Small And Medium-sized Enterprises Owners Research Articles

Making Succession a Success: Perspectives from Canadian Small and Medium‐Sized Enterprises

Introduction The emergence of an aging population in Canada and its impact on the economic growth and social policy development such as health care has been a focal point of public policy research. However, one key aspect that has been overlooked is the impact of an aging small- and medium-sized enterprise (SME) sector in Canada. Focus on SMEs is pivotal in assessing the effects of succession planning. Seventy-five percent of all businesses in Canada employ fewer than five employees, and almost 60 percent of employed Canadians work for a small- or medium-sized business. In addition, the SME sector contributes approximately 45 percent of Canada's economic output and is the catalyst of innovative products and services. Clearly, there is a need for in-depth examination into the aging of SME owners and their preparedness for business succession. To assess the risks and opportunities for Canada's economy, the Canadian Federation of Independent Business (CFIB) carried out an extensive survey on SME succession. (Further details on CFIB's research on SME succession are outlined in the report Can Breed Success [www.cfib.ca]). The survey was completed by 4,311 CFIB members during the period from May 1 to 26, 2004. The survey focused on several key issues, including: when do owners expect to exit their business; how are they preparing for succession--if at all; and what barriers do they face in implementing their succession plans. To obtain another perspective unique to the CFIB survey, questions were asked to those owners who recently acquired a business through succession. Major survey findings are as discussed as follows. Business Exit Timeline Forty-one percent of SME owners intend to exit ownership or transfer control of their businesses within five years, with this figure jumping to 71 percent when extended to the next 10 years (Figure 1). Retirement is the number one reason for business owners who are planning to exit their business, as indicated by 82 percent of respondents. However, 11 percent of respondents indicated that they plan to move to another venture. Although small, this fact is particularly important as they represent the natural churning of businesses whereby resources are shifted to more productive purposes. Succession Planning Only one-third (35 percent) of SMEs have a plan to sell, transfer, or wind down their business in the future (Figure 2). Among these, it is more likely to be an unwritten, informal plan (28 percent) as opposed to a formal one (7 percent). The earlier one expects to exit the business, the more likely that he or she will have a succession plan. Although this finding is intuitive, the issue is the degree at which owners are planning. Among those respondents planning to exit within 10 years, 41 percent have a succession plan, while only 48 percent of those planning to exit within five years have a succession plan. Succession Plan Development The development of a succession plan often requires the input and services of various professionals such as accountants and lawyers; internal stakeholders in the business, such as key managers and employees; as well as family members and the successor(s) if already chosen. The most common types of professional assistance used in developing a succession plan are accountants and lawyers. Use of other professional services is significantly lower. What Is Being Planned? The most commonly cited components of a succession plan are considered to deal with technical and include the legal transfer of business ownership, tax implications of disposing the business, the financing of the successor, and the division of future profits after the transition. However, seldom cited are soft issues such as identifying long-term personal and family goals, the communication of each stakeholder's vision for the business (employees, family, successor) and their anticipated role in the business after succession, as well as the processes foreseen for selecting and training their successor. …

Female small and medium-sized enterprise ownership in Lithuania: A comparison

The transition to a market-oriented economy has brought tremendous changes to the lives of men and women living in transition countries. What has its influence been on the development of female small and medium-sized enterprise (SME) owners? This paper explores the similarities and differences between female SME owners in advanced western countries (OECD countries) and transition countries (Hungary, Slovenia, Poland) with a specific focus on Lithuania. Recent data collected by the author provides new and detailed information on Lithuanian male and female SME owners. In general, the results show that female SME owners are similar in terms of personal characteristics, business characteristics, and business motivations regardless of context. However, there are also some differences amongst female SME owners especially in terms of prior business and work experience between some transition countries and OECD countries. Finally, the implications of these results and suggestions for future research are discussed.

Why Less? The Gendered Aspects of Small- and Medium-sized Enterprise (SME) Ownership under Economic Transition

This paper explores the gendered influence on SME development under economic transition in Lithuania. Previous studies have shown that male and female business owners are more different than similar in terms of personal and business characteristics (Brush 1992). An analysis of 332 SME owners in Lithuania using descriptive statistics and regression analysis indicates that there are significant differences not only in objective criteria such as business size and business turnover but also in terms of subjective criteria such as perceived business financial ‘success’ and general business ‘success’. Gendered expectations such as norms, values and social expectations (i.e. informal rules) that have been internalized or continue to exert external pressure seem to be at the heart of this discrepancy.

Success and Failure in Helping SMEs

This paper describes the outcomes of work conducted to help local small and medium-sized enterprises (SMEs) since 1999 by a unit attached to a university in the North East of England. It describes the pattern of help offered, the uptake rates, levels of assistance and the types of outcome measures achieved. Certain regions of Europe have been given special status as areas that are in need of varying degrees of funded assistance. The North East of England is one such area and has attracted several hundreds of millions of pounds in European-sponsored State Aid as a result. The paper describes briefly how some of this money has been used to help SMEs design products more quickly, reduce waste and re-work, and introduce continuous improvement to key business processes. It then details the numbers and types of companies concerned, how many companies dropped out of the project early, the patterns of work and the measured outcomes. The authors examine the uptake rates, and discuss possible reasons why some SMEs do not make full use of the facilities on offer. Anecdotal evidence of SME owner motivations and decision criteria is also presented. Reasons for the overall success of the unit's efforts are suggested, as are ways to improve the potential for SME engagement throughout the HE sector.

The career choice of business graduates: SMEs or MNCs?

To promote SME growth, it is essential to attract young, educated minds to work for them. Recent graduates often view employment in small‐ and medium‐sized enterprises (SMEs) as a “second choice”, and prefer to work for multinational corporations )MNCs). This study uses a job attributes model to address the inability of SMEs to attract business graduates. The first part of the study investigates the importance of nine job attributes to graduates in initial job selections, and their perceptions of these attributes offered by SMEs and MNCs. The second part of the study reports that SME employer perceptions of the attractiveness of these attributes are very much different from those of the graduates. Finally, recruitment packages of SMEs and MNCs are compared, and attributes such as job security and long‐term career prospects are found to be better in SMEs, thus suggesting that SME owners must communicate more effectively with graduates.

Why Don't We See More Small- and Medium-sized Enterprises (SMEs) in Lithuania?: Institutional Impediments to SME Development

This paper identifies the specific external barriers to SME development in Lithuania. An analysis of 332 SME owners indicates that formal barriers (taxes, frequent changes to and ambiguity of tax policies) and environmental barriers (low purchasing power, lack of funds for business investment) form the most significant barriers for SME businesses. Informal barriers (late payment to clients, corruption, government interference) were secondary in significance. By grouping together variables according to barrier types, and using regression analysis, the inter-linkages between barrier types becomes evident. Our results suggest that the effect of business barriers is intensified by corruption, lack of information and inadequate business skills.

Identifying indicators that can play a meaningful role in promoting creativity in SMEs: A South African study

This study focused on identifying indicators that can play a meaningful role in promoting creativity in South African small and medium-sized enterprises (SMEs). Seven indicators of creativity for SME owners and four for the SME organisation were identified. The present profile of South African SME owners does not correspond with these indicators providing some clues to the lack of creativity in the SME sector.

Expanding Partnerships for Small‐ and Medium‐Sized Enterprises (SMEs) Needed: The Right Kind of Support

Expanding Partnerships for Small‐ and Medium‐Sized Enterprises (SMEs) Needed: The Right Kind of Support