In order to survive, a small business must first make a profit. Beyond this point of survival, however, “success” may be defined from two perspectives. One perspective suggests growth as a measure for success (Small bone & W yer, 2000; and Dobbs & Hamilton, 2007). Success is measured by growth in revenues and number of employees.
The second perspective proposes that over time, the growth path of a small business may not continue upward. Indeed, entrepreneurs may become less growth oriented as their personal motivations change (West head & Wright, 1999). They become satisfied with a certain level of performance and income. Their desire to maintain control leads to a decision to not grow further. Support for this perspective was found in the further analysis of research to be reported here (Hunter & Kazakh, 2008; and Hunter & Kazakh, 2012). Representatives of 11 small businesses were interviewed to document management issues.
Some research participants were content with the volume of their operations. Others realized that a small increase in the volume of output (house building) would lead to a significant increase in expenses (more sub-trades), which in turn could financially ruin the small business. In the general, few small businesses survive for very long. Montano & Anderson (2004) report that over two thirds of small businesses close within the decade they open. More specifically, Industry Canada (2010) reported that 30% of small businesses fail within one year and up to 75%after 9 years. In the United States (Small Business Administration, 2010) 33% of start-ups have failed by the end of the second year and 50% have failed after 4 years. Further, very few small businesses exist for a long time. The attrition rate is quite high.
According to cater et al. (2006) only 30% of small businesses are passed to the second generation with only 12% being passed to the third. Further, only 4% make it to the fourth generation. If a small business is going to exist for a long time, there needs to be a focus on empowering employees and facilitating the development of a culture that promotes a learning environment (De Gus, 2002). Given this focus, the small business will retain employees who will adopt an attitude of continuing to search for improvement.
Bellingham (2006) identified entrepreneurs who rejected the opportunity for growth. These individuals did not necessarily want to do more. They were content with simply doing better.
This document is organized as follows. To begin, some definitions of small business are reviewed, along with the importance of small business to a nation’s economy. Then, small business is differentiated from large companies.
The performance of a small business is based upon its resources and how they are employed. Growth may result, but in general it does not last. This leads to the contention that success is not necessarily related to growth, but in some cases longevity may represent a successful small business.
These individuals did not necessarily want to do more. They were content with simply doing better. Note that this attitude does not discount taking an innovative approach to conducting business.
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