Small Business Strategies for Company Profitability and Sustainability part 2

17 98% are microbusinesses (Samujh, 2011). Microbusinesses comprise more than one-half of all small businesses in the United States (Monahan, Shah, & Mattare, 2011). Samujh posited microbusinesses aid in a more stable and sustainable economic and social community environment. Technology and telecommunication advances have led to more opportunities for self-employment and microbusinesses (Monahan et al., 2011). Parilla (2013) conducted a study to compare small businesses and microbusinesses. Parilla revealed that microbusiness owners rarely promote their products and services, whereas small business owners and entrepreneurs intensively promote their products and services. The main reason for this is that microbusinesses have minimal capitalization and budget to spend on promotions; rather, they spend their funds on buying of goods to sell (Parilla, 2013). Samujh (2011) conducted a qualitative study to explore perceptions of microbusiness owners and entrepreneurs about the support they must have to be successful and to survive. Samujh revealed that the interviewees expressed lack of time and lack of psychological support as the most important issues in being self-employed. The leading cause for not being able to take control of their time was the unpredictability and uncertainty of their daily work, such as customer keeping them on the phone for longer periods of time they expected (Samujh, 2011). Their main sources of support can from bankers, family, friends, and accountants; they lacked community support and at times felt isolated (Samujh, 2011). Samujh (2011) stated that small businesses, particularly microbusinesses are needed to build and maintain the sustainability of the social, environmental, cultural, and.

18 economic development of communities. Microenterprises may hold the key to economic revitalization (Monahan, Shah, & Mattare, 2011). Neumark, Wall, and Junfu (2011) conducted research on varies small business sizes and United States job growth. More jobs were created by small businesses with less than 20 employees, than larger manufacturing jobs, despite their job creation and business performance (Neumark et al., 2011). Another classification of business size is SME (small to medium size enterprises); SMEs are defined as firms consisting of between six and 500 employees, according to United States and European classification standards (Kreiser, Marino, Kuratko, & Weaver, 2013). Barth, Lin, and Yost (2011) confirmed SMEs are businesses with 500 or fewer employees, depending upon the industry. Small Businesses Effect on the Economy Small businesses can be considered the engine of economic growth (Valadez, 2011). Small business owners enhance economic growth by creating between 60% and 80% of new jobs in the U.S. (Lahm, Stowe, Carton, & Buck, 2011). Small and medium- size enterprises are the backbone of industrial development and important source of economic growth (Tan, 2011). One-third of all new patents issued came from small business technologies (Cronin-Gilmore, 2012). Cronin-Gilmore acknowledged small businesses sustain the technological lead and drive the economy. Chow and Dunkelberg (2011) studied the reasons for small businesses poor performance during recent recoveries. Chow and Dunkelberg explained small firms are important for job creation; therefore, their health essential to economic growth. Rubens, Jackson, and Andrews (2011) stated that more and more states, counties, and cities are seeking ways to increase.

19 job creation, entrepreneurship, and economic development objectives by starting or supporting businesses. With their innovation and creativity, small businesses have the potential to reverse the course for any economy (Monahan, Shah, & Mattare, 2011). Through their closeness to customers and flexibility advantages, small business owners can potentially increase their sales volume in economic downturns (Bumgardner, Buehlmann, Schuler, & Crissey, 2011). Small businesses competitiveness is based more on working close with customers to produce customized products for them (Bumgardner et al., 2011). Geho and Frakes (2013) explained that in order to have a sustainable positive economic impact on small business growth, stimulus programs must be available. Through various public policies and programs, the federal government supports small businesses, the most notable being the SBA, which acts as a gap lender for small businesses (Gale & Brown, 2013). Gale and Brown stated that there are numerous programs that (a) subsidize and facilitate credit for small businesses that would otherwise be incapable of obtaining credit, (b) short-term loans, (c) financing to purchase fixed assets, and (d) private equity financing of small business. During economic hard times, small firm leaders’ ability to partner with other firms and enterprises is an apparent success factor (Eggers & Kraus, 2011). Small businesses are expected to continue to be the primary future business size and to be part of the answer to global sustainability (Samujh, 2011). In terms of entrepreneurship, Parilla (2013) stated that entrepreneurship has become essential to economic growth due to the rapid progression of information technology and increasing importance of.

