Leadership skills are invaluable in any career. However, if you’re running a small business, leadership skills can help you reach your full potential, drive growth, and ensure that your business doesn’t just survive but thrives.
Effective leadership is like having a skilled captain steering the ship. It provides direction, creates a positive environment, and helps your business navigate challenges and achieve its goals.
As we’ll explore in this guide, leadership can and should be learned. So, if you’re ready to earn the leadership title and reap the rewards, discover the 15 skills you need to be an effective leader below.
“A leader is one who knows the way, goes the way and shows the way.”
John C. Maxwell
What makes a leader effective?
It can be hard to describe a good leader. This is because there is no single trait that makes a good leader; it’s a combination of qualities that inspire and empower others to follow them and achieve their vision.
Both Bill Gates and Elon Musk have been described as great leaders within the tech industry. Despite that, the two operate different leadership styles – Bill Gates was known for being very analytical and strategic. At the same time, Musk grew a reputation for being a risk-taker and pushing boundaries.
Great leaders aren’t all the same, but there is a shared set of skills that they use to become great leaders that anyone can learn. After all, great leaders aren’t naturally born into it—they’re made.
If you want to join the leadership ranks, you just need to put in the work and get started learning these 15 essential skills to become an effective leader.
“Leaders aren’t born, they are made. And they are made just like anything else—through hard work.”
Vince Lombardi
15 Skills You Need To Be An Effective Leader
Becoming a successful leader requires a unique blend of skills that empower others, navigate challenges, and ultimately, pave the way for success. Get ready to learn and unlock your potential with our list of the top skills you need to be an effective leader.
“Finding leadership requires vigilance, hard work, an abhorrence of complacency and self-satisfaction — and a willingness to make changes when changes are needed, no matter how painful they may be.”
Katharine Graham
1. Being decisive
Being an effective decision-maker is an important part of leadership. It’s a skill you will use often, particularly within your business.
For example, you will have to make daily decisions about the best way to achieve your business goals, the best way to complete a project, or how to conquer a problem (more on this later!)
Of course, being decisive doesn’t mean you should rush every decision. It’s still important to weigh up the pros, cons, and data before taking action. The important part here is not to go into every decision blind but to make sure that you do take action and aren’t stuck waiting for someone else to act on your behalf.
In addition, being decisive can also inspire confidence in others about your ability and skill. If you make confident decisions, others will feel secure knowing you are in charge.
“The very essence of leadership is that you have to have vision. You can’t blow an uncertain trumpet.”
Theodore M. Hesburgh
2. Effective communication
Communication is the cornerstone of building relationships. People cannot be on your side if they don’t know your vision and plan in clear and precise terms. Communicating your vision effectively ensures that everyone is working towards the same goal.
Whether that’s you and your employees, you and your clients, or even you and your suppliers, clear communication is the key to putting everyone on the same path.
Effective communication is also an invaluable skill in preventing issues. Just think—how many times have you been in awkward situations because of a misunderstanding or because you read a text message in the wrong tone of voice?
Communication is a two-way street. The more open and honest communication you have, the more you pave the path for others to reciprocate with open and honest feedback and collaboration.
In this case, honesty can be a plus point for the younger members of your team. This generation’s newest set of employees, Gen Z, places the most importance on honesty out of all the other leadership characteristics (Ahn & Ettner, 2014).
Again, knowing how to articulate your honest thoughts effectively without offence is a skill every leader should have in their toolkit.
“Nothing in life is more important than the ability to communicate effectively.”
Gerald R. Ford
3. Problem-solving
To be a leader, you have to take up problems and find practical and suitable results for them. If you have employees, you will be the one your team relies on and the person they bring all of their issues to for you to find relevant solutions.
Even if you’re running a business alone, it will still be on your shoulders to find solutions to internal problems – or any issues with clients, customers or suppliers. You are the leader of your business, so you are the one that needs to find the answers.
While you won’t be expected to find a miraculous fix for every situation that’s headed your way, as a leader, you should be able to show others a feasible way out and be decisive in how you handle the situation.
Let’s say that Sarah has opened up her independent bookshop. However, there’s been a decline in foot traffic recently. The less foot traffic into her store, the fewer sales she will make. This is a problem! As the business owner and leader, it’s up to her to address it.
