Problem statement
Small business startups are the most rapidly growing business developments in the United States. Apparently, 42 percent of these kinds of businesses are owned and run by women. Businesses that are owned by women are less profitable as compared to those owned by men by an average of 25 percent annually. Small businesses owned and managed by women and have been recording increases in profitability for 5 years or more may have been utilizing improved financial strategies. These businesses demonstrate that they have the ability to increase profits, deploy strategies that are effective and sustain high profits. However, the glaring problem is that women business owners do not have sufficient strategies to sustain profitability for their businesses beyond a 5 year period. Specifically, small business women owners do not have financial strategies for increasing their businesses’ profitability ( Welter, Smallbone, & Isakova, 2006).
Significance of the study
Contribution to Business Practice
Small business activities play a crucial role in the development of any country’s economy. Besides, small businesses can learn from the success of other successes. Apparently, women who own and run businesses create growth and businesses can acquire knowledge about financial strategies in order to increase the profitability of businesses. Profitable businesses for five years and over indicate the ability to sustain growth of profits, sustenance of high profits and deployment of effective strategies. Additionally, emphasizing the strategies for the profitability that work for women in businesses ownership could help in improving the success of other women in business. The study could have implications on many women small business owners since the findings could enhance the contributions to the understanding of the manner in which financial strategies can be used for increasing profits ( Stanley, 2004).
It is apparent that women business owners operate on profits that are lower than average to run their businesses. Unfortunately, the reasons behind this cannot be fully understood without adequate research study. It is expected that researches that will be done in the future will be able to specific strategies for women business owners to enhance their profitability growth ( Welter, Smallbone, & Isakova, 2006). Since small businesses form the largest part of the development of the economy, cultivating financial strategies that are practical for these business owners remains an essential aspect for economic growth and job creation. Moreover, sharing these financial strategies could also go a long way in increasing that other small business owners will acquire the resources essential for profitability increase. This study will most likely contribute to this study through the provision of knowledge to women small business owners concerning the use of financial strategy in increasing their business’ profitability ( Buddle, 2010).
Background
For many centuries women have owned and managed businesses across the globe yet it was until 1976 that focus had been given to small businesses owned by women. Before then it was assumed that all owners were fundamentally the same and therefore did not require closer emphasis. However, the increase in the ownership of women in profitable small businesses has also increased the amount of studies and focus on them. Averagely, in the United States, women owned businesses generate lower profits of 25 percent as compared to those owned by men. Many scholars have been interested in studying the reasons behind this phenomenon. Moreover, the manner in which women run their own businesses in order to increase their profitability has also attracted a significant amount of studies ( Wilmerding, 2006).
Motivations and Women Small Businesses
Women businesses owners require special kinds of processes of decision making and motivations that are distinct in terms of financial strategies when it comes to running small businesses. This may be partly because they have to strike a balance between their family engagement and business commitments even as they strive for positive results business developments and profitability. The implementation of financial strategies by women is prone to encounter a different set of challenges and obstacles that are different from those of men. As a much as women may wish to grow their businesses, profit making may not be their ultimate motivation. In many cases, the financial strategies that women have may not coincide with their motivations for establishing their businesses ( Jones, 2000).
Profitability and women small businesses
Small businesses owned by women that have been recording increases in profitability for the five years or more have unique financial strategies for profitability generation. Businesses that have consistently been generating profits year after year have some financial strategies and motivations that are not possessed by women business people and managers. The financial strategies that are used by successful women business owners may go a long way in helping many other women businesses owners in managing their businesses. One of the key challenges that women in businesses have raised to be of major constraint is lack of relevant information on financial loans and revenue use in profitability improvement. It is not uncommon for women in businesses to avoid some financial risks because of their personal decisions that prohibit them from taking up more financial strategies. Therefore women in small businesses may learn the manner of increasing their profitability from other women businesses owners with similar motivations and obstacles to encounter ( Chiste, 1996).
Conceptual framework
The key conceptual framework for this study was the theory of planned behavior. Apparently, the planned behavior theory was created to help in the understanding of the manner in which intentions of individuals are reflected in their behaviors. It originated from the theories of limitation and reasoned action and their effects on dealing with behaviors. Incidentally, many studies involve behavior concepts ( Wilmerding, 2006). However, the new motivations and challenges call for the need to develop intentional behaviors as well. The theory of planned behavior provides an up to date diagnosis of ownership of small businesses that goes beyond innovations into intentions and actions to keep up with small business ownership growth. The theory also creates a framework from three different forms. These include personal attitude behavior outcomes, perceived social behavior norms and the perceived control of the behavior of an individual ( Pakroo, 2014).
The purpose of this case study on qualitative exploratory was to explore the financial strategies of small businesses engaged in consultations in northwest Houston that have been increasing in profitability for the 5 years. Many researchers rely on the theory of planned behaviors for research on women in small businesses. Experiences of women in business ownership could not only be informed by business growth and money. Therefore, researching on intentions and behaviors would generate knowledge for small business owners. When a person has a greater degree of apparent control, she will in turn have stronger intentions when operating her business. The ability to be able to understand the intentions and attitudes of women in small business owners will most likely provide insights on the manner in which women make use of their financial strategies for profitability increases ( Keveles, 2010).
Research question
This research was guided by a central research question which was: what ways do women small business owners and their employees apply financial strategies in increasing their businesses’ profitability? This central question was assisted by several other interview questions such as:
What ways do you access and utilize financing to increase your business’ profitability?
What are the goals that your business has for growth of its profitability?
What are the financial strategies in place to increase the profitability of your business?
Does your attitude towards work have anything to do with the ability of your business’ growth? If the answer is yes, explain how?
