The 4 Leadership Stages Every Entrepreneur Encounters

Ronin Workshops For Business Owners (Free)

Enjoy learning from peers in a safe environment?

No two entrepreneur’s stories are exactly alike.  That means every company and the journey their founder is on is slightly different. But no matter the type of company or the industry it’s in,  every entrepreneur is on a leadership journey.

Take Howard Schultz as an example.  In 1988, there was a small and struggling company that couldn’t quite find its way in the world. Howard had big dreams and a great vision for the struggling company so he put together a group of investors and purchased it for $3.6M. Fast forward to today. The little struggling company went on to expand well past 10,000 stores globally and has one of the most recognizable brands in the world. 

While it seems like a perfect journey to success it was anything but easy and without challenges. Schultz was an entrepreneur who went on his own leadership journey through his 30+ years as a part of the company.  While he didn’t start the journey as a great leader he certainly became one.  He was quoted as saying: 

“Success is empty if you arrive at the finish line alone. The best reward is to get there surrounded by winners.” – Howard Schultz

As great is Schultz’s quote is, it’s impossible for you to have this kind of success without being aware of your own leadership journey. Turns out there are four leadership stages all entrepreneur’s journey through.

To help gain some insight into the stages, I spoke with John Eades, the CEO of LearnLoft, a leadership development company that exists to turn managers into leaders and create healthier places to work.  He also the author of Building the Best: 8 Proven Leadership Principles to Elevate Others to Success.

John cut his teeth working for Sales Performance International, a $20M+ business that specialized in implementing sales performance improvement solutions to organizations around the globe.  He saw the leadership stages SPI’s founder went through operating a business for 20+ years and has spent the last 7 years working with entrepreneurs of SMB’s of all sizes and in all different industries to elevate the way they lead their people.

The 4 Leadership Stages Every Entrepreneur Encounters

STAGE ONE | THE HERO STAGE – The founder is the hero.  They come up with the ideas, they execute, they have relationships with customers, they are the marketing, sales, and delivery departments. The hero’s story usually ends up going one of three ways:

  • The hero is good enough to carry that early load long enough to get to stage two
  • The hero needs to find another person to help them get to stage two
  • The hero finds that there isn’t enough market fit or can’t produce the right product to support their vision and the hero’s journey comes to an early end.

STAGE TWO | THE PARTNER STAGE – The entrepreneur continues to be the hero of the story but they get a couple of key team members to join them on the journey.  These key players become partners to the hero in more ways than one.  They rely on trust, quick decision making, and a lot of collective energy to get the job done.  Because of this, the small group of partners becomes thick as thieves.  

There are some complications that start to arise for businesses at this stage because the story is now too big for one person. The potential complications in leadership here are:

  • There can be some stratification of value – the supporting cast may feel like they aren’t as important as the hero
  • The hero is threatened by how important the supporting cast members become to operations or to the business. Sometimes the hero makes the mistake of trying to hold the supporting cast members back.
  • The supporting cast members have been taught so much and the hero has invested so much time and money into them, that the hero feels held a bit hostage in needing to do whatever it takes to keep them around. 
  • The hero and supporting staff start to gain some real traction but instead of thinking big they start to think small. The hero gets caught up in the day to day decision making and fails to be a visionary leader.

STAGE THREE | THE EXPANDER STAGE – At this stage, there is a clear product-market fit. Not only does the business generate substantial revenue and earnings but the general roles and responsibilities are clear.  Thus causing the hero to expand as a leader. This often means hiring new team members, bringing in investors (capital), and exploring various growth channels.  

The winners of this stage are those entrepreneurs that have a system and formula to make great hiring, investor, and growth decisions.  Because of the speed at which this stage evolves, and the number of moving parts, each key player from stage one and two has to continue growing as a leader. The reason is simple, a company will only grow to the capacity of its leaders.  The minute the leaders stop growing and developing, it holds the entire business back from reaching its full potential.

 At this stage, there are a few things that absolutely need to be done if they haven’t already:

  • Define Purpose Trifecta – This is what John Eades defines as the mission, vision, and core values of the organization – These key things should have been developed in stage one or two, but most people wait until stage three to do this.  By defining the Purpose Trifecta it allows for clear alignment between team members, hiring with more precision, and bringing on the right investors.  
  • Development Pathways and Programs – All high performing employees want to work a for winning team that’s purpose-driven. But that’s not enough, they also want to be respected and recognized for who they are and the work they do. And lastly, they want growth and development opportunities. Now is the time to invest in development programs, online learning opportunities, and new roles to increase responsibility and skills. 

STAGE FOUR | THE MENTOR PHASE  – Here, our Hero is so small as a percent of the organization that they need to look at more and more at mentoring team members to help be an advocate in the marketplace for the future of the business.  The Hero is now only able to act as a guiding light and a cheerleader for the rest of the team to go out and execute and lead. 

At this stage, here are a few things that should be happening 

  • The hero should be supporting, teaching, and participating in onboarding programs as a speaker and voice.
  • Each of the key team members from stage 1 and stage 2 should be using making the brand bigger and broader to provide long term growth opportunities for the business
  • The hero should be seeking out and building out a succession plan both with people and a financial exit. 

Closing 

The best part of the four stages of the leadership journey of an entrepreneur is regardless of which stage you are in, your journey isn’t over.  Each day you get the opportunity to become a better leader and help your company make a positive impact on the world.  There isn’t a better person for this journey than you!

About LearnLoft

LearnLoft partners with Executives and Human Resource Departments to power their leadership development initiatives.  They help develop high performing and purpose-driven leaders through assessments, proven content, expert delivery, performance coaching, and consulting services. You can learn more here.

Ronin Workshops For Business Owners (Free)

Enjoy learning from peers in a safe environment?
Christopher Sica

Christopher Sica

We are passionate about helping business owners feel confident so they can enjoy the journey of entrepreneurship and create value for themselves and their communities. Understanding the steps required to scale a business helps empower business owners. That’s why I work in finance now. We are here to help in any way we can. Check out one of our workshops where we can help each other down the path.

Share this post

Share on facebook
Share on linkedin
Share on email

15 Ways to Manage Cash Flow In Times Of Uncertainty

First, we list the top 5 things you can do to generate cash, save cash, and finance a cash crunch. Then we’ll share some quick tips on how to think through this type of situation. Towards the end we list out even more things you can do to protect your cash flow. These are all strategies we’ve implemented as small business consultants for our clients.