First, she does some digging. Sarah knows that a good business leader is decisive, but shouldn’t act without knowing the big picture. She explores sales data to see if there’s a pattern, talks to customers and researches online trends to see if there’s something she’s missing.
Ultimately, she decides that the business isn’t active enough on social media to promote the bookstore. So, she sets up a social media plan to promote the bookshop, and even organises an event to draw more attention and traffic into the store.
Well done on using your problem-solving skills here Sarah!
“Leadership is solving problems. The day soldiers stop bringing you their problems is the day you have stopped leading them. They have either lost confidence that you can help or concluded you do not care. Either case is a failure of leadership.”
Colin Powell
4. Conflict resolution
Unfortunately, not every problem you solve as a leader will be amicable. Conflict resolution is a great skill to navigate any disagreements (either within the team, or with customers), and turn them into positive opportunities.
For example, if a conflict has happened because of a miscommunication, you can turn this situation into a chance to establish clear and more effective communication methods.
Alternatively, if the conflict is caused by someone having an opposing viewpoint, you can turn this into a positive environment to have a healthy debate and ensure that everyone’s concerns are heard and addressed while encouraging collaboration.
Conflict resolution skills are also about avoiding conflicts in the first place, noticing where tension might be growing and what could turn into conflict down the line – and ultimately getting ahead of it before it becomes an issue.
“Have those uncomfortable moments. Because my strong personal belief is it is those moments that cause you to grow the most yourself, but that also differentiate you the most in your career.”
Corie Barry
5. Delegation
Another useful skill that all leaders must possess is delegating work. A leader isn’t a one-person team that can do it all—it’s someone who knows the vision and their part in it and can recognise where to delegate tasks to others.
If you have employees, delegation is about knowing each member’s abilities and assigning work according to their calibre and efficiency.
If you’re running the business alone, it’s about knowing which jobs to take on yourself and which to outsource. For example, if you know that accounting isn’t your strong suit, rather than try to handle all the books yourself, you should consider delegating to an accountant and using their skills and experience to your advantage.
Some leaders may misinterpret delegation as dumping. Edward and Murphy (2022) discuss how the latter is closely tied to assigning tasks that do not encourage growth and accountability.
As the head, you may be tempted to control every single thing in your organization while doing away with grunt work. If this happens, dumping can lead to frustration and, eventually, turnover.
“No man will make a great leader who wants to do it all himself, or to get all the credit for doing it.”
Andrew Carnegie
6. Effective Time Management
Effective time management empowers leaders to be more effective and efficient. It helps with your own time management (allowing you to step away from your business after hours and enjoy a personal life) but also helps you become a better delegator by understanding how your employees or agencies manage tasks.
Better time management also helps reduce stress and improve your well-being, putting you in a happier and healthier state to make important decisions and keep your passion for your business alive and thriving.
“If you don’t have time for the small things, you won’t have time for the big things.”
Richard Branson
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7. Motivation
Great leaders are those who inspire and motivate others. Motivation is contagious – if you have enough motivation and drive, it will energise and ripple across others, helping to get people on your side and ready to go the extra mile to help your business grow.
It’s no wonder why it’s one of the traits that most successful leaders possess (Kirkpatrick & Locke, 1991).
Motivation also improves quality and performance. If you’re motivated and excited about a task, you will naturally put more effort and energy into the work. If you don’t care, it’s easy for the quality to slip and mistakes to come through.
In addition, motivation inspires more creativity and innovation, helping to unlock your business’s full potential.
O’Neil (2007) also agrees with this sentiment. Conscientiousness is the most decisive factor in determining a leader’s effectiveness.
“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.”
John Quincy Adams
8. Relationship Building
Relationship building is one of the core skills of being an effective leader. After all, people won’t follow someone they don’t trust or connect to.
Relationship building isn’t just about being friendly to people. It’s about creating a network of trust, respect, and open communication.
This strong foundation allows leaders to create a more positive and productive work environment where everyone feels empowered to contribute their best and achieve success together.
Building relationships will be a fundamental skill for your success, no matter what industry or business you operate in.
