Necessity is the mother of invention, they say. Perhaps nowhere is this more evident than when you consider the current state of American small business ownership. According to a report (PDF) released this month by the Kauffman Foundation For Entrepreneurship, 340 out of every 100,000 adults launched a new business each month during 2010, representing the highest level in 15 years. This is understandable considering the economy.
The report calls it a trend of “jobless entrepreneurship.” I call these new business owners consumer-business owners, and if so many of them are starting businesses because of the tough economic times, and not because they want to run a business, what will happen to this new crop of entrepreneurs? According to a 2008 Small Business Administration report (PDF), nearly 50% of them will not exist in five years. Can anything be done to increase their chances of success?
Of course they must embrace the fundamentals of business — researching and planning, watching expenses, smart use of new technologies, etc., But I don't think that's enough.
I think something even more fundamental is often overlooked. They'll need to develop good leadership skills.
Leaders, More Than Ever
Anyone can start and run a business reasonably well while optimism and energy levels are high, and before they've torn through a year's worth of charge card cycles. But what about when controversy flares up on your FaceBook Page? Or when you make an embarrassing mistake? Or when doing the right thing knocks your bank account for a loop?
When these things happen, all the money and planning in the world won't help you. You need good leadership skills to help you weather these types of storms.
I have seen others in each of these awful situations, and I have been there myself. In some instances, I have handled things well. In others, not so much. But through practice, I have developed a sort of sixth sense about the mindset needed to handle such situations.
Whether they are called “jobless entrepreneurs” or “consumer-business owners,” I have worked with hundreds in all aspects of business ownership, and the one I find most rewarding is in the area of leadership training.
There is nothing like helping a person blossom from a timid and fearful small business owner to confident, proactive, decisive business leader. Here are a few thoughts to help you put this commentary into context, especially if you own and lead a business.
- Leadership is a given. Everyone is a leader. Whether it's your children, your family reunion planning committee, a Sunday school class, or your cosmetics business, you are its leader. The only real question is: what kind of leader are you? Whether or not you answer that question is up to you, but don't fool yourself into thinking you're not a leader. You are.
- Leadership is hard. Like running a business, leadership is not for the faint of heart. Over time, you'll have to develop thick skin. You'll also have to make tough decisions, and stick with them despite the criticism of others and your own nagging doubts.
And you'll have to do all of this in this new age of transparency, where nothing is hidden and the long arm of the Internet will expose even the most minor misstep. In this new world of openness and accountability, you'll have to make tough decisions now, knowing that you will not see the benefits for months or years to come.
But there's far more good news than bad.
- Leadership is empowering. When you are connected to a community of people who are building businesses and also focusing on honing their leadership skills, every hour is an opportunity to be empowered. These types of communities are all around you. They're online at your own FaceBook Page, in niche social networks like INDIE, and even in fun places like a Twitter hash tag such as the new one for #indiebookclub.
They're in your own community at the local chamber of commerce meeting, local groups you find on Meetup, or your mompreneur support group. As you consistently connect with like-minded people who are learning and tackling the tough issues alongside you, over time, you will uncover strength you didn't know you had. Your self esteem will soar and your business along with it.
- Leadership is paying it forward. As you become more empowered, you'll enjoy opportunities to empower others. Use your blog, for example, to share what you learn. “Don't pull the ladder up behind you,” says my colleague, Lela Barker. Give recognition to the people who help you along the way. Pay it forward by making it possible for others to follow you.
After over 11 years of leading the INDIE Beauty Network, I can honestly say that the most rewarding part is that I have the opportunity, time and again, to watch thousands of women grow into amazing examples for me and others to follow. There's nothing like watching other women lead and succeed. It makes it easier and more fun for me to do that same, and collectively, we pass on what we know to the next generation.
It is the single most amazing thing about being a business owner.
Because I feel so strongly on this topic, I recently opened the Small Business Leadership community on FaceBook. It's open to all, and is dedicated to raising the bar for small and independent business owners. It's a place to be encouraged and to connect with others around the common problems and victories we share as we lead our businesses during these challenging times. It's also about accountability. Effective leadership requires accountability. If you want to learn, grow and share with us, we welcome you!
I could write about this forever, but enough of what I think. What do you think? As a small business owner, how do you view leadership? What did I leave out?