20 knowledge. As Fornoni, Arribas, and Villa (2012) pointed out, entrepreneurship is a key driver of wealth creation and social and economic development. However, entrepreneurship is a challenging and difficult task, and a majority of new businesses fail (Mushtaq et al., 2011). Perceived Small Business Failure Factors Business failure definitions range from narrow, including (a) bankruptcy, to less permissive, including (b) discontinuity of the business, and broad, including (c) discontinuity of ownership definitions (Ucbasaran, Shepherd, Lockett, & Lyon, 2013). Cope (2011) agreed that narrow conceptions of failure include bankruptcy or liquidation. Business closure may not necessary mean business failure (Cope, 2011). The closure of a business may involve the voluntary termination of a firm with explanations such as the pursuit of other entrepreneurial ventures or activities, or retirement (Cope, 2011). Lagging behind on a projected schedule, failure to match expectations, and surpassing the budget, are some other forms in which business failure is defined (Garg & Garg, 2013). Small business failure is common and happens at various ages (Amel & Akkari, 2012). In general, the longer a business has been open, the better the survival rate (Amel & Akkari, 2012). The SBA confirmed that the probability of survival increases with the firms’ age (2014) and a firm can obviate or reduce failure by recognizing their strengths and weaknesses (Shirouyehzad, Dabestani, & Badakhshian, 2011). Yallapragada and Bhuiyan (2011) identified the following as the most frequent causes of failure of small business entrepreneurship: (a) poor work relationships and interpersonal skills, (b) inability to develop teamwork and cooperation, (c) person-job.

21 mismatch, (d) inability to lead and motivate personnel, (e) failure to provide direction and performance expectations, (f) ineffective communication skills and practices, (g) breakdown in delegation and empowerment, (h) lack of personal integrity and trust, (i) failure to break old habits, and (j) poor planning and operational practices. According to Byrd, Ross, and Glackin (2013), access to credit is vital for the survival of small businesses. In the United States, many small business owners indicate that the main obstacle to entry or expansion is the accessibility of sufficient intermediate and long-term capital to support their working capital and fixed-assets requirements (Byrd et al., 2013). One of the most substantial contributors to failure of a small business relates to the acquisition of adequate capital (Yallapragada & Bhuiyan, 2011). One key challenge in maintaining profitability is health insurance costs according to 65% of small business entrepreneurs, as stated by Blavin, Blumberg, Buettgens, Holahan, and McMorrow (2012). Furthermore, Kovacevich (2014) indicated small business failure is due to increased health care and other cost, excessive regulation, and higher taxes. Wilson (2012) studied the difficulties of financing and structuring of start-ups and noticed (a) labor cost management, (b) promotion of an unfamiliar brand name, (c) production management, and (d) destructive partner conflict were the most common reported difficulties of small business start-ups. Conversely, Fadahunsi (2012) found that a major issue for most business owners involves the decision to seek external finance that may open up financial resources, but dilute ownership. Hormiga, Batista-Canino, and Sanchez-Medina (2011) conducted a quantitative study to examine the impact of relational capital on the success of start-ups. The.

22 reputation that a start-up company can create for itself in the first few years of business had a great impact on its short-term success (Hormiga et al., 2011). In addition, customer loyalty, the support an entrepreneur receives, and the location of the new venture had a positive impact on the success of the new organization (Hormiga et al., 2011). Besser and Miller (2013) found that during economic hardships, metropolitan areas experience a higher rate of business start-ups, and rural businesses tend not to thrive as well in comparison to those in more densely populated areas. In a similar study, Siemens (2010) conducted a qualitative study to examine challenges, responses, and available resources for rural small business owners. Rural small business owners face different challenges that they have to navigate to be successful (Siemens, 2010). Siemens found their main challenges included market size, labor availability, access to urban centers, infrastructure gaps, and considerable time demands. These challenges are their key factors that can lead to business failure if not tackled (Siemens, 2010). Miller, Besser, and Weber (2010) also suggested that scarcity of resources often challenge the sustainability of small and medium size businesses. An additional insight from Eggers and Kraus (2011), confirmed young SMEs face a scarcity of resources, which are vital in achieving growth and exploiting opportunities. Rural community well- being is connected to health of locally owned family small businesses because they provide civic leadership, create income for employees, and make financial and human capital contributions to communities, particularly those in more economically vulnerable locations (Stafford et al., 2010). Miller et al. (2010) concluded through examining the practices of numerous small.

23 community small businesses, several critical phases to network development include the creation, retention, extension, and leverage. Participating in business networks improves connectivity and collaboration with the marketplace (Miller et al., 2010). Lewrick et al. (2010) posited it is very important to write a business plan, but more important to teach how to sustain business success, raise companies’ survival rate, and educate entrepreneurs about the challenge of the going from a start-up phase to a mature phase of business. Similarly, Diehl, Toombs, and Maniam (2013) suggested the most common challenges that affect small businesses include (a) lack of finance, (b) managerial capabilities, (c) purchasing and using the right technologies, and (d) low productivity. Strategies are actions that provide guidance for attainment of organizational goals (Gupta & Muita, 2013). A business strategy is a planned approach to secure a favorable position in the marketplace (van Gelderen, Thurik, & Patel, 2011). Frequent changes in business strategy led to small business failure (Rompho, 2011). Van Gelderen et al. posited 95% of small business failure is due to lack of proper business planning. Conversely, Steyn and Niemann (2013) suggested that small business owners need to rethink business strategies to incorporate new ideas and principles to adapt to societal and stakeholder expectations. Box (2011) conducted a study on small business success and business strategy. Box focused on the correlation between the two and indicated that sound strategies and tactics must be in place for success. Box posited that having a competitive advantage over competitors hinged on having a strong strategy. Cordeiro (2013) studied strategic planning of small businesses that succeeded and others that failed. Cordeiro discovered.

