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How to Apply the 21 Irrefutable Laws of Leadership to Your Small Business

small business leaderships skills in action during a meeting

Effective leadership is closely connected to long-term business success. Understanding the laws of leadership and how to apply them can help you build a successful and sustainable small business. Here we’ll examine the 21 Irrefutable Laws of Leadership from John Maxwell’s book of that title and how they can enable you to boost your business.

Law #1 – The Law of the Lid

According to this law, your success in any endeavour is determined by your leadership ability. In other words, your leadership is like a ceiling or lid on the organisation you lead. One example highlighted in the book is the story of McDonald’s fast food restaurants. Founded by Richard and Maurice McDonald in 1940, the restaurant had limited growth under their leadership. The business grew slowly over the next 15 years and began its rapid growth when Ray Kroc, who became a partner in the business, took over McDonald’s from the brothers.

Fortunately, your ability to lead can be developed over time. If you pursue growth of your leadership skills by enhancing your skills, you can become a more effective leader and make a positive impact on your business.

Law #2 – The Law of Influence

Leadership is based on your ability to influence people. So if you aren’t able to influence people, you won’t be able to lead them. As Maxwell notes, “The true measure of leadership is influence. Nothing more, nothing less.”  The seven factors that determine influence include:

  • Character – who you are
  • Relationships – who you know
  • Knowledge – what you know
  • Intuition – what you feel
  • Experience – where you have been
  • Past success – what you have done
  • Ability – what you can do.

Consider how you rank for these factors and determine how you can improve them to increase your influence. In addition, check out Persuasion Communication Tips for Small Business

Law #3 – The Law of Process

According to this law, leadership develops daily, not in a day. This means that your personal growth as a leader is an ongoing process that takes time. Developing as a leader occurs in stages, starting out at a point where you don’t know what you don’t know and progressing to a point where leadership is automatic.

The first step is to write out a plan to develop as a leader. For example, your goals could be to read one book per month on leadership or attend one workshop per year to develop your skills as a leader.

Law #4 – The Law of Navigation

According to this law, “Anyone can steer the ship, but it takes a leader to chart the course.” Effective leaders set the direction for their people to follow. In addition, they visualise the entire journey before it starts and understand how to get to their destination. Apply the Law of Navigation in your small business in three steps:

  • Regularly reflect on positive and negative experiences, and write down what you have learned.
  • Do your research. Speak with team members and experts to collect information and analyse current conditions that could affect your ability to reach your objectives and successful outcomes.
  • Determine whether you rely more on facts or faith. Effective navigators have the ability to do both, while most people tend to rely on one over the other. In this case, you will get feedback from a team member who thinks the opposite way to balance your approach.

Law #5 – The Law of Addition

As a leader, you add value by serving others. The important question to ask is: “Are you making things better for the people who follow you?” One example of applying the law addition found in the book is the leadership of Jim Sinegal, the founder and CEO of Costco. The company employees are paid 42% more than those who work for their main competitor. They also get subsidised health care, so pay a fraction than the national average. As a result, Costco has the lowest employee turnover rate in retail and this employee loyalty helps boost their profits.

To apply The Law of Addition for leadership, take the following steps:

  • Adopt the attitude of a servant when it comes to leadership. Get in the habit  of performing small acts of service for others without seeking recognition or credit.
  • List the most important people in your life and write down what each of them values most. On a scale of 1 to 10 rate yourself and how well you relate to that person’s value.
  • Make it part of your life to add value. Start with those closest to you and then expand this to the people you lead.

Law #6 – The Law of Solid Ground

According to this law, “Trust is the Foundation of Leadership.” Trust is built when a leader consistently exemplifies competence, connection and character. Some of the steps you can take to apply The Law of Solid Ground include:

  • Determine how trustworthy you are in the eyes of your followers. How willing and comfortable are they to share their opinions with you? Are they willing to share bad news or unpopular opinions with you? If not, you need to determine whether the people you lead believe in your character.
  • Focus on and develop the three areas of your character: integrity, authenticity and discipline. Be totally honest, even if it’s not comfortable. Be authentic and do what’s right, no matter how you feel.
  • If you have lost trust with someone you are leading, apologise and make amends if you can do this. Work on winning back their trust again.


