Background of the Problem
Small ventures are essential to a healthy economy in the US because they represent approximately 99% of the total firms and 50% of the entire jobs created in America (Labedz & Berry, 2011). Accordingly, at least two-thirds of all the novel firms in American strive to survive for the first two years while one half of them strive to survive up to 4 years (Monahan, Shah, & Mattare, 2011). Chow and Dunkelberg (2011) asserted that small enterprise leaders often yield about half of the total private GDP and they provide employment to more than half of the total employees. The focus of this dissertation was to investigate why small businesses struggle and fail; in essence, exploring the pitfalls of the small businesses.ÿÿÿÿ
In the year 2011, about 28.2 million leaders from the small businesses employed approximately 99% of the total employees in America (SBA, 2014). Scholars at the SBA described a small venture as any enterprise with less than five hundred workers (SBA, 2014). Cronin-Gilmore (2012), further, claimed that small business leaders are the core factor in driving and sustaining the technological milieu of the global marketplace that result in more than 1/3 of the novel patents that are issued. Moreover, small businesses have been found to be the backbone of the fiscal conditions within the country, especially the role the small business leadership plays cognizant of the residents? health (Eveleth, Chung, Eveleth, & O?Neill, 2011). What is more, in reference to high rates of failures depicted, researchers tended to ignore small businesses (Eveleth et al., 2011).ÿÿ
In the contemporary context, small corporate owners have emerged to be the core contributors to the American economy with a contribution of roughly 39 percent of the total gross domestic product (Ho & Barnes, 2013). Owners of the small businesses create at least 2 out of 3 novel jobs and often instigate innovations at a rate of 2.5 times more per employees as opposed to the large business firms. However, small businesses fail more at a rate equal to 75 percent within the 5 initial years of establishment (Plehn-Dujowich, 2010). Further, most of the businesses established as dealerships are often medium and small-sized enterprises (Fraser, Tseng, and Hans-Henrik, 2013). The accentuated failure rate leads to a collapse of the sector that deals with small businesses, which often has a profound outcome on the economy of the nation, especially the employment rates (Plehn-Dujowich, 2010). Additionally, the increased competition in the extant globalized world affects international and domestic firms, large and small firms, and fosters the competition making it unavoidable for majority of the firms (Chen & Chen, 2013).
Scholars and academicians have depicted that large business enterprises experience about 100 percent survival rate as compared to small businesses that experience a low survival rate (Chen & Chen, 2013). Owners of the small businesses experience a myriad of challenges to foster the economy (Geho and Frakes, 2013). Evidentially, lack of training, support, and education that are needed for identification and utilization of business skills add to the incompetence and failure of small business. Fundamentally, impacting the improvement of the future that regards to the small businesses require appropriate skills and business practices including the possibility of determining strategies. Indeed, the owners of the small businesses need these strategies for expertise, development, proceedings, and techniques (Quazi, Bell, & Bryant, 2010)