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Be inclusive. With a smaller operation, it's essential that everyone feels like an equal and involved part of the team. A good employer is certain to treat each employee fairly, not only in terms of salary and other forms of compensation, but also in how that employee is involved in the daily function of the business. Encourage feedback, innovation and creativity so employees feel genuinely engaged. "You need to create an environment of integrity, trust and respect to make absolutely certain that everyone is treated fairly, regardless of the differences they may have," says Sheehan. "It's essential to be inclusive, because that keeps everyone on the same page when it comes to the business's long-term goals."

Mission, not just money. Very few businesses operate out of sheer altruism, but that's not to say that turning a profit is the primary philosophical and practical focus. Rather, an effective boss establishes a genuine business mission. How that takes shape depends both on the business and on the overriding focus the boss wants to set. For instance, a restaurant owner may push speedy lunchtime service as a way of serving the time-strapped business community. By contrast, a medical supply outfit may emphasize how its products improve customers' health. Not only can a clear mission serve to motivate employees, it can also infuse a sense of importance in their jobs. "The point to be made is that there's something bigger than money," says Sheehan. "That can really help in keeping employees from feeling as though they have some mundane, day in and day out job."

Nothing to fear but fear itself. Many of us have had bosses who would be right at home with a guillotine next to their desk calendars. Make one mistake on the job and feel free to slip your noggin right in beneath the blade. Conversely, an effective boss encourages his or her employees not to be gun shy about an occasional snafu along the road toward better job performance. "This requires a mentality that encourages learning rather than a fear of making a mistake. Try something new and different, but know we're not going to kill each other if things don't work out," says Sheehan. "I was a swimmer in college and I swam fast when I imagined a shark was after me. I swam just as fast when I imagined I was in the Olympics. It's a question of what you want to focus on -- fear or opportunity."

Don't just lead -- coach. It's common to hear a sports reporter observe that one coach out-coached another in a particular game. The same dynamic holds true for your business, in which you view your position both as a leader and a coach who teaches, encourages and, if need be, corrects employees. "A coach sees things very differently than the players," says Sheehan. "It's important to use that different perspective to educate and encourage. But it's also important, like a good coach, to lead your team by example. For instance, while you should point out mistakes by your employees, be sure to admit when you yourself make a mistake."

It's their careers, too. Don't forget that the people who work for you are looking to you to help them navigate and advance their careers. As I said, it's not all about money. But it is all about making your employees see how to improve and create meaningful careers for themselves. If an employee has a goal of becoming a manager or running his or her own business someday, nurture that goal. Tell them the traits they need to work on to achieve their ultimate plans.

Made, not necessarily born. One final aspect of being a good boss is recognizing that much of what goes into being an effective leader is, in fact, learned behavior. Of course, there always have been and will be bosses who seem to have a flawless touch in leading and motivating. But for every natural, there are just as many top-flight bosses who got that way by attending management classes and seminars, reading books on effective leadership and, just as important, understanding that a good employer naturally attracts first-rate employees. "People can definitely develop good leadership capabilities," says Sheehan. "To a certain degree, we all have innate traits that make us good bosses. All you really have to do is work to develop those traits to their utmost."