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IN A RECENT SURVEY of more than 200 CEOs of small businesses in the U.S., we learned some interesting things about what it takes to lead entrepreneurial companies--in particular, about the critical skills of the CEOs who run them and how these skills relate to company development.
The CEOs in our study reported that they require a formidable set of leadership skills--34 in fact--the top five of which were:
1. Financial management
We found that the financial management of emerging businesses requires CEOs to be particularly concerned with two challenges. The first is finding and maintaining adequate capital for the business, locating appropriate sources of funding, securing it and maintaining good relations with the source to ensure long-term availability of the funding. The main sources are independent investors, often called angels, and commercial banks.
The second challenge is using acquired funds wisely. CEOs accomplish this by applying accounting skills and general accounting knowledge. Wise use of capital was defined by successful CEOs as maintaining adequate cash reserves through anticipating cash needs, controlling spending, collecting receivables and monitoring cash flow.
2. Communication
The CEOs in our study also reported that communication, both interpersonal and intrapersonal, is a critical skill and that the ability to express ideas in a clear, simple and direct way is the foundation of successful communication. These skills apply not only to one-on-one communication but also to large-group presentations.
The ability to express ideas, however, is only a portion of how the CEOs defined successful communication. They reported that it is equally important to listen to others carefully and openly, showing that ideas are being heard and valued. This willingness to be open extends beyond interpersonal communication to the larger picture of creating an organization that values openness as a cultural norm.
The CEOs were not only concerned with communication as a skill; they also focused on he content of communication. The most successful CEOs reported that it is critical to express the company's vision, goals and plans in a way that inspires understanding and action. Receivers of this communication are the organization's employees, its customers and vendors.
3. Motivation of others
The CEOs achieve their vision through motivation of others, which they accomplish by focusing on three things. First, they develop...