9 Leadership Styles for Entrepreneurs

Written by Allison Way on . Posted in Be An Entrepreneur

As entrepreneurs, we wear many hats—CEO, developer, consultant, HR, even janitor.  But no hat is more important than that of “boss”.  As an entrepreneur, you’re not only your own boss, but you may also be the superior to employees in your organization.  And trust us—it’s not an easy role.

Understanding your leadership style is one of the most important steps you can take as a leader in your startup.  By learning about what leadership style is most effective, what type of leader you are and how you can improve your leader qualities, you can help build a positive startup culture. 

President Harry S. Truman once said, “Men make history and not the other way around. In periods where there is no leadership, society stands still.  Progress occurs when courageous, skillful leaders seize the opportunity to change things for the better.”

And if developing leadership skills is that important, than reading this article is mission-critical.  Check out the nine different entrepreneur leadership styles and how they can make or break a startup—which one do you fit?

Transformational Leadership

Transformational leaders are those who, no matter how busy they may get, continue to inspire teams and influence subordinates to improve and/or change.  Imagine an enthusiastic, charismatic, passionate entrepreneur—he or she is also a transformational leader.  This is one of the most effective leadership styles known today because it changes mindsets, social culture and work efficiencies. 

Famous transformational leaders: Sam Walton (Wal-Mart), Herbert D. Kelleher (Southwest Airlines) and Jack Welch (General Electric)

Charismatic Leadership

Charismatic leaders are known to be the driving force that inspires teams to deliver above what is expected of them.  These leaders often use personal charm to lead and inspire and tend to be universally respected and admired.  A charismatic leader is one that knows how to “work the room” and pays attention to the details when doing so.  Charismatic leaders are famously known for their ability to gather a large number of followers.

Famous charismatic leaders: Thomas Watson, Sr. (IBM), Mahatma Gandhi

Participative Leadership

Using participative leadership, entrepreneurs will ask for input and advice from all team members involved in the startup.  This type of leadership makes every team members’ opinion an important one and employees quickly become part of the decision-making process.  This kind of leadership style makes everyone involved in the startup feel appreciate and highly motivated. 

Famous participative leader: Donald Trump (Trump Organization)

Laissez-faire Leadership

Do not get participative and laissez-faire leadership mixed up!  Participative leadership has been proven very successful, while laissez-faire, although similar in nature, often results in startup failure.  Laissez-faire entrepreneurs are often hands-off and allow group members to make all decisions.  This leadership style leads to the lowest productivity among group members.

Famous laissez-faire leader: Thomas Jefferson

Transactional Leadership

Transactional leadership is established by incorporating rewards and punishments in day-to-day work-life.  Using the transactional method usually results in a very clear chain of command.  Transactional leaders often believe that people perform better with a chain of command, a rewards and punishment system and heavy monitoring.  Transactional leadership has been found to be quite ineffective apart from situations where problems are simple and clearly-defined.  

Famous transactional leaders: Joseph McCarthy and Charles de Gaulle

Autocratic Leadership

When an entrepreneur uses autocratic leadership, they are setting themselves up for failure.  Autocratic leaders wield with absolute power and do not listen to employees.  Many entrepreneurs feel like autocratic leadership is the best option since they will have complete control over their idea and their business.  However, this leadership style is often resented by employees and tends to lower self-esteem and office morale.   

Famous autocratic leaders: Some would say Steve Jobs (Apple) was an autocratic leader

 Situational Leadership

The situational leadership style, much like the transformational leadership style, is one of the most successful known today.  This type of leader adapts to situations, abilities of teams and his own capabilities with ease.  It’s all about situational adjustment and adaptation. 

Famous situational leader: Dwight Eisenhower

Service-oriented Leadership (or Servant Leadership)

Service-oriented leaders put the needs of their employees ahead of their own at all times.  They often rely strongly on subordinates’ values and ideals and involve their teams heavily in the decision-making process.  Service-oriented leaders are often empathetic, collaborative and ethical.  Entrepreneurs with this leadership style encourage teamwork and long-term goal making. 

Famous service-oriented leaders: S. Robson Walton (Wal-Mart), George Washington

Quiet Leadership

Quiet leaders lead by example, not by telling people what to do.  Quiet leaders are not known for speeches, statements and clear-cut orders.  Instead, they do what needs to be done and inspire others to do the same.

Famous quiet leaders: Rosa Parks and Abraham Lincoln. 

Which leadership style is best for an entrepreneur?  Successful entrepreneurs tend to be a combination of a few leadership styles including transformational, charismatic, participative and situational.  Whatever leadership style you decide to follow, it is important to remember that not all styles will work for the same individual or organization.  Do what’s best and focus on what improves your chances of startup success!