Big companies have the luxury of chief executive officers and chief operating officers. Small-business owners don't.


If you own a small business, are you a leader or a manager? Can an entrepreneur be both?

In a small business, your employees can make or break your business. You've got to have smart, capable people. But because virtually all small businesses are understaffed, you need employees who are self-starters, people you can trust without being supervised constantly.

COLUMN: Management, leadership not same

MORE: Rhonda Abrams' column index

I've always had this motto: "Hire people you trust and trust them."

But what do you do on those rare occasions when an employee turns out to be untrustworthy?

I've had that experience. An employee I trusted lied to me. He's gone now, and while he hurt me and everyone in the office, fortunately, no major damage was done to my company.

However, the incident makes me evaluate my management skills and ask myself: "Am I good leader but not a good-enough manager?"

I've always prided myself on being a great employer. I pay well, provide excellent benefits, give lots of praise and give employees the chance to grow.

As an entrepreneur, it's important to understand the distinction between being a "manager" and being a "leader." They are two distinctly different roles with two distinctly different skill sets.

First, some basic definitions:

A leader is someone who provides guidance and direction, someone who illuminates and shows the way forward toward a goal.

A manager is someone who takes a more hands-on and direct approach. To manage implies more direct governance and control than leadership. Rather than focusing on high-level goals, a manager helps people successfully fulfill responsibilities.

As management guru Peter Drucker once said: "Management is doing things right. Leadership is doing the right things."

A business needs both.

In big corporations, you often have two people handling these roles. The chief executive generally sets the direction and vision of the company, while the chief operating officer makes sure the decisions get executed.

Small businesses don't usually have that option.

Optimally, a small-business owner or entrepreneur should be able to switch back and forth between the two roles. Practically speaking, such a person is rare.

But at the very least you should be conscious of the key attributes of each and strive to incorporate them into your working style.

A leader:

  • Sets high-level goals and strategy.
  • Establishes clear standards and company values.
  • Provides motivation and optimism.
  • Creates a sense of teamwork and solicits input on strategies for various functions and business units.
  • Identifies opportunities and threats companywide.
  • Monitors and measures financial and organizational success.
  • Empowers others to take action.
  • Helps things go right.

A manager:

  • Tells employees what needs to be done.
  • Trains employees or arranges for training on how to do their jobs well.
  • Solicits input from employees on procedures.
  • Identifies opportunities and problems on a day-to-day level.
  • Monitors and measures individuals' success.
  • Helps prevent things from going wrong.

Since small businesses usually aren't staffed to have separate people fulfill these roles, it's typically up to you, as the boss, to wear both hats.

When you don't, your business suffers.

If you are only a manager, your focus is too short sighted. You don't provide the vision your company needs to survive and grow. You won't respond to changing conditions, develop new business, keep up with the competition.

And your employees may not feel motivated or engaged.

If you are only a leader, your vision is too grand. You don't provide the day-to-day oversight and guidance you need to make sure that things are being done on time and on budget. Your customer service slips. Your profit margins shrink.

And employees may feel you don't care about or notice their personal performance.

Realistically, entrepreneurs tend to lean one way or the other, toward leadership or management. I'm a stronger leader than a manager.

So, what have I learned from my recent experience?

I must put procedures in place to ensure that my employees are more accountable.

I certainly do not want to be the kind of employer who micromanages my employees nor do I want to have a workplace where workers feel mistrusted.

But I've decided that I need to follow a bit of Ronald Reagan's advice: "Trust but verify."

Lead and manage. It's tough, but it's my job.


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