Sustainability Strategies of Small Business Owners
of
Prospectus: Entrepreneurial Attributes and Competencies of Small Business Owners
Foundation of the Study
There are 28 million small businesses owners are the engine of America’s economy (Business & Industry, 2015). Small businesses are responsible for creating enough jobs for over one-half of the employees in the USA (SBA, 2015). Healthy and thriving small businesses across the country are necessary to stabilize the economy and the mission of the SBA is to support those business owners with loans, practical knowledge, and improving the circumstances for promising small business owners (SBA, 2015).
The purpose of this study is to explore strategies that small business owners use to sustain the business.
Background of the Problem
The amount of new small business startups is approximately 10 to 12% each year, however about 10 to 12 % close each year, producing a net sum of 0 to 2% of small businesses that survive from year to year (SBA, 2014). The survival rates were similar in each year from 1995 to 2011 (SBA, 2014). The numbers of small business startups were reported to stay at approximately the same number year after year; in other words annual closing rates match small business startups (SBA, 2014). Rotem (2013) suggested that many successful small business owners started their new business by starting with a previously failed business, which adds special challenges to creating a successful business.
Small business owners might benefit; from this research to understand the sustainability phenomena.
Problem Statement
Eighty percent of all businesses in the United States are small businesses (SBA, 2014). However, 50% of all small businesses failed within the first five years (Bureau of Labor Statistics, 2016). The general business problem is that business leaders often start a new business without fully understanding how to run a business. The specific business problem is that some small business owners lack strategies to sustain and operate their business longer than 5 years.
Purpose Statement
The purpose of this proposed qualitative exploratory multiple case study is to explore strategies that some small Jamaican restaurant owner use to sustain and operate their business longer than 5 years. The target population for this study will consist of two small business owners from Caribbean Jamaican restaurants located in New Jersey. The data from this study may contribute to social change by reducing the number of small business failures and in that way reduce the unemployment rate.
Nature of the Study
Qualitative methods allow researchers to gather in depth data, discover meaning of the unknown and reconstruct the stories of participants on a conceptual level (Yin, 2014). Quantitative research a represents a rigorous approach to determining relationships between multiple variables (Yin, 2014). I will be exploring meaning of the insights of participants; therefore, a quantitative approach is not appropriate. The mixed methods approach is not appropriate as it incorporates features of both qualitative and quantitative methods. I will use a qualitative method to explore the sustainability phenomena.
I considered several designs for this study. They included phenomenology, case study, narrative, and ethnographic research methods. Phenomenology requires the observation or exploration of a phenomenon by researching text and image data as well as by asking open-ended questions. The capability of careful listening is needed to carry out a narrative study, because participants are asked to tell their life story or talk about particular topics so the researcher can gain knowledge about the participant’s world view and what is considered important to them. Ethnography can be a field study where individuals are studied in an environment where the spend most of their time; the observations are used to make interpretations about human behavior.
I have selected to do a descriptive case study. Case studies are challenging, but the knowledge the research seeks to find is based on the complex dynamics of successfully running a small business during the first five years after opening. Therefore the most logical source to learn from are small business owners to learn their attitudes and strategies that lead to making good business decisions.
Research Question
The central research question is: What strategies do small business owners use to sustain their businesses longer than 5 years?
Interview Questions
The following interview questions will be used for the research.
1. What initiative do you implement to ensure the survival of the business?
2. What risk taking skills do you implement to ensure the survival of the business?
3. What components of your education increase your ability to adapt initiative and risk taking skills?
4. How did you overcome barriers when you first attempted to increase the number of new customers? What worked and what did not work?
5. What strategies did you find worked best when you wanted to increase efficiency at your business to save time or money?
6. What are the three most important characteristics you look for when you hire employees?
7. What management skills have you used to attain positive outcomes in your business?
8. What business strategies relating to taking initiative have you applied with your supply chain vendors?
9. What innovative or creative ideas do you do to maintain a competitive advantage?
Questions to learn information about how these small business owners succeed.
10. Describe the barriers you encountered when you first attempted to gain a bank loan.
11. What strategies work best when you want to attract more customers?
12. What strategies to you recommend to individuals attempting to distribute responsibility to others instead of doing everything yourself?
13. What am I forgetting to ask that you found to be helpful in dealing with vendors?
Questions related to the conceptual framework.
