What is the secret of success for small firms? Is it customer service, good marketing, staff selection or innovation?
Entrepreneurs and academics regularly try to answer this question and come up with differing conclusions.
However, according to new research by Dr Martie-Louise Verreynne, a small firms expert at the UQ Business School, the answer is closely related to how you measure success.
Dr Verreynne surveyed 2100 Australian firms and analysed the words used by CEOs to describe success.
She found that "lifestyle firms" – which provide a reasonable living for their owners and have no growth aspirations – have a very different view of success from high-growth firms.
Lifestyle firms viewed success as the ability to satisfy customers, make a profit and repay the initial investment, and placed a high value on family, lifestyle, happiness, and retirement provision, she said.
High-growth businesses focused more on the firm and its stakeholders, rather than the personal circumstances of the CEO.
Their measures of success included profitability, customer satisfaction, employee happiness, shareholder goals, product or service quality and growth.
The survey is part of an international study on small firm growth with partner organisations in Cambridge, UK and Auckland, New Zealand.
Dr Verreynne is leading the Australian part of the survey.
She said that, although little attention was paid to them, lifestyle businesses accounted for a significant proportion of Australia’s 11 million population workforce and were important to the economy.
The Australian Bureau of Statistics estimates that in June 2009, there were 1.2 million non-employing businesses, and 500,000 employing one to four staff.
As the different types of firms had different aspirations, so the methods used to achieve success must be tailored to their needs.
However, both types of firms agreed that success was more than just making money.
“Henry Ford once said that a business that only makes a profit is a poor business," Dr Verreynne said.
"The results reported here reinforce this.
"Success rests in the ability to work out what is important to your business, and then take the necessary steps to attain it.
“Whether it is by maintaining a lifestyle and providing self-employment, or growing a business for future generations, having a clear vision of the future and linking it with the appropriate actions are key.”
For further information see http://theconversation.edu.au/the-secret-to-running-a-successful-small-firm-mind-your-own-business-4917
Media: Samantha Kennerley - UQ Business School Marketing & Communications Manager, mobile +61 (0) 433 130085, s.kennerley@business.uq.edu.au
