{"id":34,"date":"2018-12-24T12:01:34","date_gmt":"2018-12-24T17:01:34","guid":{"rendered":"http:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/?post_type=chapter&#038;p=34"},"modified":"2020-01-06T09:58:21","modified_gmt":"2020-01-06T14:58:21","slug":"success-and-failure-in-small-businesses","status":"publish","type":"chapter","link":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/chapter\/success-and-failure-in-small-businesses\/","title":{"raw":"Chapter 2: Success and Failure in Small Businesses","rendered":"Chapter 2: Success and Failure in Small Businesses"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3 itemprop=\"educationalUse\">Learning Objectives<\/h3>\r\n<ul>\r\n \t<li>Be able to explain what is meant by business success.<\/li>\r\n \t<li>Be able to describe the different components of business failure.<\/li>\r\n \t<li>Understand that statistics on business failure can be confusing and contradictory.<\/li>\r\n \t<li>Understand that small business failure can be traced to managerial inadequacy, financial issues, and the external environment.<\/li>\r\n \t<li>Understand that small business owners need to be able to formally plan and understand the\u00a0accounting and finance needs of their firms<\/li>\r\n<\/ul>\r\n<\/div>\r\n<h1><strong>What Is a Successful Small Business?<\/strong><\/h1>\r\nAsk the average person what the purpose of a business is or how he or she would define a\u00a0successful business, and the most likely response would be \u201cone that makes a profit.\u201d A more\u00a0sophisticated reply might extend that to \u201cone that makes an acceptable profit now and in the\u00a0future.\u201d Ask anyone in the finance department of a publicly held firm, and his or her answer\u00a0would be \u201cone that maximizes shareholder wealth.\u201d The management guru Peter Drucker said\u00a0that for businesses to succeed, they needed to create customers, while W. E. Deming, the quality\u00a0guru, advocated that business success required \u201cdelighting\u201d customers. No one can argue,\u00a0specifically, with any of these definitions of small business success, but they miss an important\u00a0element of the definition of success for the small business owner: <strong><em>to be free and independent<\/em><\/strong>.\r\n<p class=\"no-indent\">Many people have studied whether there is any significant difference between the small business owner and the entrepreneur. Some entrepreneurs place more emphasis on growth in their definition of success.[footnote]William Dunkelberg and A. C. Cooper. \u201cEntrepreneurial Typologies: An Empirical Study,\u201d Frontiers of Entrepreneurial Research, ed. K. H. Vesper (Wellesley, MA: Babson College, Centre for Entrepreneurial Studies, 1982), 1\u201315.[\/footnote] However, it is clear that entrepreneurs and small business owners define much of their personal and their firm\u2019s success in the context of providing them with independence. For many small business owners, being in charge of their own life is the prime motivator: a \u201cfervently guarded sense of independence,\u201d and money is seen as a beneficial byproduct.[footnote]\u201cReport on the Commission or Enquiry on Small Firms,\u201d Bolton Report, vol. 339 (London: HMSO, February 1973), 156\u201373.[\/footnote] [footnote]Paul Burns and Christopher Dewhurst, Small Business and Entrepreneurship, 2nd ed. (Basingstoke, UK: Macmillan, 1996), 17.[\/footnote] [footnote]Graham Beaver, Business, Entrepreneurship and Enterprise Development(Englewood Cliffs, NJ: Prentice Hall, 2002), 33.[\/footnote] Oftentimes, financial performance is seen as an important measure of success. However, small businesses are reluctant to report their financial information, so this will always be an imperfect and incomplete measure of success. [footnote]Terry L. Besser, \u201cCommunity Involvement and the Perception of Success Among Small Business Operators in Small Towns,\u201d Journal of Small Business Management 37, no 4 (1999): 16.[\/footnote] Three types of small business operators can be identified based on what they see as constituting success:<\/p>\r\n\r\n<ol>\r\n \t<li>An artisan whose intrinsic satisfaction comes from performing the business activity<\/li>\r\n \t<li>The entrepreneur who seeks growth<\/li>\r\n \t<li>The owner who seeks independence[footnote]M. K. J. Stanworth and J. Curran, \u201cGrowth and the Small Firm: An Alternative View,\u201d Journal of Management Studies 13, no. 2 (1976): 95\u2013111.[\/footnote]<\/li>\r\n<\/ol>\r\nWhen discussing failure rates in small business, there is only one appropriate word: confusion. There are wildly different values, from 90 percent to 1 percent, with a wide range of values in between.[footnote]Roger Dickinson, \u201cBusiness Failure Rate,\u201d American Journal of Small Business 6, no. 2 (1981): 17\u201325.[\/footnote] Obviously, there is a problem with these results, or some factor is missing. One factor that would explain this discrepancy is the different definitions of the term failure. A second factor is that of timeline. When will a firm fail after it starts operation?\r\n\r\nThe term failure can have several meanings.[footnote]A. B. Cochran, \u201cSmall Business Failure Rates: A Review of the Literature,\u201dJournal of Small Business Management 19, no. 4, (1981): 50\u201359.[\/footnote] Small-business failure is often measured by the cessation of a firm\u2019s operation, but this can be brought about by several things:\r\n<ul>\r\n \t<li>An owner can die or simply choose to discontinue operations.