Small Business and Risks - Research Paper Example

Evaluation of Risks Faced by Small Businesses in Colorado Management 605 Colorado Technical Table of Contents Table of Contents 3 Introduction 4 The Purpose Statement 5 Literature Review 6 Research Question(s)/Hyposteses 8 Methodology 9 Reliability and Validity 10 Sampling Plan 11 Data Analysis 12 Limitations of the Study 13 Ethical Considerations 14 Future Considerations and Implications 15 References 16 Introduction The North American Industry Classification code sets up standards for each industry in relation to the definition of the size of the industry. In general, most industries are classified as small businesses if they have less than an annual turnover of $7 million and a staff strength of 500 employees (Small Business Administration, 2014). Like all other businesses, these entities are faced with a unique set of situations and circumstances. As such, such entities have to come up with unique and distinct solutions to their problems, issues and matters. North Boulder Café is a small café in the Boulder Colorado. The café prepares hearty and delicious breakfasts and lunch and offers authentic homemade Mexican food. North Boulder Café is known for providing old-fashioned comfort and its menu is traditional and well situated for the discerning customer in the region. The menu includes a specialized range of coffees, burgers and Mexican dishes that are prepared by qualified chefs with an in-depth level of experience. North Boulder Café is a family owned entity that competes with the major giants in the breakfast and coffee industry including Starbucks and others. North Boulder Café is classified as a small business. Due to that, it has major capital structure needs and other marketing concerns. This puts the business in a major risk. However, the firm managed to thrive through difficult times and periods. This includes the credit crunch and other circumstances and it seem to be doing fairly well. It controls a very strict niche and this niche remains faithful to the firm. The sales approach includes the use of local marketing channels and media. However, the threats posed by larger entities in the industry are serious. This puts the firm in a major risk of folding up. In spite of this, it is apparent that with the careful research into the business environment, identification of real risks and formulation of solutions, North Boulder Café is likely to survive and beat all the competition it faces. a) Aims of Research The aim of this research is to identify the risks faced by North Boulder Café and how these risks can be ameliorated in order to make the firm survive into the future. b) Research Question Based on the aim, we will pose the fundamental question “what are the risks faced by North Boulder Café and how can they be resolved to make the café survive into the long-run?” c) Research Approach The research will involve an empirical study of the elements and aspects of the business environment of North Boulder Café to ascertain risks and identify how these risks can be contained and dealt with. This will involve various tools of data collection and analysis to conduct an empirical research into the organization and identify solutions to the main problems and issues in the firm. The Purpose Statement The problem with North Boulder Café is that the management might want to consider getting the franchise of a larger brand like Starbucks or MacDonalds in order to survive into the foreseeable future. This will give them a collection to a national brand and through this, they will leverage their efforts and will be able to compete with other entities in the industry. However, the management of North Boulder Café insists that they want to grow organically and honor the values and culture of the founders. Hence, there is a strong quest for the growth and expansion of the café. In this quest, the researcher asks what the actual risks are. Are there major issues that can prevent North Boulder Café from growing/ Are there matters of concern that affects them as a small business in the state? To this end, the research will seek to investigate the risk through the use of tools of empirical business research and analyze how they can be applied to deal with the dilemma and ensure a sustained growth on the basis of competitive advantage into the future. Literature Review Gilmore et al identify that there is a clear relationship between small business risks and small business failures (2004). This relationship also indicates that there is a high occurrence of business failures amongst small businesses with their owner and manager being the same person. In their qualitative study, Gilmore et al (2004) identified that the main sources of risk amongst small owner-managed businesses include: 1. Cash flow; 2. Company size; 3. Entering new markets and new products & 4. Entrusting staff with responsibility. Gilmore et al’s research seem to have provided the core elements and the core stuctures that pose the main risks that affect small businesses. This can be classified as liquidity and profitability risks. The liquidity risks involve the ability of a small business to raise funds whilst the profitability risks are about the circumstances that will enable a firm to stay in business. Turvey et