Last reviewed 14 December 2018

What’s the difference between managing a business and leading it? Are they mutually exclusive, or facets of a single personality? Dave Howell reports.

Think about the most successful businesses in your sector. Do these businesses have strong leaders or active management? Leaders tend to stand out from the crowd. Richard Branson, Steve Jobs and Bill Gates are clear leaders, but does this mean they are poor managers?

Antoine Baschiera, CEO at Early Metrics, commented: “To set up and grow a business successfully, entrepreneurs need a healthy balance of many skills. Their powers of persuasion are crucial as it’s not just about building profits — it’s about winning hearts and minds. We have seen many business leaders set out with excellent plans and strong business skills. However, when they lack the most important soft skills, it becomes harder to build and keep a strong team, source investment and get everyone else as excited about your journey as you are.”

Small business owners should become leaders and managers in their own right. The idea of leaders being “big picture” thinkers with little or no interest in the day-to-day operations of their business, with managers immersed in this detail is a distinction that can have harsh commercial consequences. A balance has to be struck between the two. The late Steve Jobs, for instance, made a point of visiting Apple’s retail stores to stay in touch with his customers.

David Selves, Business Advisor at The Selves Group that operates across a range of disciplines, commented: “Winston Churchill was a great leader, but by his own admission, not a manager. Leaders inspire, influence and have vision. In 1711, Jonathan Swift wrote that vision is the art of seeing the invisible. Managers implement the vision of others. They manage assets including people to achieve objectives often set by leaders. Leaders can be conceptual, but managers must attend to detail.”

The goal is to start and then later run a profitable small business. The personality traits needed can be variable, but often, a single-minded drive to succeed defines what a leader is. Management comes later when the company is established. Great leaders understand their limitations and hire expert managers to help them with day-to-day operations.

“Marrying leadership and management can be difficult for small business owners, developing a series of short-term goals which contribute towards the long-term target — while handling any challenges and difficulties which may occur,” said Daniel Ball, Business Development Director at e-procurement software business Wax Digital. “As a business grows, a small business owner may find themselves assuming the role of leader — shaping the long-term future while bringing in a product or departmental managers to handle the day-to-day responsibilities.”

Business focus

Small business owners have always had to wear several hats. The overlapping skills they need can be diverse and challenging to acquire. Leadership and management do, though, pull businesses in the same direction: to accomplish set goals, achieve projected revenues, build efficient and agile teams or strive to create new groundbreaking services or products. These ambitions all need leaders and managers.

Sue Andrews, Business and HR consultant at Chartered Institute of Personnel and Development (CIPD) shares an insight into how leadership and management differ.

Good managers may not make great leaders — why is this?

“While good management is important in any business to ensure it runs smoothly, it’s strong leadership that will make an organisation take off and fly. As the saying goes, ‘leaders do it standing up’. In other words, they are a visible presence in the organisation, proactively encouraging those around them to produce their best work. While managing systems and processes is important, a good leader recognises that what makes the real difference is having an engaged and motivated workforce, with a clear vision of where they’re going.”

How do you combine both skill sets?

“Leaders inspire and bring out the best in those around them. While good managers are not necessarily good leaders, in a small company where you may be alone at the top, you do need to work to combine both skill sets. That said, a good leader will empower those around them to fulfil their potential, through delegation with support.

“Those who only focus on managing their company may avoid delegating any form of authority through fear of losing control. However, the effective leader will see that this is the way to harness the energy and passion of those around them. They look for that spark of initiative in others and encourage it, rather than feel the need to maintain complete control.”

How should leaders and managers adapt to today’s business culture?

“Today’s businesses need to be responsive to changing demands and quick to adapt. A good leader will ensure that his or her staff are well informed about the direction that the company is going to enable them to adapt and adjust in response to the marketplace. Increasingly and ever-changing technology and competition will mean that only organisations with this level of vision and leadership will thrive.”

How do you develop your leadership skills?

“While management skills can be taught, developing as an effective leader is not quite so simple. Some believe that good leaders are just born, not made, but with the right environment and culture, that encourages and allows learning from mistakes, the leaders of tomorrow will emerge. In the meantime, more effective than generic leadership training is looking at how successful leaders operate and study their approach.

“Consider what it is about their style that you admire and then think about how you can emulate this in your own company. Equally, consider those in positions of authority that you don’t respect. It can be just as effective to know what not to do and how to avoid the pitfalls, as a way of improving your effectiveness as a leader.”

Whether leader or manager, the skills needed to run a successful small business today are many and often don’t reside in a single person. Companies need both skills to be successful. The key is, to be honest about which skills you possess and which you are lacking. You can develop the skills you are missing, but often, hiring specialists will deliver the practical skills your business needs.

David Selves of The Selves Group concluded: “Leaders need to think strategically to inspire and innovate, whereas managers need to be capable of being inspired and involving others in the common goal. Leaders need to learn to be conceptual and concentrate on the big picture. They need to delegate, mentor and take clear policy decisions.”