24 that small business owners and managers often plan poorly. Small business owners and managers claim that the daily demands of running their businesses reduces their time available for effective strategic planning (Cordeiro, 2013). Chwolka and Raith (2012) explained business planning starts with the development of a business opportunity, where the goal is to enhance the small business owners’ performance in terms of monetary outcome and the likelihood of survival. Alsaaty (2012) studied the deaths and births of U.S. employer microbusinesses. Microbusinesses are enterprises that employ 20 or fewer individuals (SBA, 2014). Alsaaty emphasized that despite ample chances for success, data shows that the annual rate of small firms' survival is lower than the annual rate of their creation. Alsaaty discovered that most microbusinesses fail due to their owners' misidentification of opportunities, mismanagement, and misallocation of resources. In contrast, Monahan, Shah, and Mattare (2011) studied critical factors of microbusiness success and indicated the biggest challenges for a microbusiness are the economy, finding new customers, tax burdens, and regulation. Economic downturns contributed the most to venture failure (Song, Song, & Parry, 2010). Song et al. studied 539 new ventures utilizing VENSURV (a database that tracks the failure and success of ventures founded since 1998) and shared that less than half the 539 businesses survived two years. In addition, first-product success was highly correlated to new venture success (Song et al., 2010). The most successful first products were created based on ideas that reflect both an analysis of customer needs and technology development (Song et al., 2010). Campbell, Heriot, Jauregui, and Mitchell (2012) explored the relationship.

25 between business closures and public policy in the 50 Unites States. Campbell et al. found that business closure was significantly related to elements of economic freedom and that increases in state policy lead to more closures. Franco and Haase (2010) conducted a study to identify factors of failure faced by eight small and medium-sized enterprises in the country of Portugal. Franco and Haase attributed the key failure factors as (a) poor market conditions, (b) limited access to finance, (c) inadequate staff, (d) poor market conditions, and (e) lack of institutional support, networking, and co-operation. A similar study was conducted by Hussain, Si, Xie, and Wang in 2010 on SMEs in Pakistan to determine their critical failure factors (CFFs). The CFFs were lack of management skill, excessive taxation, and the economic downturns (Hussain et al., 2010). Government policies and political involvement are also identified as critically important to SME failure (Hussain et al., 2010). Perceived Small Business Success Strategies The definition of business success varies (Philip, 2011). Nonfinancial and financial performance measures are used for measuring entrepreneurial success (Gupta & Muita, 2013). Gorgievski, Ascalon, and Stephan (2011) revealed personal satisfaction, profitability, and satisfied stakeholders ranked as the highest criteria to determine success. Geneste and Weber (2011) conducted a quantitative study on small business owner's intention to grow their business and their self-perception of success. Growth of the firm, turnovers, and profits are the most commonly used measures of success by small business researchers (Geneste & Weber, 2011). Others included market share, total assets, profitability, and employee numbers (Geneste & Weber, 2011). Business success.

26 often refers to a firm’s financial performance (Philip, 2011). However, there are other forms, including (a) survival, (b) return on investment, (c) profit, (d) happiness, (e) number of employed, (f) reputation, and (g) sales growth (Philip, 2011). In contrast, Bauer (2011) found that entrepreneurs thought about success in terms of happy clients, enjoying what they do, and good customer service. There are many different ways to interpret business success (Jasra et al., 2011). For this research study, business success refers to a business with profitability and longevity of five or more years in business (SBA, 2014). In the U.S., only about half of all new small businesses survive after four years (Cader & Leatherman, 2011). Abou-Moghli and Al-Kasasbeh (2012) studied the success of small business start-ups and the impact of social network usage. Abou-Moghli and Al- Kasasbeh found building relationships are fundamental factors in determining the success of a business. In addition to entrepreneur network relationships with others, new product offerings, and pro-growth strategies promote success of a business (Abou-Moghli & Al- Kasasbeth, 2012). A small businesses ability to develop business relationships in their market leads to their failure or success (Awuah & Reintert, 2012). Awuah and Reintert suggested being flexible and responding and adapting quickly to customers changing needs is vital with small businesses. Conversely, Box and Miller (2011) claimed the most successful basic strategy for small firms is focused differentiation. Differentiation is demonstrated through the act of offering something other than what can be obtained by the competition (Box & Miller, 2011). Philip (2011) studied success factors of SMEs and shared that the most important.

