1.5.6 Moving From Entrepreneur to Leader

🔑 Factors that cause a change in role due to business growth

• Growth in the number of employees
• Growth in the number of customers
• Quantity of resources used

🔑 Different functions an entrepreneur will have to perform

• The need for formality 🔗 Larger organisations require formality from the leader due to the number of employees, departments and roles. Ensures employees are controlled and recognise the communication

• The need for shared ownership 🔗 Larger organisations require capital to fund investment and expansion. The entrepreneur will now have to invite new owners such as shareholders and financial institutions 📝 (E.G Insurance companies)

• Greater responsibility to others 🔗 A larger corporation means the entrepreneur is responsible for more stakeholders 📝 (E.G Shareholders, customers, suppliers, employees)

• The need for motivation and inspiration 🔗 More focus on a larger workforce as the business expands. Entrepreneurs must develop into leaders in order to motivate, inspire and support workers to incentivise higher productivity

• The need for strategy and vision 🔗 As the business expands, specialists become more involved in production than entrepreneurs. They instead become leaders who design strategies for the long-term future of the business.

🔑 The difficulties in developing from an entrepreneur to a leader

• Adapting to the mindset 🔗 Entrepreneurs will have to accept a loss of control and learn to delegate in order to focus on strategy. However may result in a lack of trust and doubts over the ability of others

• Stress 🔗 As a business grows, it will borrow more money to invest, more debtors to wait for, more employees to manage and more stakeholders to satisfy. The stress a leader has compared to a small entrepreneur is significant as they are liable for everything

• Sharing ownership and control 🔗 Entrepreneurs may struggle with loss of control as the business expands, especially sharing future profits and consulting other shareholders over decisions. Loss of sense of independence that a small entrepreneur has

• Trust 🔗 Difficulties trusting other people, especially specialist managers employed for different departments. May struggle to delegate and trust others with tasks, due to fear of being seen as inferior, being manipulated or being lied to

• Lack of leadership qualities 🔗 Leaders may lack the skills to take upon more responsibilities and a new role in the business (E.G Communicating with a higher profile in complex negotiations)

Overcoming difficulties

• Delegation and trust 🔗 A leader must be comfortable with delegation and trusting specialists with responsibility in order to reduce stress and improve relations

• Earn respect 🔗 If leaders earn respect from employees, they can trust people more with delegation, inspire more workers towards a goal and communicate better

• Maturity and experience Developing leadership skills and qualities over time through learning from mistakes and experience over time

• Education 🔗 Attending specialist courses and learning how to become better at communicating, managing and delegating

• Reduce stress 🔗 Having a healthier lifestyle in terms of diet as well as exercise, and having leisure time alongside work helps reduce stress