al (2012) analyzed credit solution for small businesses in relation to the provision of credit solutions where a firm is faced with income risks. This was an in-depth analysis of the liquidity risks of a small business. This is an issue because most small firms rely heavily on income and profits to grow and expand their activities. Therefore, the study examines how firms can deal with their financial risks and how those risks can be dealt with. They conclude that risks relating to financing can best be dealt with thruogh the utilization of continengency credit systems and structures that ensures that a firm is able to get capital to deal with its payment and liquidity needs to ensure that the firm continues to grow. Another research conducted by Ho et al (2010) focusedon the different factors and the different strategies that were adopted by firms in response to extreme circumstances. This research was done with an emphasis on the global financial crises which was at its height at the time of the study and the research. The study focused on Ho et al identified that Design/methodology/approach – The research target of this paper is the small and medium enterprises (SMEs) in Hong Kong. This is quantitative research and it is done on a survey basis, which includes hypothesis setting and statistical analysis. In addition, constructive suggestions are given to companies after analyzing the current situation. Findings – In total, ten factors from four dimensions are determined as the critical strategies for the company to adopt in an uncertain financial situation. The result shows the influence of different factors on return on investment for the companies with different backgrounds. Practical implications – The business environment today is full of turbulence and uncertainties; this, along with the fierce global competition, means that manufacturers are all struggling to survive. The financial tsunami that has swept across the global economy is believed to be the most catastrophic in living memory. Therefore, this research will be especially valuable and useful to companies which wish to achieve excellence in business performance in spite of such a global disaster. Originality/value – Manufacturers worldwide have suffered badly from the impact of the financial tsunami. The SMEs in Hong Kong are certainly not an exception. However, under the same adverse conditions, some have been able to maintain their stability or even thrive. The findings suggest some specific corporate strategies which will enable companies to survive and remain competitive. Select at least three articles from journals that touch upon the issue you are investigating. Make sure to follow APA 6th guidelines for citing, quoting, and referencing articles. For each article: Identify the type of study (literature review, quant, qual, mixed methods…) Purpose of the study Which methods did the authors use to answer their research questions? What results did they find? What were the limitations of the study? What were the implications of the study results? More information on literature review can be found in Creswell’s chapter 2. Gilmore, A., Carson, D. and O’Donnell, C. (2004) “Small-Business Owner-Managers and their attitude to risks” Journal of Applied Marketing 22(3) pp349 – 360 Ho, G. T. S., Choy, K. L., Chung, S. H., Lam, C. H. Y. (2010) "An examination of strategies under the financial tsunami", Industrial Management & Data Systems, Vol. 110 Iss: 9, pp.1319 - 1336 Turvey, C. G., Bogan, V. L. and Yu, C. (2012) "Small businesses and risk contingent credit", Journal of Risk Finance, Vol. 13 Iss: 5, pp.491 - 506 Research Question(s)/Hyposteses Your research question(s) should be very ‘tight’. The wording describes exactly what will be investigated (and by omission, what will not be investigated). Here all of your efforts in the previous chapters will pay off because you have spent the time narrowing in on the true issue at hand. You may need more than one research question/hypotheses. See chapter 7 in Creswell. Quantitative Example Does the type of manager a customer service team works with impact productivity? Or -What is the relationship between customer service team productivity and manager leadership style? Or, Is there a correlation between lowering the price of our product and sales numbers in the Northern California territory? Using verbs such as impact, cause, affect, relate, influence, determine suggests quantitative research where you are looking for a relationship between variables. Qualitative Example How do customer service team members describe their feelings towards work as it relates to their manager? How would our customers in the Northern California Territory describe the value of our product to them? Use the word ‘how’ to allow for a wide open answer. If you start with ‘why’ you may be looking for a reason which is a quantitative approach. Different verbs signal which methodology you will use. Discover for grounded theory, seek to understand for ethnography, explore a process for a case study, describe an experience for phenomenology, or report a story for narrative research. Methodology Which basic approach are you choosing (quant or qual) and why? Of all of the methods within an approach, which one are you going to use? Then go into details. See