27 factors are management knowledge, products and services, external environment, and the way of doing business. Another significant factor in the success of an entrepreneurial venture is leadership capability (Philip, 2011). Teng et al. (2011) studied the success versus failure prediction model on small businesses in Singapore. Teng et al. found the most important factors that contribute to success of SMEs include (a) employment, training, and the retention of high-quality staff members; (b) prevalence of good products, services, and optimum timing in introducing these in the marketplace; (c) excellent relationships with customers; and (d) availability of top managers with good leadership qualities. Leadership is critical to the success of a small business (Valdiserri & Wilson, 2010). Phipps (2012) explained one way to reduce small business failure is to assist small business owners through the development of a business model underlining the development of leadership skills. Valdiserri and Wilson (2010) sought to determine how leadership qualities of small business owners affect success and profitability. Lack of leadership and neglect were primary factors in the failure of a small business (Valdiserri & Wilson, 2010). Furthermore, it is the duty of organizational leaders to empower employees and strive to achieve organizational goals (Valdiserri & Wilson, 2010). Abbasi, Siddiqi, and Azim (2011) stated leadership education is a process supported with good communication and used in enhancing the skills of future entrepreneurs. Regardless of the age or size of a business, well-developed and adaptable leadership skills are vital to achieve incremental success and avoid business failure (Buchan, 2011). A factor of the success of projects and businesses is tied to leadership (Nixon, Harrington, & Parker,.

28 2012). Mirocha, Bents, LaBrosse, and Rietow (2013) studied the most successful leadership development strategies that SMEs utilize and found that having a leadership development plan and business strategy are highly relevant. Bring into line leadership development strategies with company values and culture; distinguish the top performing firms from the others (Mirocha et al., 2013). The top performing firms develop an integrated and disciplined approach to developing leaders in their business, long term and short term (Mirocha et al., 2013). In a similar study, Waldman (2011) recommended that measuring or evaluating leadership should include an analysis of mindsets, beliefs, and philosophies, not just the leaders characteristic or traits. Parilla (2013) conducted a study on small businesses and indicated entrepreneurial competencies, personal characteristics of business owners, and management practices were the main contributing success factors. Mitchelmore and Rowley (2013) suggested that the performance, growth, and success of an SME is heavily dependent on the competencies of the owner or entrepreneur. Personal characteristics of an entrepreneur, such as strong internal locus of control and need for achievement contribute to having a successful business (Hansen, Shrader, & Monllor, 2011). Fadahunsi (2012) examined small business growth to discover key factors that influence small business growth. Fadahunsi reported (a) the founder's growth motivation, (b) the entrepreneurs' characteristics, (c) willingness to team up and work with other entrepreneurs, (d) previous experience with management or business ownership, and (e) level of education as the key factors that influence small business growth. Small.

29 businesses can focus their efforts towards a strategic growth strategy to counter their disadvantages (Golovko & Valentini, 2011). Sinfield, Calder, McConnell, and Colson (2012) clarified growth strategies often occur through (a) new and improved product development, (b) acquisition strategies, (c) investments in capital equipment to increase efficiencies, and (d) marketing strategies aimed toward consumer insights that respond to the customers’ needs. Financing is important for any small business, but even more critical for start-ups (SBA, 2014). Financial resources are the most important factor in the success of a business (Jasra, Khan, Hunjra, Rehman, & Azam, 2011). Access to capital, along with effective management, was identified by Arthur and Hisrich (2011) as barriers to success for new ventures. Fadahunsi (2012) also agreed that access to and use of financial resources were critical factors affecting the capability to implement growth opportunities for small businesses in the United States. Yallapragada and Bhuiyan (2011) studied essential prerequisites for operating a small business successfully. They discovered the following: (a) adequate financing, (b) efficient operations and production, (c) customer service, (d) information management and administration, (e) marketing and sales, and (f) qualified personnel. Ling and Jaw (2011) discussed that the success of a small business is contingent on investment in human capital and training for sustainability. Jasra et al. (2011) found other success factors including technological resources, government support, marketing strategies, and entrepreneurial skills have positive and significant impact on business success as well. The federal government supports small businesses through many programs, public policies, and exemptions from numerous.