14. What kind of a decisions maker are you; how do you make organization decisions?
15. What do you feel are your personal characteristics that make you a successful business owner?
16. Please describe your business philosophy; would you say your business orientation is more focused on the product or service, the market, or sales?
Conceptual Framework
The entrepreneurship theory, in the context of small business, is an area that is only now is being researched and few published studies address competitive approaches practiced for success (Rothbard, 2010). Cantillon is the “founding father of modern economics” and the originator of the entrepreneurship theory in the early 18th century (Rothbard, 2010). Cantillon described the entrepreneur as someone exercising good judgment and innovation despite uncertainty in order to achieve profitability and sustainability (Rothbard, 2010).
Operational Definitions
Attributes: Attributes are qualities or feature, characteristics or inherent components of someone or something. In the context of human capital, attributes include “education, experience, motivation, talent and skills to attain superior performance” (Muda, 2016).
Competencies: A group of behaviors which provide structure allowing for the identification, evaluation and development of the behaviors in individual employees. Baptista et al. (2013) explained that the competencies will survive the critical early years after startup.”
SBA: The Small Business Administration is a US Government entity which provides assistance and support for small business owners (SBA, 2014).
Small business: Small businesses are generally classified as privately-owned entities, partnerships and also non-employer organizations with less than 500 employees (SBA, 2014).
Small business owners: A person who takes risks and provides jobs by hiring (less than) 500 employees (SBA, 2014).
Assumptions, Limitations, and Delimitations
Assumptions
Assumptions are facts that cannot be tested, but assumed to be true. To avoid misguided information in this study, researchers are required to acknowledge such assumptions. I assumed any potential entrepreneurial candidates of the study will want to participate if they had success for five years or more. I also assume the participants will offer unbiased responses during the interviews. I assume this research and the results of the study may effect change on the small business owner and their loved ones. Another assumption is that the research questions provided to participants can generate useful data. This researcher assumes that the participants will be honest when they describe their thoughts and experiences during the interview.
Limitations
Transparency is valuable but can be costly, for example in terms of using software analysis (Büthe & Jacobs, 2015).) Therefore the research will attempt to overcome concerns about transparency by making the interview transcriptions available for interested parties after the identifying information about the interviewees have been removed (Büthe & Jacobs, 2015). Another general limitation is the availability of sampling options for finding individuals that fit the study’s criteria, who are willing to be interviewed, and to take the time needed to participate. The study was also limited because of deadlines, in other words the time factor. A further limitation is the fact that the study only uses small restaurants that were successful for five years or more with a small geographical area.
Delimitations
Delimitations are the parameters that describe the restrictions of the propose research, briefly describes the case and shares some pertinent information (Yin, 2014). The choice for only choosing small businesses as defined by the SBA is delimitation. Only the business owners of small restaurants that have been successful for five years or more will be interviewed. The restaurants are all located in Essex, New Jersey where the interviews will be carried out.
Significance of the Study
The findings of this research may be significant because the intent is to learn what small businesses do to sustain longer than 5 years. This study may be used as additional insights for small business owners in order to gain confidence in bringing their business to profitable avenues. Small business owners often put all their resources into the business with the intention of ensuring the survival of the business within the first 5years.
The significance of this study focuses on improving knowledge about the sustainability of small business ownership.
The research findings may be significant to the larger society because small businesses are the backbone of the US economy. The significance may add to the knowledge for small businesses startups and for SBA and other organizations that support small businesses. This study could have positive benefits and effects by enabling small business owners to shift their focus to entrepreneurial attributes and competencies (Sawoko et al., 2013). Knowledge may be found that will increase the effectiveness of small business owners, while at the same time providing employment security to millions of people (Sarwoko et al, 2013).
Literature Review
The high rate of business failure means lost jobs and limited career continuity (SBA, 2015). The purpose for this academic literature review is to compare, contrast and summarize published research related to this research.
