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Transitioning from Entrepreneur to an Effective Small Business Leader

Updated 26.03.24 5 minutes read
AdvisoryBusiness PlansCommercial

No one will argue against the statement that starting a business is tough. Entrepreneurial pursuits require dedication, grit, and resilience, among other traits. With hard work – and a little bit of luck – your business will succeed and thrive. As your business grows so will your team and you may quickly find yourself transitioning from an entrepreneur to a small business leader with several employees and other workers to command.

Previously, the success of your business relied mainly on your own work and effort. Now, the continued success and growth of your business will rely on the combined efforts of an entire team that you must lead. While some of the traits that served you well as an entrepreneur will continue to serve you as a leader, there are also traits you will need to focus on and develop.


The first step to becoming an effective leader is intently focusing on your own self-awareness. Self-awareness allows you to assess your own strengths and weaknesses. It is only through this practice that you can truly identify what skills you have already mastered and what traits you may need to develop.

As an entrepreneur, you tend to just put your head down and work. However, being a good leader will often require you to make time for contemplation before acting. This contemplation time should make introspection and personal reflection a priority in order to increase your self-awareness.


Part of the reason self-awareness is so important in leadership is because it makes it easier to influence others. Self-awareness allows you to understand how others are going to perceive you and to then manage that perception. As an entrepreneur, you undoubtedly had to influence outside parties such as partners, vendors, and perhaps even lenders or investors. However, it’s different when you are trying to influence a team for which you are solely in charge.

According to Harvard Business School, “Influencing others requires building trust with your colleagues. Focus on understanding their motivations and encourage them to share their opinions. You can then use that knowledge to make a change and show that their voice matters.”

(Reasonable) Transparency

One way to build trust with your employees is to be transparent. Transparency leads to a sense of inclusion, making your employees feel more connected to the business. This sense of connection tends to lead to more engagement, higher productivity, and lower turnover. No matter the size of your business or working structures, there are many tools that can help you relay important information to your entire team and foster a sense of transparency.

It is important to note that transparency doesn’t have to be a two-way street. While as the leader you should be transparent about things like the business’s performance and new products or services that are being developed, it should not translate to things like revealing aspects of individual performance or expecting employees to share everything about their daily work. You must balance transparency without making your employees feel vulnerable or overexposed.


One of the biggest concerns with transparency is that it means you will undoubtedly be delivering bad news from time to time. Many leadership experts encourage this but recommend you never deliver bad news without a plan forward. The ability to see the upside of difficult times and to keep your eye on overcoming and moving beyond it is likely one of the traits that made you a successful entrepreneur. However, in order to be a truly effective leader, you must learn to communicate this sense of optimism even when delivering bad news.

Strong Moral Compass

In an ideal world, everyone would always act ethically and with integrity. Although this should happen even when no one will be aware of our actions, as a leader, it is even more imperative when others are watching. How you act will have a direct impact on how your employees and subordinates act which ultimately shapes your company culture and how your business is perceived by the world.

In 2016, human resource consulting firm Robert Half conducted a survey that asked workers to select the most important traits in a leader, with each participant choosing up to 3 characteristics. The study found that 75% of workers chose integrity followed immediately by fairness at 58%. The preference for these traits overshadowed all other responses with the next most common, decisiveness, coming in at only 37%. This survey goes to show that acting ethically, with an emphasis on integrity and fairness, is not only an attractive trait but one of the most important.

There are many traits that will help you as a leader but the above are among the most important. One of the biggest takeaways is to create an inclusive environment where your team feels in the know, heard, and respected.