30 federal laws and regulations (Gale & Brown, 2013). Federal laws and regulations that small businesses are exempt from include: • Small businesses with 15 or fewer employees are exempt from Title I of the Americans with Disabilities Act (prohibiting employment discrimination against individuals with disabilities); • Small businesses with 20 or fewer employees are exempt from the Age Discrimination in Employment Act and Title VII of the Civil Rights Act of 1964 (prohibiting discrimination by sex, race, religion, and color); • Small businesses with 50 or fewer employees are exempt from the Family and Medical Leave Act (regulate unpaid leave) and the Patient Protection and Affordable Care Act of 2010 (Gale & Brown, 2013). Lacho and Mitchell (2010) conducted a study to determine how the Better Business Bureau (BBB) can help accredited small business members. Lacho and Mitchell emphasized the value and importance of being a member of the BBB on success. They found that BBB may aid in the likelihood of small business success because they provide reports on prospective vendors, arbitration with consumers, and help with complaint analysis to improve operations (Lacho & Mitchell, 2010). Furthermore, Lacho and Mitchell claimed the accreditation status provides a greater likelihood that consumers will buy from that business and that businesses should use the BBB Accredited logo to gain more customers. Lacho and Mitchell discovered seven in ten consumers indicated that knowing a firm is a BBB Accredited business makes them more likely to do business with them..

31 Cronin-Gilmore (2012) conducted a qualitative case study to understand the actions and decisions a small business owner takes when creating marketing strategy. Interviews with 20 small business owners discovered five findings: marketing, formulating strategy, strengths, values, and needs (Cronin-Gilmore, 2012). The theme of marketing was the most important and the least important was needs (Cronin-Gilmore, 2012). O’Donnell (2011) conducted a qualitative study on 30 small firms to comprehend how they market their goods and services through their marketing activities. O’Donnell found nine key themes in their marketing activities, including: marketing planning, managing limited resources, keeping existing customers, acquiring new customers, gathering information about customers, gathering information about competitors, managing the product offering, managing pricing, and managing delivery. El-Gohary (2010) stressed that in implementing E-Marketing by small businesses, it changes both the shape and nature of its business all over the world. Even if a business has a great product or service to offer, customers have to be motivated to buy; marketing energies them to make that decision to purchase (El-Gohary, 2010). The increasing use of the Internet and other E-Marketing tools, such as e-mail and mobile phones, in electronic transactions may create many opportunists for small businesses, as well as reduce threats (El-Gohary, 2010). In online marketing, a successful website should also be mobile friendly because many customers use their cell phones to view company websites (Mariotti, 2014). The availability of online shopping allows the consumer to make purchases without the need to go to a store during specific hours; therefore many consumers are purchasing products and services via the web (Alijani, Mancuso, Kwun, &.

32 Topcuoglu, 2014). Even if one does not sell their product or service online, they must be discoverable when their customers try to search for them online (Mariotti, 2014). Entrepreneurship For the purpose for this study, small business owners and entrepreneurs are used synonymously. An entrepreneur is one who organizes and manages a business undertaking, assuming the risk for the sake of profit (SBA, 2014). According to Oncioiu (2012) an entrepreneur is a creative person, with innovative ideas in business, who contributes to a company’s profitability and growth (Oncioiu, 2012). Entrepreneurs are not necessarily innovators or inventors, but people that initiate a business, assume the risks, and have the drive of gaining profit (Oncioiu, 2012). Entrepreneurship is a process of creating value for business and social communities by bringing together resources for economic, social, or cultural opportunities in an environment of change (Filis & Rentschler, 2010). In contrast, Parilla (2013) explained entrepreneurship as the practice of developing new products or services or starting a new business. Zahra and Wright (2011) agreed, entrepreneurship involves seeking opportunities, creating a new business, incorporating the assumption of risk, and developing an idea from inception to reality. In short, entrepreneurs see an opportunity, make a plan, start a business, manage the business, and receive the profits (Arthur & Hisrich, 2011). Entrepreneurship has developed over the last couple of decades as the strongest economic world force that exists (Mushtaq, Niazi, Hunjra, & Ur-Rehman, 2011). Unfortunately, failure rates amongst new ventures and start-ups can amount up to 60% within the first 5 years (Carree & Verheul, 2012). Samujh (2011) stated in the face of an.

33 uncertain and complex global business environment a growing number of people are feeling the need to create their own employment opportunities. Entrepreneurship has changed during the 20th century as one who works for personal gain. Entrepreneurs are recognizing business opportunities and act fast to capitalize on them (Arthur & Hisrich, 2011). Passion resides deeply in the practice of entrepreneurship (Cardon, Stevens, & Potter, 2011). The more passionate an entrepreneur is to their business, the more sentimental they are to their entrepreneurial goals (Tasnim, Yahya, & Zainuddin, 2014). Relatedly, Binder and Coad (2013) conducted a study on the relationship between self- employment and life satisfaction; they found that the self-employed achieved satisfaction from being their own boss and leading an independent lifestyle. Self-employed individuals are more satisfied with their jobs largely because of (a) greater autonomy, (b) skill utilization, (c) greater flexibility, (d) and to some degree, perceived higher job security (Binder & Coad, 2013; Hundley, 2011). Carree and Verheul (2012) agreed, discovering that job performance and flexibility are the main factors that influenced satisfaction levels of newly established entrepreneurs. Millán, Hessels, Thurik, and Aguado (2013) posited there is a direct and an indirect link between organizational performance and job satisfaction. Job satisfaction is linked to organizational effectiveness; therefore, it can be considered an important part in improving and maintaining a firm (Millán et al., 2013). There is a positive connection between organizational commitment with overall employee performance and job satisfaction (Gupta & Muita, 2013; Qureshi, Hayat, Mehwish, & Sarway, 2011). Small business.