Sarwoko, Surachman, Aramanu and Hadiwidjojo (2013) surveyed 147 SMEs in East Java Indonesia and found that the entrepreneurial characteristics highly influence business competencies, which will eventual impact the business’ performance. Baptista, Karauz and Mandonca (2014) determined that human capital had a high influence on increasing the small business’ “early survival” if the founder had moved from employment to founding the startup (p. 1). On the other hand, the same study showed that human capital influenced the early survival of the startup SME when compared to the reliance of former entrepreneurial experience (Baptista et al. 2014). Muda, Ridhuan and Rahman (2015) noted that the phase of the business’ life cycle influenced the characteristics of human capital at any given time. Human capital was perceived as intellectual capital because of the appearance of the global knowledge economy (Muda et al., 2015). In general, during the early stages of starting up a small business the “contributions of human capital” were found to be more influential than at later stages (Muda et al., 2015).
Key search words used to collect information included combinations of small businesses, entrepreneurial attributes, competencies in small business, small communities, small communities and importance of small business, small business economics, and mall business success in the United States.
The review and analysis of academic literature area of this case study consists of various categories which include: small business, small business success, small business in small communities, and entrepreneurial attributes and competencies.
The purpose of the proposed qualitative multiple case-study research is to explore the entrepreneurial attributes and competencies used by small restaurant businesses owners to ensure the survival of their business. The targeted sample population consists of entrepreneurial owners small restaurant owners, located in the Southeast United States, who were successful for more than five years. Furthermore, Rotem (2013) suggested successful small business small business owners likely started with failed businesses. However, owners continued to contribute and also invest money and sweat equity in small enterprises until they succeeded.
Small Jamaican restaurants in Essex, New Jersey because they are only a short distance away (Baptista et al., 2014). A case study approach is commonly used when the research is looking for an explanation of why and how a particular event takes place like the survival of a small business; therefore it was chosen for a research method (Yin, 2014).
Summary
For this case study, references and sources were mainly obtained online by studying academic peer reviewed journal articles. Another source used was the Small Business Administration, which supports small businesses and maintains a FAQ sheet and other resources. Some of data was from the Business & Industry section of the US Census Bureau.
Six of the total references are from research studies in peer reviewed journals published from 2013 to 2016. Two of the references are from the SBA and one is from Business & Industry. Two references are from books. One of the references is from a book on APA style and formatting.
References
Baptista, R., Karauz, M., & Mendonca, J. (2014). The impact of human capital on the early success of necessity versus opportunity-based entrepreneurs. Small Business Economics, 42, 831-847. doi: 10.1007/s11187-013-9502-z.
Business & Industry. (2015). “Statistics of US Businesses.” U.S. Census Bureau. www.census.gov/econ/smallbus.com
Büthe, T., & Jacobs, A.M. (2015). “Conclusion: Research Transparency for a Diverse Discipline.” Qualitative & Multi-Method Research, 13(1), 52-64. http://www.maxwell.syr.edu/uploadedFiles/moynihan/cqrm/Newsletter%2013_1.pdf
Muda, S., Ridhuan, M. & Rahman, C.A. (2016). Human Capital in SMEs Life Cycle Perspective. Procedia Economics and Finance, 35, 683-689.
http://dx.doi.org/10.1016/S2212-5671(16)00084-8.
Perrin, R. (2015). Pocket Guide to APA Style.5th ed. Stamford, CT: Cengage Learning.
Rotem, Y. (2013). Small business financial distress and the “phoenix syndrome”: A re-Evaluation. International Insolvency Review, 22, 1-28. doi: 10.1002/iir/1202
Rothabard, M.N. (2010). “Richard Cantillon: The Founding Father of Modern Economics.” In An Austrian Perspective on the History of Economic Thought: Economic Thought Before Adam Smith. https://mises.org/library/richard-cantillon-founding-father-modern-economics
SBA (Small Business Association). (2015). U.S. Small Business Administration, FY 2015 Congressional Budget Justification, Budge Request in Brief. Office of Advocacy, SBA. 1-3. Retrieved March 2, 2016 from https://www.sba.gov/sites/default/files/files/SBA_FY15_Budget%20Highlights.pdf
SBA (Small Business Association). (2014). Frequently Asked Questions: Advocacy: The voice of small business in government. Office of Advocacy, 1-4. https://www.sba.gov/sites/default/files/FAQ_March_2014_0.pdf
Sarwoko, E., Surachman, A., & Hadiwidjoj Z.D. (2013). Entrepreneurial Characteristics and Competency as Determinants of Business Performance. Journal of Business and Management, 7(3), 31-38. www.iosrjournals.org
Yin, R. K. (2014). Case study research design and methods (5th Ed.). Thousand Oaks, CA:
