to make our lives better. However, every entrepreneur faces a huge obstacle that can plague a business: funding. Some have it; many don’t. Even for those that do get funding face headaches and problems.

Plus, entrepreneurs have to ask themselves many questions in the funding sphere.  Do you go for crowdfunding or look for local investment? Do you try to find an angel investor or seek out a venture capital group? The questions are endless and the answers will vary depending on the business model. The following is valuable insight into the world of funding gathered during iKC panel, Geocashing Players from Pawns: Finding the Power Players to Invest in your Company. 

• Put your own skin in the game: Starting a business is a major risk.  By not investing your own money, you’re sending a message of doubt to potential funders. If you think, “Hey, I’m investing my time. That’s got to be worth something,” you’re still not investing enough. Your time is the measure of your effort. Your money is a measure of your passion.  As panelist Kelly Pruneau of Women's Capital Connection put it, “If you don’t put your own skin in the game, what makes you think I will?”
• Ask people you know: Friends & family—we all have them. When you have an idea that you’re passionate about and you know could be big, don’t be afraid to ask. Whether it’s a well-off uncle or a friend from college, the worst that could happen is that they say no. These people may also have wisdom in that field that will allow them to help in other ways
• Look to the crowd for answers: The great new trend for startups is to get crowdfunding. Sites like Kickstarter, Fundable and Gust all allow you to pitch your idea to millions of people who, in turn, can become potential investors. However, according to Rachel Qualls of Angel Capital Group, it’s important to “gather credible local investors first before looking to crowdfunding”. She also suggests, if possible, to accumulate 90% of your projected needed capital. This way, you’re dealing with people you know. You’re more likely to hear from the person who gave $5 rather than one who gave $5,000. She went on to say that due to the popularity of these sites, it is becoming increasingly harder to “rise above the noise”. Giving insight into the mind of potential angel investors that view funding portals, she says, “Don’t pay for extra listing fees that promise to increase visibility. Investors don’t care for it.  Instead, they look for what has already be raised and how quickly it can become liquid.”
• Know the rules before you get into the game: The recent popularity of crowdfunding has brought about the good folks of the Security Exchange Commission. On May 7th, 2012 they issued guidance to prospective crowdfunding intermediaries under the Jumpstart Our Business Startups (JOBS) Act (H.R. 3606). This measure was taken because the current crowdfunding space looks a lot like that of the stock market prior to the major crash in 1929. A full list of SEC guidelines for crowdfunding is available here.

Let’s say crowdfunding isn’t your cup of tea, mainly because you don’t like a bunch of random peoples’ hands in your tea.  That’s where angel Investors and venture capitalist firms come into play. Much like an elusive white-browed shortwing, these groups can easily be turned off by your actions so it is imperative to know how to deal with them.

• Know everything:  Investors understand that you are passionate about your business.  Don’t spend 14 minutes of your of 15-minute pitch only talking about how cool your business idea is. The investors aren’t really investing in the business. They’re in vesting in you. They want to know if you can do what you say you will. Have you done a reasonable financial forecast? Have you researched the market and potential competitors? What role do you expect from them? These are some of the questions that investors want to know the answer to.
•  Don’t just look for a check: You want to find a sophisticated investor, someone who has already had success. Nine times out of ten, their wisdom is more valuable than their money.
• Don’t be afraid to Think Big: There are many obstacles you may encounter along the way, but that shouldn’t get you down. When you have the opportunity to pitch to angel investors, be optimistic and fearless.

Getting funded is a major undertaking.  You may hear the word “no” 100 times but one “yes”. That “yes” is all it takes to make your idea a reality. Whether you ask friends and family, seek out angel investors, or look to crowdfunding, there is one thing that is universal: people invest in you.

Dave Ramsey Presents a New Breed of Entrepreneur: The EntreLeader

Why be an entrepreneur when you can be an EntreLeader?

Dave Ramsey has been brave enough to ask this question:  Who is more important in a business, an entrepreneur or a leader?

And after years and years of analyzing who truly is more beneficial in a business environment, only one answer came to mind:  the EntreLeader; a new breed that Dave Ramsey holds to be the most important type of person that can come into a new business situation.  The EntreLeader brings the drive and motivation of an entrepreneur and the strength and vision of a leader, all rolled into one.

But how do you find EntreLeaders?  And even more importantly, how can you develop into one yourself?

 

Dave Ramsey has found a way.  He started out by pouring himself into his top three guys, but he quickly realized the information needed to be passed down to the whole team.  So he started holding classes once a week for all current and future leadership.  As he taught the sessions each week, more and more outside visitors began sitting in.  When the guests outnumbered the team members, Dave realized that the world outside his company was hungry for a new way to do business!  That’s when the EntreLeadership workshop was born.

Great news, KC entrepreneurs: the EntreLeadership workshop is coming to Kansas City!  Join Dave Ramsey this Friday, March 4, 2011 at the Kansas City Convention Center.  Tickets are $99, but if you use the Groupon discount, you’ll get 51% off (and save $50!).  Hurry—you only have 1 day left to buy on Groupon!

Whether you’re an individual who wants to develop your leadership abilities, a business or organizational leader who wants to develop your team, or an entrepreneur who wants to build a business on solid, proven principles, EntreLeadership is for you.

Register today!

Written by Allison Way.  Allison is a writer for Think Big Partners, Kansas City’s mentorship-based startup accelerator and business incubator.  To read more of Allison’s work, check out the Kansas City Entrepreneurship Examiner and her articles on Helium, BrooWaha and eZine.  Follow Allison! @AllisonThinkBig