Understanding the Common Causes of Small Business Failures: A Qualitative Study

IntroductionThe small sector represents an important segment of most economies. In Canada, for instance, approximately 30% of the Gross Domestic Product is generated by about 1.0 million businesses with fewer than 100 employees (Industry Canada, 2008). These small businesses employ 5.0 million individuals representing 48% of the private sector labour force. Further, Industry Canada (2008) has determined that about 25% of small businesses (those employing fewer than 100) remain in operation after 9 years. Zontanos and Anderson (2004) note, in general that over two thirds of small businesses close within the decade they opened. This project investigated aspects related to why small businesses fail.Small differs from large companies in many ways (Forsman, 2008). There are and knowledge limitations. Thong et al (1994) employ the concept of resource poverty to suggest that managers of small businesses must continually conduct their affairs with limited resources. Further, small businesses tend to rely on a few customers. Again, because of limited size and the consequent lack of market power the small must depend on a small customer base (Zontanos & Anderson, 2004). Also, employees of small businesses must be multi-skilled in order to perform a number of varied tasks.There are many ways of defining a small business. A variety of criteria have been employed such as, total or net worth, annual sales, and value of products. Usually, however, number of employees is used because the previously mentioned data may not be made available from a privately held small business. An interesting definition of a small was developed by the Wiltshire Committee.... a in which one or two persons are required to make all the critical management decisions. (Wiltshire Committee, 1971, p.7).This definition was employed here in general. These businesses are privately held and do not have publically traded stock. The research participants who were interviewed based their comments on experience with the critical decision makers of the at an important juncture in the life of the business.The goal of this project was to document the opinions of bankruptcy professionals and consultants relating to their experience working with small businesses that have failed or were potentially heading towards failure. Confidential one-on-one interviews were conducted to document research participant's interpretations. A qualitative approach was adopted, employing narrative inquiry to document these interpretations. The interview transcripts were analyzed to . identify emerging themes.The main objective of this investigation was to describe those aspects which contribute to the failure of small businesses. After a review of literature on the topic, the method adopted for this investigation is presented. This is followed by a discussion of results by identifying issues categorized by controllable and uncontrollable as they relate to small failure. Finally, conclusions are drawn about the contribution of this investigation.Literature ReviewA review of the available literature about small failures reveals a number of categories, such as basic definitions, liabilities, poor management, and the resource-based view of the firm.A number of articles address the basic definitions surrounding this area of research. Watson (2003) discusses different definitions of small failure. One is discontinuance of ownership (Bruderl et al, 1992; Churchill, 1952; Ganguly, 1985; Hutchinson et al, 1938; Phillips & Kirchoff, 1989; Stewart & Gallagher, 1986; and Watson & Everett, 1999) where the is sold to someone else. Another definition is discontinuance of business (Bates, 1995; Bates & Nucci, 1989; Birley, 1986; Cooper et al, 1988; Dekimpe & Morrison, 1991; Dunne et al, 1989; Hamilton, 1984; Price, 1984; Reynolds, 1987; Stanworth, 1995; and Tauzell, 1982). …

Récupéré en direct depuis OpenAlex et désinversé. Les résumés ne sont pas conservés dans cette base de données : les index inversés représentent 8,6 Go des 9,3 Go de texte de la base, et le serveur dispose de 13 Go libres.