A comprehensive resource for building higher-level knowledge and skills that can be applied across the functional, technical, managerial, and operational aspects of a business to improve processes, decision-making, performance, and to strategies for developing a sustainable competitive position.
In modern markets, small businesses must contend with forces such as increasing complexity, rapid change, technological advancements, and globalization. A major challenge for many small businesses is competing with well-known franchises and major corporations, which benefit from advantages such as high levels of brand awareness and economies of scope and scale.
Numerous studies show that a primary cause of small business failure is a lack of the appropriate knowledge and skills needed to effectively direct and make decisions for a business. However, a comprehensive and widely accepted set of factors that contribute to small business success or failure has not been established by experts and researchers in the area.* One reason for this is that small, independent businesses each faces their own unique risks and challenges in addition to those that are common among all firms within a particular industry and economy.
Newly established and young small firms are at the greatest risk of failure. The statistics regarding small business survival rates over time, as reported by the SBA Office of Advocacy,** provide a clear picture of this risk:
There are a wide range of factors that can contribute to the success or failure of a small business. These factors are often complex, interrelated, and both internal and external to a business. Some common examples include: The use of analytical tools and relevant, reliable data in decision-making; the use of appropriate financial controls and metrics to evaluate performance; and the development of formal business plans, strategic planning, and well-defined goals.
Some factors cannot be directly controlled or influenced, such as trends in the economy or an industry. However, their impact on a business can be influenced by the measures taken to anticipate, plan for, and respond to them. The focus here is primarily on factors that can be controlled or influenced, which includes the examples listed above.
Although these factors are numerous and diverse, virtually all of them have one important thing in common: Their impact on a business largely depends on the specific knowledge and skills of those making the decisions. The Toolkit is designed to help you build those critical areas of knowledge and skill, which translate to the capabilities needed to help ensure long-term success.
The LISBI Team
References
*Lussier, R.N., Bandara, C. and Marom, S. (2016). Entrepreneurship success factors: an empirical investigation in Sri Lanka, World Journal of Entrepreneurship, Management and Sustainable Development, 12(2), 102-112.
**Sources: ABS Annual Business Survey 2020, Data Year 2019, US Census Bureau, https://www.census.gov/programs-surveys/abs.html; BED Business Employment Dynamics, Bureau of Labor Statistics, https://www.bls.gov/bdm
Compiled by the US Small Business Administration Office of Advocacy (Data from 1994 to 2020)