Law #7 – The Law of Respect: People Naturally Follow Leaders Stronger Than Themselves

When you have stronger skills and gifts, people will automatically follow you. Six ways to gain respect as a leader include:

  • Use your natural leadership abilities – if you lack some abilities, work on developing these areas.
  • Respect others – if you respect people, they will respect you.
  • Be courageous – by doing what’s right despite criticism or risk, you instil hope in your followers.
  • Achieve success  – people are drawn to success and respect accomplishment.
  • Be loyal  – in a world of constant change, being loyal will build respect.
  • Adding value to others  – followers respect leaders who look for ways to add value (see Law #5).

Evaluate yourself on each of these aspects of leadership and think about how you could improve them.

Law #8 – The Law of Intuition: Leaders Evaluate Everything with a Leadership Bias

This law is the most difficult to teach as it is often developed unconsciously be natural leaders. Intuition is based on much more than facts. It is about being in tune with what is going on in the environment, including people’s attitudes and team dynamics. These intuition includes being ahead of trends to understand future challenges or opportunities on the horizon.

Law #9 – The Law of Magnetism: Who You Are Is What You Attract

The people you attract to your business or team is not determined by what you do or want, but on who you are. The basic principle of this law is that you need to have the qualities that you want to attract. People are drawn to others with similar qualities, so you need to have these qualities to attract the right people. For example, people with a positive attitude tend to attract other positive people.

Apply the Law of Magnetism with these three steps:

  • Determine the qualities that you are looking for in your followers and write these down. Mark which ones you are strong in and which ones need improvement. Work on improving those that are weaker.
  • Get help by finding a mentor or mentors who can help you in the areas you are weak in.
  • If you are already attracting the right people, aim to recruit people who complement your leadership skills. Determine your greatest strengths and weaknesses. Once you have done this, look for people who will complement your weaknesses to fill the gaps in your organisation.

Law #10 – The Law of Connection: Leaders Touch a Heart Before They Ask for a Hand

Emotion is the key to connecting with people and persuading them. Here are eight steps to connect with people:

  • Connect with yourself
  • Communication with openness and sincerity
  • Know your audience
  • Live your message
  • Meet them where they are
  • Focus on them.
  • Believe in them
  • Offer direction and hope.

Law #11 – The Law of the Inner Circle: A Leader’s Potential Is Determined By the Closest People

It’s not possible for a leader to apply the 21 laws of leadership on their own. For this reason, every leader needs a team that will fill their fill areas where they are weak. Ask the following questions when looking for members to fill your inner circle:

  • Do they have a high level of influence when dealing with others?
  • Do they bring complementary skills and abilities to the table?
  • Do they have a strategic role in the organisation?
  • Can they add value to you and your business?
  • Can the impact other inner circle members in a positive way?

Follow-up steps include:

  • Listing the names of inner circle members and writing what down what the person can potentially contribute.
  • Spend time with inner circle members, mentor them and develop relationships.
  • Limit numbers to keep your inner circle manageable.

Law #12 – The Law of Empowerment: Only Secure Leaders Give Power to Others

Effective small business leaders are not afraid to help others reach their full potential and achieve success. Leaders who try to keep others down, fall down themselves. Barriers to empowerment include:

  • The desire for job security – ineffective leaders are afraid that empowered subordinates will leave their organisations.
  • Resistance to change – empowerment results in constant change as it encourages growth and innovation.
  • Lack of self-worth – insecure leaders worry about others’ opinions of them. They are reluctant to give power to others because they don’t feel they have it themselves. The most effective leaders believe in themselves and are comfortable empowering others.

Law #13 – The Law of the Picture: People Do What People See

It’s essential for small business leaders to model their vision. Effective leaders balance their vision with practicality. Apply the Law of the Picture using the following three steps:

  • Write down your values and think about your actions over a few weeks. Ask yourself, “Do my actions reflect my values?” and “Are there any actions that contradict my values?”
  • Get a colleague you trust to observe you for a month to see if there are any differences between what you say and what you do. If there are any inconsistencies, work on changing your beliefs or actions so that they match.
  • Write a list of 3 to 5 things you wish your people would do better. Rate yourself on each one. If you get low scores for any, work on improving them. For ones you score high on, increase the visibility those actions see your followers can see.