34 entrepreneurs are courageous, tenacious, risk-taking people, and independent; contributing significantly to the total United States economy (Yallapragada & Bhuiyan, 2011). Entrepreneurial characteristics historically have included heroism and individual uniqueness (Larty & Hamilton, 2012). A study by Cardon, Stevens, and Potter (2011) aimed to discover the cause of entrepreneurial failure. Entrepreneurial failure occurs when the business venture is no longer in operation (Cardon et al., 2011). Cardon et al. determined failure occurred because of mistakes made by the entrepreneur and misfortunes that were out of the control of the entrepreneur. The geographical area chosen was another cause of failure (Cardon et al., 2011). However, Askim-Lovseth and Feinberg (2012) noted that a failure can be a crossroads that can lead to future success of their next venture. Entrepreneurs can learn from their previous losses as well as from other’s business misfortunes (Askim- Lovseth & Feinberg, 2012). Cope (2011) agreed that failure for an entrepreneur is one of the most difficult, but valuable learning experience for them. Cope conducted a qualitative phenomenological study to explore eight entrepreneurs that had failed to discover what they had learned from their entrepreneurial failure. Cope suggested that the lessons of failure are beneficial for the entrepreneur and can give them a broader more refined knowledge base. Cope concluded entrepreneurs that have experienced failure are better prepared for the trials and tribulations of entrepreneurship than those that have only experienced success or potential entrepreneurs with no experience. Venture failure is a way for entrepreneurs to learn what works and does not work (Sarasvathy, Menon, & Kuechle, 2013)..

35 Fillis and Rentschler (2010) aimed to discover the role of creativity in entrepreneurship. Fillis and Rentschler described creativity influences motivation and identified three main dimensions of entrepreneurship (a) risk-taking, (b) pro-activeness, and (c) innovation. Furthermore, due to advances in technology and globalization, more opportunities exist for entrepreneurs (Fillis & Rentschler, 2010). However, as opportunities increase, so does competition, resulting in the need for creative solutions to improve sustainability and profitability (Fillis & Rentschler, 2010). Audet and Couteret (2012) conducted a case study to explore the effectiveness of coaching as a support measure for entrepreneurs. Coaching an entrepreneur, rather than consulting, encourage entrepreneurs to put their own strategic vision into action (Audet & Couteret, 2012). Furthermore, Zhang (2011) suggested previous founding experience is very valuable for an entrepreneur in later ventures. Prior firm-founding experience helps an entrepreneur obtain and improve needed skills to be successful (Zhang, 2011). Makhbul and Hasun (2011) conducted a study to explore the relationship between entrepreneurial factors and entrepreneurial success. The study included random sampling questionnaire surveys of 163 entrepreneurs that had been in business for three or more years (Makhbul & Hasun, 2011). Communication skills and strong will of the entrepreneurs are key factors in the success as well as the ability of entrepreneurs to access information, their leadership styles, and their support from others (Makhbul & Hasun, 2011). Makhbul and Hasun concluded that the religious duty and honesty factor was perceived as the most significant factor affecting entrepreneurial success and that it suggests that entrepreneurs believe that they can succeed if they run their businesses.

36 ethically. It is important to write a business plan, but more important to teach how to sustain business success, raise companies’ survival rate, and educate entrepreneurs about the challenge of the going from a start-up phase to a mature stage of business (Lewrick, Omar, Raeside, & Sailer, 2010). Shukla and Shukla (2014) advise taking advantage of resources available, such as the Small Business and Entrepreneurship Council (SBE Council). The SBE Council as one of the most active and powerful organizations devoted to promoting entrepreneurship and protecting small businesses (Shukla & Shukla, 2014). The SBE Council is an advocacy, research, training, and networking organization (Shukla & Shukla, 2014). The number of young firms in the U.S. has declined by almost 30% over the last 30 years; the trend suggests that incentives for entrepreneurs to start new firms have diminished over time (Decker, Haltiwanger, Jarmin, & Miranda, 2014). Elmuti, Khoury, and Omran (2012) described entrepreneurial education and training as being outstanding factors for success and have significant essential value to any entrepreneurship venture. Wen-Long, Wen Guu, and Chiang (2014) conducted a study on the relationship between entrepreneurship courses and identifying opportunities. Wen-Long et al. showed that entrepreneurs that participated in entrepreneurship courses were better able to identify opportunities. The courses aided in developing their business related problem-solving skills and enhanced their ability to recognize opportunity (Wen- Long et al., 2014). Education helps entrepreneurs understand and exploit information technology towards success (Monahan, Shah, & Mattare, 2011). Entrepreneurs must have team building skills, according to Makhlouf (2011)..