In what ways do you apply your personal motivations for driving your business’ profitability?
What do you consider as the most critical behaviors at the work place that can assist in increasing your business’ profitability?
Do you have anything to add regarding your strategies for increasing business profitability?
Nature of study
Qualitative methodology was used in this study. This is through the application of common themes from thorough experiences of the respondents by identifying their intentions and actions. Qualitative methodology gives researchers an opportunity to explore individual behaviors complexities from the respondents’ view point as with regards to an existing phenomenon. For purposes of this study, data was saturated in an in depth sampling process that allows for the acquisition of the information from small women business owners and their employees. The saturation of data focused on those people with the most knowledge that could accurately provide answers to the research questions ( Stanley, 2004). The sample was small and could therefore be managed effectively in terms of repetition and other follow up inquiries. Further qualitative research could be designed for addressing issues pertaining to small business ownership by women with in depth analysis. Apparently, qualitative method provides statistical numerical collection through the provision of additional data set for analysis. Nonetheless, statistical and numerical approaches do not give participants opportunities to offer detailed descriptions concerning their experiences. Based on these observations, a qualitative approach was poised to provide the best alternatives ( Chiste, 1996).
Possible types and sources of Information
This is a qualitative exploratory case study and it was aimed at exploring the manner in which small women business owners together with their employees apply financial strategies in increasing business profitability. The case study involved the interview participation of one small woman business owner and nine business consultants from Northwest Houston in Texas. The researcher also had an opportunity to review the company documents that demonstrates the profitability of the businesses through a triangulation methodology. This study is intended to help women in small businesses together with their employees to expand their knowledge horizons and acquire new strategies of growing their businesses and thereby contributing to the creation of jobs and growth of the local community ( Buddle, 2010).
Possible analytical strategies
The main purpose behind this study was to explore the manner in which women in small business ownerships together with their employees can explore various financial strategies for purposes of increasing their business’ profitability. As a matter of fact, the guiding research question was as follows: what ways do women small business owners and their employees apply financial strategies in increasing their businesses’ profitability? This is an appropriate question for it directly impacts on the financial strategies of the business. Over the past few decades, many women have entered and owned small businesses across the globe. The continued increased of women in the management and ownership of small businesses around the world especially during the 2000s has in turn attracted more studies from various scholars. Many of these studies emphasized on the likely obstacles that small women business encounter and their psychological characteristics that prepare them for these. Many researchers concurred that women in small business ownership are individuals with unique characteristics and circumstances and therefore require motivations that is solely emphasized on profit generation ( Welter, Smallbone, & Isakova, 2006).
Women in small business ownerships and management are perceived in certain ways by the society and many other studies. This can help in the development of the economy. They need a unique set of resources to run and manage their businesses. These include communication styles, goals and motivations. In this regard therefore, women in small businesses require more research about their intentions and their effects on the outcomes of their businesses. The ability of women to be able to determine their small business’ intentions could go a long way in improving their financial strategies. These financial strategies might not all be the same across the board. In some business environments, obtaining financial assistance for a business is not as easy as it is in others. This implies that women business owners in these regions need to work extra harder to fit in their business environment ( Welter, Smallbone, & Isakova, 2006).
Conclusion
Small business startups are the most rapidly growing business developments in the United States. Apparently, 42 percent of these kinds of businesses are owned and run by women. Businesses that are owned by women are less profitable as compared to those owned by men by an average of 25 percent annually. However, this is not true of all businesses. There are some women who have made a niche for themselves for running successful and profitable businesses enterprises. Companies that have women in the highest echelons of decision making have shown to do better financial performances. The Chief of International Monetary Fund, Christine Lagarde, argues that women occupy critical positions in the society since they have different ways of taking risks as they ruminate a little bit before making any conclusions.
Companies with many women on their boards record high financial performances in terms of sales returns, capital investments and equity returns. There is evidence that the presence of women in businesses in ownership and management is a plus for those businesses. Several studies have been done to prove this statement. A study done by two male business school professors in 2008 found out that companies that focus on the strategy of innovation need women representation in top management to help improve the performance of firms. Another 2008 McKinsey study also discovered that companies that have more than three women in senior positions of management recorded highest scores on nine dimensions of organizations. These include control, leadership, values, coordination and work environment. These are positively related with higher margin operations. In the same year, a study by two researchers from the University of Cambridge related high levels of testosterone with taking risks. This in turn leads to increased profits. On the other hand, increased levels of the hormone may also impede the chances of making rational decisions.
References
Buddle, . (2010). The business of women : marriage, family, and entrepreneurship in British Columbia 1901-51. Vancouver: UBC Press.
Chiste, K. B. (1996). Aboriginal small business and entrepreneurship in Canada. North York, ON : Captus Press.
Jones, K. (2000). 150 most profitable home businesses for women. Holbrook MA : Adams Media.
Keveles, M. R. (2010). Scrappy startups : how 15 ordinary women turned their unique ideas into profitable businesses. Santa Barbara, Calif.: Praeger.
Pakroo, . (2014). The women's small business start-up kit : a step-by-step legal guide. Berkeley, CA: Nolo.
Stanley, T. J. (2004). Millionaire women next door : the many journeys of successful American businesswomen. Kansas City, Mo.: Andrews McMeel Pub.
Welter, F., Smallbone, D., & Isakova, N. B. (2006). Enterprising women in transition economies. Aldershot ; Burlington : Ashgate.
Wilmerding, G. (2006). Smart women and small business : how to make the leap from corporate careers to the right small enterprise. Hoboken, N.J. : John Wiley & Sons.