Law #14 – The Law of Buy-In: People Buy into the Leader, Then the Vision

People won’t follow a good cause if they haven’t bought into the leader. If you have a vision for your small business, people will only accept it if they believe in you. You can apply the Law of Buy-In by following these steps:

  • Create a vision statement that defines your organisation’s goals and the reason you lead. Ask whether you are willing to give up a large part of your life to your business goals. If your answer is ‘no’, reconsider your role and why you are doing it.
  • Write down the names of your team members who you need to buy into your vision. On a scale of 1 to 10, rate each person’s buy-in. If people don’t by into you as a leader, the won’t follow your vision.
  • Determine how you can win people over so that they buy into your vision.

Law #15 – The Law of Victory: Leaders Find a Way for the Team to Win

An effective small business leader is at their best when faced with a challenge. They do whatever it takes to achieve victory. Victory comprises:

  • Unity of vision – a unified vision is required for team success, no matter how much talent its members have.
  • Diverse skills – small businesses required diverse skills for success.
  • Dedication and empowerment – an effective leader is dedicated to winning and empowering team members to reach their potential.

Law #16 – The Law of the Big Mo: Momentum Is a Leader’s Best Friend

Momentum is a big factor in determining whether you win or lose. With momentum moving your forward, it’s easy to overcome challenges. Take these three steps to apply the Law of the Big Mo:

  • Practice that attitude and work ethic that you would like to see in the people you lead.
  • Get rid of any obstacles that lower the passion and enthusiasm of your team members.
  • Celebrate achievements and recognise people who help achieve your organisational objectives.

Law #17 – The Law of Priorities: Leaders Understand That Activity Is Not Necessarily Accomplishment

No matter how advanced you are as a leader, you will always need to prioritise your activities. In prioritising, use the Pareto Principle which says that focusing on 20% of the most important activities will result in 80% of your results.

To apply this law in your small business, determine what are the most important activities that will create results. Getting out of your comfort zone and doing what is more difficult will create more impact with results. Follow these three steps to apply the Law of Priorities:

  • Look for something in your work or personal life that is not working and will require a major change in how you operate.
  • Write the answers to the three ‘R’ questions – ‘What is required of me?’, ‘What brings the greatest return?’, ‘What delivers the greatest results?’  Eliminate or delegate the activities that don’t bring you the greatest results.
  • Regularly set aside time to go over the activities you are responsible for and prioritising them by the results they deliver.

Law #18 – The Law of Sacrifice: A Leader Must Give Up to Go Up

People who are not in leadership positions often believe that leadership is only about position, perks and power. In reality, sacrifice is required in order to lead. The Law of Sacrifice can be applied in three steps:

  • Create two separate lists of the things you are willing to give up and the things you are not willing to give up in order to go up. In the lists consider things such as personal relationships, family time, and finances.
  • Consider what you will need to give up in order to get something that is more valuable. Are you willing to give up time, energy and resources in order to build your personal worth?
  • It is a fallacy to think you can sacrifice temporarily in certain areas until you reach your goal and then sacrifice is no longer necessary. Write down areas that you believe this is true so you can find ways to overcome such thinking.

Law #19 – The Law of Timing: When to Lead Is As Important as What to Do and Where to Go

Timing often determines the difference between success and failure. When the right leader is combined with the right time, success is usually inevitable. Follow these three steps to apply the Law of Timing:

  • Take stock of your recent important actions and consider how much attention you gave to timing. Ask yourself, “Do I consider my timing as much as I consider whether a particular action is right?”
  • Think about recent initiatives in your business that have failed. Was it a result of the action chosen or the timing?
  • As you implement new plans, ask questions that will help you time better. These include your grasp of the situation, your belief in your action, your ability to win the trust of people involved, and consultation with others.

Law #20 – The Law of Explosive Growth: To Add Growth, Lead Followers – To Multiply, Lead Leaders

The three stages of development are developing yourself, developing your team, developing leaders. To build your business in the long run, you need to develop leaders. If you are not at this stage yet, create an action plan to reach this point. Do you have a plan for finding and recruiting leaders? If not, create one.

Law #21 – The Law of Legacy: A Leader’s Lasting Value is Measured by Succession

The ultimate goal for any business should be to survive and grow in the long run. A successful business can be sold or passed onto future generations. Unfortunately, most small business end when their leader dies or retires.

Following the Law of Legacy is a way to spread your influence into the future. Think about the legacy you want to leave. What steps will you need to take to make this possible? These could include creating a succession plan, mentoring potential successors, or even writing a book about lessons you have learned in business.

To learn more, read The 21 Irrefutable Laws of Leadership or visit the author’s website.


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