37 Makhlouf explained entrepreneurs may start their ventures based on a discovered opportunity or idea, but acting alone in the beginning will have to give way to gaining and working with a team to be successful. Entrepreneurs will need to build relationships with not only hired employees, but other firms as well (Makhlouf, 2011). Similarly, Wen- Long et al. (2014) suggested that starting new ventures, developing new products, and discovering new opportunities involve more than one person’s knowledge and effort. Entrepreneurs are knowledgeable about the business, but not so knowledgeable about potential investors; identifying investors who can provide long-term funds is crucial for success (Gartner, Frid, & Alexander, 2012). Gartner et al. found that the primary source of funding for venture development comes from the personal contributions of the entrepreneurs themselves and that family and friends, as a source of capital, play a minor role in funding new ventures. The purpose for this qualitative descriptive multiunit case study was to explore what strategies small business owners used to achieve profitability by the end of the first 5 years of opening their business. The review of professional and academic literature contains scholarly articles and government documents. The literature review summarizes, compares, and contrasts all of the sources that relate to my research topic. Based on the research and review of literature, the profitability and sustainability of small business owners may be crucial in contributing to the prosperity of their employees, their families, communities, and the local economy. Transition Section 1 contained the problem statement and purpose statement, as well as the.

38 nature of the study that justified my using a qualitative method and descriptive multiunit case study design. Section 1 also included the (a) interview questions (Appendix C), in addition to the (b) conceptual framework, (c) assumptions, (d) limitations, and (e) delimitations of the study. Section 1 concluded with the significance of the study and a review of professional and academic literature. The literature review included a focus on previous literature relating to the following sections and subsections (a) systems theory, (b) small business, including subsections small business owner and small businesses in Colorado, (c) types and sizes of small businesses, (d) small businesses effect on the economy, (e) perceived small business failure factors and success strategies, and (f) entrepreneurship. Section 2 contains (a) the business project purpose, (b) the role of the researcher, (c) the selected participants, (d) a detailed description of the research methodology and design, (e) the population and sampling, (f) ethical research, (g) data collection instruments and technique, (h) data organization technique, (i) data analysis, and (j) reliability and validity. Section 3 begins with an introduction including the purpose statement, research question, and findings. Section 3 includes application to professional practice, implications for social change/behaviors, recommendations for action and further study, and concludes with researcher reflections..

39 Section 2: The Project In the Unites States, small businesses sustain the technological lead in the global marketplace and drive the economy (Cronin-Gilmore, 2012). It is paramount for small business owners to be made aware of the success strategies for small businesses that have survived 5 years and longer, so they can better prepare and become more likely to sustain their businesses with this knowledge. Section 2 includes the purpose statement, the role of the researcher, participants, and the selected research method and design. Purpose Statement The purpose for this qualitative descriptive multiunit case study was to explore what strategies small business owners used to achieve profitability by the end of the first 5 years of opening their business. The population comprised small business owners located in Denver, Colorado who have been profitable by year 5 of being in business. Four small business owners participated in semistructured interviews to explore strategies in becoming profitable by the end of the first 5 years of being in business. The data from this study might affect social change by contributing to small business owners preparing and sustaining profitability and contributing to the prosperity of their employees, their families, communities, and the local economy. Role of the Researcher In a qualitative study design, I was the data collection instrument (Suri, 2011). My role as the researcher of the study was to select the appropriate research methodology and design, recruit potential participants, and collect and analyze the data. The data collection process involved conducting semistructured interviews and collecting company.

