Fundamental Leadership Skills

As a small business owner and entrepreneur, you need to rely on yourself to set the example and tone for your business. Your vision and leadership determine the success of your business, so developing good leadership skills will benefit not only you, but your employees and your customers as well. And in these challenging times, being a successful leader will show future generations what is necessary to endure and thrive.

Although leadership styles vary, there are some fundamental skills that apply to all good leaders:

1) Have the ability to develop a vision and inspire others

2) Set clear goals, stay focused and communicate well

3) Give AND receive feedback

4) Recognize strengths and weaknesses in themselves, as well as team members

5) Know when to ask for outside help

6) Act with honesty and integrity

7) Be committed and accountable for their actions

8) Be able to effectively execute a strategy or plan

The first step in becoming a better leader is taking stock in your current leadership skills. What are you good at? What areas could you improve upon? Look at each day as a new opportunity to try something new, inspire others or reinforce a healthy habit.

Leaders inspire others with their actions, so be sure your actions are aligned with your vision, goals and values. This is called "intentional leadership". By keeping to your core ideals, you will greatly increase the chance of creating the business you really want.

The Importance of Trustworthiness

Credibility is the foundation of all successful businesses and it takes time and effort to build trust and credibility with your customers, vendors and business partners.  Customers want to know that they can rely on the products and services they purchase, vendors want to know they can count on your business to pay its bills on time and business partners want to know they can build solid, long-term relationships with you.

Like respect, credibility has to be earned.  It doesn't happen overnight and if you don't spend time maintaining that trust, your business can be vulnerable to losing customers to competitors.  Here are several great ways to build trustworthiness in your business and brand:

Be a Great Communicator

Your brand is special and unique.  You need to be able communicate your vision and brand message to your customers through your sales and marketing activities.  Be sure you communicate clearly and often so that customers are reminded what sets you apart from the competition.  Also ask customers for feedback, collect and share testimonials and use this information to improve your business.

Be sure to communicate your vision with employees and others involved in the operations of your business as well.  Make sure they feel a part of team, acknowledge their efforts and listen to their ideas and concerns.  You will gain invaluable insight if you practice this daily.

Follow Through

In order to build trust, you must practice what you preach.  Above all, this means being honest and trustworthy in all of your dealings with customers, vendors, and employees.  Make sure your actions align with your vision and don't promise more than you can deliver.  Let your customers know they are your highest priority and address their concerns or issues promptly.  The best way to lose a customer is to fail to meet their expectations.  

Stay Objective

Small business owners are passionate about their brand and their business.  However, don't let enthusiasm cloud your judgment when it comes to running your business.  Reach out to team members and advisors to get objective feedback and consider it carefully before making major decisions.  Learn to disconnect from the daily grind by taking time for quiet reflection on a regular basis - you will be surprised how much easier decisions become when your mind is clear.

Getting a Handle on Cash Flow

Positive cash flow is one of the most critical components in managing a business, yet many business owners struggle to manage their cash. Most businesses fail not because the business isn’t profitable, but because they fail to manage their cash effectively and essentially run out of operating capital.

In tracking cash flow, business owners rely too often on looking just at their bank balance, rather than using tools such as financial statements, budgets and forecasts to help them anticipate the ebbs and flows of their cash cycle. Careful planning can help businesses maintain a healthy cash flow, as well as minimize the need to use short term financing, which often comes with hefty finance charges.

Although the Balance Sheet and Income Statement are helpful reports, they don’t show the whole picture when it come to cash flow. The Balance Sheet shows a snapshot of your cash position and the Income Statement shows the profitability of your business, which contrary to common belief, is NOT the same as cash in the bank. Oftentimes, the financial reports are also prepared on an accrual basis, and not cash basis, which can cause further confusion if you are not aware of the timing differences between accrual and cash basis.

A third financial report, called the Cash Flow Statement, can help you understand your cash flow better and assist you in tracking where you cash is coming from and where it goes each month. The Cash Flow statement shows not only sources of cash from operations and cash used for expenses, but also non-operating cash sources and uses, such as loans, fixed asset purchases and owner contributions and distributions. These non-operating items can significantly impact your cash balance, so it is vital that you understand and plan for non-operational cash activities.

Most accounting programs, including QuickBooks, have a Cash Flow Statement available as part of their financial reports. Begin by familiarizing yourself with this report, and review it monthly to better understand how your business cash flows. Once you know your cash flow cycle, you can implement steps to better manage cash, such as setting up and following budgets, improving billing and collection procedures, and negotiating better terms with vendors.