chapter 8, 9, and 10 in Creswell for further information. Quant: experiment or survey? If survey, what kind of survey are you using (Likert scale? Force ranking?), where are you getting the survey from (purchased, already exists, have it developed for you by professionals, you will create yourself), how will you administer the survey (what are the details of how the survey will get to the people answering them), how will the answers get back to you and in what format (word document, spreadsheet, faxed forms…). Qual: phenomenological research. If you are using a phenomenological approach, how will you develop your interview questions, how will you interview the participants, how will you record the content of the interview, what will you do if you need to make changes to the questions? Or will you do observation research? Mixed methods approach? Sequential or concurrent? Why use a mixed methods approach? Reliability and Validity Identify your methodology and your method, for example a quantitative survey and use the book to list all of the potential threats to validity and what you will do to mitigate those threats. What are you doing to ensure that the survey you are using (if quant) is reliable? What will you do to ensure qualitative reliability? Trochim website (http://socialresearchmethods.net/) has a wealth of knowledge on reliability and validity. Sampling Plan Define the target population you are going to investigate. Next define the sample size of that target population. For example, target population is the entire customer base in the Northern California Territory. The sample size will be 20 customers. Now define how you will obtain a sample of that target population for your study – your sampling method (convenience sample, purposive sampling, random sampling). Then go into specifics. How will you recruit your participants? Go step-by step. First you will obtain a list of all customers, then you will email all customers, … Creswell and Trochim are good resources for further information. Data Analysis Outline step by step how you will process the data. For a quant survey you want to start with how many surveys you emailed out, how many came back filled out properly. Then descriptive statistics and the go into correlational analysis or analysis of variance. For qual interviews you may want to describe the participants before presenting the themes you found when looking through the transcripts. Review Chapter 8, 9, 10 for data analysis suggestions for quant, qual and mixed methods studies. Trochim has a detailed section on data analysis. Limitations of the Study List all of the limitations. Here is an example: 1. This study is focused on sales prices of products A, B, and C. Oil prices, global warming, and price of tea also has an influence on the sales price of products A, B, and C but was not included in this study. 2. The focus of the study on individuals from the Northern California metropolitan areas is a limitation. Customers from very small rural towns were not included even though these customers purchase products A, B, and C and are also price sensitive. These customers were not included as they are likely to follow the pricing suggestions from customers in the large metropolitan areas. 3. The study instruments used for this quantitative study may not fully capture the nature of the items under investigation due to instrument limitations. 4. Or - The time allotted for the in-person interviews may not be sufficient to delve deeply enough into the survey topics. 5. Non-experimental studies do not control all variables in play therefore a relationship between two variables cannot be declared a causal relationship. This study examined what is currently occurring or has already occurred with respect to product pricing. This study only shows how the variables are related. Ethical Considerations Describe the ethical issues you may face and how you may overcome them. What are the informed consent procedures you will follow? What do the informed consent forms contain? Leverage the information listed in Belmont report and ethical considerations in chapter 4 of Creswell. Future Considerations and Implications Since you won’t conduct an actual study, you can assume a study outcome and then base this chapter on that fictional outcome. What could your study outcomes mean to the organization? What are your suggestions are to ‘fix’ the issues based on the study results (short term and long term). Are there any follow-up studies you want to suggest (monitor, dig deeper, study another issue related but excluded from this study). References The Belmont Report: Ethical principles and guidelines for the protection of human subjects of research (1979). Retrieved from http://ohsr.od.nih.gov/guidelines/belmont.html Creswell, J. W. (2013). Qualitative, quantitative, and mixed methods approaches (4th ed.). Thousand Oaks, CA: SAGE. Cooper, D. R. , & Schindler, P. S., (2014). Business research methods. New York, NY: McGraw-Hill. Rousseau, D. M., (2006). Is there such a thing as evidence-based management”? Academy of Management Review, 31(2), 256-269. Small Business Administration (2014) Summary if Size Standard by Industry [Online] Availabel at: http://www.sba.gov/content/summary-size-standards-industry Retrieved: March 6, 2014. Read More