40 documents from profitable small businesses owners. I utilized Schorr’s (2008) semistructured interview questions for one-on-one, face-to-face interviews. Reliability refers to the stability that the results of qualitative research are comparable over time (Barusch, Gringeri, & George, 2011). One-on-one interviews can allow deeper exploration of subjective or sensitive topics (Kisely, & Kendall, 2011). The interview questions are in Appendix C. Turner (2010) stated interviews provide in-depth information pertaining to participants’ experiences and viewpoints of a particular topic. Semistructured interviews involve preparing questions in advance that lead the conversations direction, but allow the participants to answer openly (Turner, 2010). Semistructured interviews can have a variety of different forms to accommodate the interviewee; including varying numbers of questions and varying degrees of adaptation of questions (Rowley, 2012). I was able to further investigate based on the participants’ particular response. I ended each of the interviews with a follow-up question. The interviews were face-to-face, one-on-one interviews. To ensure accuracy, interviews should be audio taped and fully transcribed for analysis (Kisely & Kendall, 2011). The interviews with the participants were audio recorded and transcribed. One central question with several semistructured, open-ended, interview questions (Erlingsson & Brysiewicz, 2013) guided this research. Rowley (2012) described interviews as face- to-face verbal exchanges in which the interviewer, the researcher, attempts to obtain information from and gain an understanding of the interviewee, the participant. Interviews provide a useful way for researchers to learn about the world of others (Qu &.

41 Dumay, 2011). Document review included yearly profit and loss and monthly cash flow statements for my company document analysis. I noted information such as the date, time, and demographics. Qualitative researchers have great freedom in their methods, the way they conduct interviews, and the techniques they use to analyze data (Bansal & Corley, 2012). I am not a small business owner and I have not worked for a small business in Colorado. I do know small business owners and entrepreneurs in the area, because I live in Denver, Colorado, so this topic was of particular interest to me. I plan to open a small business in the future. I shop at small businesses in Denver, Colorado often. I have always had a passion for, and interest in small businesses in the community and entrepreneurship. The Belmont Report (1979) summarized the ethical principles and guidelines for the protection of humans, which was originally written by The National Commission for the Protection of Human Subjects of Biomedical and Behavioral Research Subjects of Research. The Belmont Report includes a distinction between research and practice, the three basic ethical principles, and the application of these principles. I followed the three basic ethics of research involving human subjects in my study. These included (a) the principles of respect of persons, (b) beneficence, and (c) justice. Qualitative researchers attempt to minimize error and researcher bias (Leedy & Ormrod, 2013). To mitigate potential bias the researcher should engage in epoche to bracket judgments about the study phenomena (Moustakas, 1994). I mitigated bias and.

42 preconceived notions I may have had. I was in a state of epoche during the interviews. I controlled reactions to the interview responses to mitigate bias. I also did not personally know the small business owners to mitigate personal bias during the interviews. An interview protocol (see Appendix C) was essential in ensuring that I, in my role as the researcher, followed the same protocol with each participant. Following the interview protocol better ensured that I did not miss or skip any important steps. Foley and O’Conner (2013) posited qualitative researchers rely on interview protocols as a tool to achieve commonality and add to the consistency and reliability. Participants I used a purposive sample of participants until saturation was achieved as discussed by Kisely and Kendall (2011). Saturation was attained when the interviews did not add any additional information (Walker, 2012). The criteria for selecting participants included (a) the participant was the owner of the small business; (b) the small business was profitable by the end of the first for 5 years of being in business; (c) the small business was located in Denver, Colorado; and (d) the participant was at least 18 years of age. To ensure I followed proper ethical procedures and avoided human rights violations, I gained approval from the Walden Institutional Review Board (IRB). The approval number for this study is 01-28-15-0246512. I selected nine participants from a public list provided by the SBA Colorado district and the Colorado Small Business Development Center Network (SBDC). Next, I sent a letter of invitation to the prospective participants selected through e-mail. The letter of invitation explained the intent for the study and included the participant consent.

43 form (see Appendix A) for the participant to review and sign electronically by replying I Consent to the e-mail. I selected the first four participants who responded and signed consent by replying to my e-mail. I had to acquire participants who were willing to honestly and openly share information and tell their story (Turner, 2010). I then contacted the four participants via telephone call to schedule interview times and dates that worked best for them and to advise participants that their participation in the study was voluntary, and they could withdraw from the study at any time. One strategy for establishing a working relationship with my participants was through trust. Researchers should establish trust and be honest with the participants on the intended purpose and outcome of the study (Rubin & Rubin, 2012). The use of the participant consent form and reassuring their confidentiality and anonymity strengthened our working relationship. Research Method I selected a qualitative research method for this study. Qualitative, quantitative, and mixed-method or hybrids makeup the three types of research methods (Clark, 2010). Qualitative research requires subjective analysis of the meaning of experiences and words rather than an objective measurement of phenomena (Harrits, 2011). Qualitative researchers offer detailed accounts of data sources and analysis (Leedy & Ormrod, 2013). Reducing emotions, thoughts, and behaviors to words results in qualitative data, while reducing them to numbers results in quantitative data (Bernard, 2012). Qualitative researchers cannot simply reference well-known data sets and statistical tests as quantitative researchers can (Bansal & Corley, 2012). The study included open-ended semistructured interview questions with participants and exploring company documents.