How to Be an Effective SME Leader

The majority of businesses in the UK are SMEs. SMEs are crucial to the economy because they provide jobs and they drive innovation, but according to research, one thing in particular is holding them back- poor management. 

Problems in SME leadership

According to a study carried out by Warwick Business School, under-developed leadership and management skills coupled with a failure to adopt best practice is negatively affecting the performance and growth of many SMEs.

Businesses which are led by leaders with strong leadership skills are more profitable and more productive, thanks to good strategic management and people management practices.

One of the best ways you can be an effective SME leader is to ensure that you develop your leadership skills and continue to do so. The good news is that even if you feel like you’re out of your depth with some aspects of management, and with being an entrepreneur in general, there are a lot of valuable training, education, and consultancy resources out there that can help you, and your business grow.

 Being an effective SME Leader: What you need to know

As well as developing your management and leadership skills, there are other things to consider if you want to increase your effectiveness as a leader of an SME.

The kind of leadership your business needs can change as the business changes

When a business starts up, much can be achieved by a leader’s drive and inspiration alone, but as the business grows, there needs to be more of a focus on strategy. You might find that you feel like a true entrepreneur at the beginning, then you move on to a stage where you plan for the longer term and put down solid foundations, before moving back to feeling entrepreneurial when you want to introduce new products or services, or take the business in a new direction.

As your business grows, you’ll come up against new challenges

As your business expands, you’ll find that you have to deal with leadership and people management issues you’ve not faced before. To overcome these, think about what you need to learn or what help you might need to recognise and solve problems. Do you know another leader or business that has faced similar challenges? How did they deal with them? Do you need external help? Asking these questions will give you some perspective on how to deal with the issues in your business.

Nobody expects you to have all the answers and do everything

In the beginning when you’re getting your business off the ground, it makes sense that you’ll be involved in every decision, and taking a lead role in most tasks, but as the business grows, you should think about developing and empowering others to take over key roles and tasks within the business. Your business will only grow if everyone’s skill set is being used in a way that truly meets the needs the longer-term needs of the business (including yours).


Maureen O’Callaghan is a Member of the Chartered Management Institute and has an MSc in Mindfulness-Based Approaches. She works with organisations, teams, and individuals to create less stressful working environments, improve team working, enhance performance and productivity and develop leadership and management skills.  For more information visit or e mail