Whether you’re building relationships with customers and clients (turning them into repeat customers!), suppliers or distributors (ensuring that your orders are given the best treatment!) or even industry peers (helping foster collaborations or partnerships), relationship building is always worth investing in.
“As we look ahead into the next century, leaders will be those who empower others.”
Bill Gates
9. Empathy
Empathy skills lend themselves to leadership by giving you a deeper understanding of other perspectives, emotions and challenges. It’s a way of connecting with people to help build relationships and trust through a deeper emotional bond.
Empathy also helps communication. By understanding other perspectives, they can help address any concerns from the start.
It’s also a good skill for motivation, as you’ll be able to understand individual drives and contributions from the people around you, allowing you to play to everyone’s strengths and inspire them to work at their best.
“Ideas excite me, empathy grounds and centers me.”
Satya Nadella
10. Creativity
Being creative doesn’t mean you’re a skilled artist. Your skills with a paintbrush are irrelevant here—it’s about being able to generate new ideas, see things from different perspectives, and ultimately think outside the box.
“There is no doubt that creativity is the most important human resource of all. Without creativity, there would be no progress, and we would be forever repeating the same patterns.”
Edward de Bono
11. Flexibility
As a business leader, you will face many challenges and setbacks. Nothing is ever smooth sailing. However, being flexible is a great skill as it allows you to quickly adapt to changing work situations and new problems and ultimately change your approach and plan as needed to reach your vision.
Flexibility is also a great skill in effective leaders as it allows you to get out of your comfort zone and embrace challenges as opportunities for growth.
“We are stubborn on vision. We are flexible on details.”
Jeff Bezos
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12. Recognising potential
Recognising potential is another great skill for effective leaders. If you are an employer, this skill is used for identifying talent and strengths within your team – and being able to delegate work to build on those talents.
This skill isn’t limited to people. Recognising potential is also a great skill for business leaders, as it allows them to recognise new ideas or products that can help steer them towards their goals.
“Leadership is unlocking people’s potential to become better”
Bill Bradley
13. Feedback
Both providing and receiving good feedback are valuable skills for effective leaders. Regular feedback is a cornerstone of growth, it’s how people identify strengths and weaknesses and build on and improve their work.
“We all need people who will give us feedback. That’s how we improve.”
Bill Gates
14. Listening
Effective leadership isn’t about just giving orders. Great leaders are those who both give direction and actively listen to those around them – helping them to learn and understand the environment and people that they work with.
Listening is also essential for building relationships and communication. As we mentioned earlier, good communication is a two-way street. It’s about inspiring and motivating others but also being open to feedback and learning from those you lead.
“Of all the skills of leadership, listening is the most valuable — and one of the least understood. Most captains of industry listen only sometimes, and they remain ordinary leaders. But a few, the great ones, never stop listening. That’s how they get word before anyone else of unseen problems and opportunities.”
Peter Nulty
15. Emotional intelligence
Emotional intelligence is the ability to gauge and read the emotions of those around you. Humans are complex creatures, and we feel emotions more deeply than just ‘happy’ or ‘sad’. Emotional intelligence is reading emotions on a deeper scale and adapting your communications and state to respond appropriately.
Effective leaders use emotional intelligence to build relationships better, adapt their communication and delegation processes, and ultimately identify and resolve conflicts quickly before they become issues.
This isn’t just some emotional mumbo jumbo we made up! Stein et al. (2009) determined that top executives with higher levels of emotional intelligence were more likely to be responsible for profit-yielding companies.
“I do business with my heart as much as I do with my head, both personally and professionally.”
Ursula Burns
Why are leadership skills important?
Developing leadership skills can help in many situations in your business and personal life. These skills help you establish a clear direction and vision of your goals and set a path towards them.
Leadership skills are also great tools towards navigating challenges and setbacks, finding solutions to move forward and seeing each setback as a teachable moment towards your goal.
In addition, leadership skills are great for motivating and developing other people. If you plan to be an employer, this will ensure your workforce is on the same path as you and inspire passion in a positive and collaborative environment.
Even if you’re not planning on being an employer, the leadership skills will help you build better relationships with clients, suppliers and peers in your industry.
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