<\/li>\r\n \t<li>The owner may recognize that the business is not generating sufficient return to warrant the effort that is\u00a0being put into it. This is sometimes referred to as the failure of opportunity cost.<\/li>\r\n \t<li>A firm that is losing money may be terminated to avoid losses to its creditors.<\/li>\r\n \t<li>There can be losses to creditors that bring about cessations of the firm\u2019s operations<\/li>\r\n \t<li>The firm can experience bankruptcy. Bankruptcy is probably what most people think of when they hear\u00a0the term business failure. However, the evidence indicates that bankruptcies constitute only a minor\u00a0reason for failure.<\/li>\r\n<\/ul>\r\nFailure can therefore be thought of in terms of a cascading series of outcomes (see Figure 2.1 \"Types of Business Failures\"). There are even times when small business owners involved in a closure consider the firm successful at its closing.[footnote]Don Bradley and Chris Cowdery, \u201cSmall Business: Causes of Bankruptcy,\u201d July 26, 2004, accessed October 7, 2011, www.sbaer.uca.edu\/research\/asbe\/2004_fall\/16.pdf.[\/footnote] Then there is the complication of considering the industry of the small business when examining failure and bankruptcy. The rates of failure can vary considerably across different industries; in the fourth quarter of 2009, the failure rates for service firms were half that of transportation firms.[footnote] \u201cEquifax Study Shows the Ups and Downs of Commercial Credit Trends,\u201dEquifax, 2010, accessed October 7, 2011 www.equifax.com\/PR\/pdfs\/CommercialFactSheetFN3810.pdf[\/footnote]\r\n\r\n[caption id=\"attachment_38\" align=\"aligncenter\" width=\"367\"]<img src=\"http:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-content\/uploads\/sites\/23\/2018\/12\/Figure-1-BIG-300x211.jpg\" alt=\"\" class=\"wp-image-38 \" width=\"367\" height=\"258\" \/> Figure 2.1 Types of Business Failures[\/caption]\r\n<p style=\"text-align: left;\">The second issue associated with small business failure is a consideration of the time horizon. Again, there are wildly different viewpoints. The Dan River Small Business Development Center presented data that indicated that 95 percent of small businesses fail within five years.[footnote]Don Bradley and Chris Cowdery, \u201cSmall Business: Causes of Bankruptcy,\u201d July 26, 2004, accessed October 7, 2011,www.sbaer.uca.edu\/research\/asbe\/2004_fall\/16.pdf.[\/footnote] Dun and Bradstreet reported that companies with fewer than twenty employees have only a 37 percent chance of surviving four years, but only 10 percent will go bankrupt.[footnote]Don Bradley and Chris Cowdery, \u201cSmall Business: Causes of Bankruptcy,\u201d July 26, 2004, accessed October 7, 2011,www.sbaer.uca.edu\/research\/asbe\/2004_fall\/16.pdf[\/footnote] The US Bureau of Labor Statistics indicated that 66 percent of new establishments survive for two years, and that number drops to 44 percent two years later.[footnote]Anita Campbell, \u201cBusiness Failure Rates Is Highest in First Two Years,\u201d Small Business Trends, July 7, 2005, accessed October 7, 2011,smallbiztrends.com\/2005\/07\/business-failure-rates-highest-in.html[\/footnote] It appears that the longer you survive, the higher the probability of your continued existence. This makes sense, but it is no guarantee. Any business can fail after many years of success.<\/p>\r\n\r\n<h1>Why Do Small Businesses Fail?<\/h1>\r\nThere is no more puzzling or better studied issue in the field of small business than what causes\u00a0them to fail. Given the critical role of small businesses in the US economy, the economic\u00a0consequences of failure can be significant. Yet there is no definitive answer to the question.\r\n<p class=\"no-indent\">Three broad categories of causes of failure have been identified: managerial inadequacy,\u00a0financial inadequacy, and external factors. The first cause,managerial inadequacy, is the most\u00a0frequently mentioned reason for firm failure.[footnote]T. C. Carbone, \u201cThe Challenges of Small Business Management,\u201d Management World 9, no. 10 (1980): 36.[\/footnote] Unfortunately, it is an all-inclusive explanation, much like explaining that all plane crashes are due to pilot failure. Over thirty years ago, it was observed that \u201cwhile everyone agrees that bad management is the prime cause of failure, no one agrees what \u2018bad management\u2019 means nor how it can be recognized except that the company has collapsed\u2014then everyone agrees that how badly managed it was.\u201d[footnote]John Argenti, Corporate Collapse: The Causes and Symptoms (New York: McGraw-Hill, 1976), 45.[\/footnote] This observation remains true today.<\/p>\r\n<p class=\"no-indent\">The second most common explanation cites financial inadequacy, or a lack of financial strength\u00a0in a firm. A third set of explanations center on environmental or external factors, such as a\u00a0significant decline in the economy.\u00a0Because it is important that small firms succeed, not fail, each factor will be discussed in detail.\u00a0However, these factors are not independent elements distinct from each other. A declining\u00a0economy will depress a firm\u2019s sales, which negatively affects a firm\u2019s cash flow. An owner who\u00a0lacks the knowledge and experience to manage this cash flow problem will see his or her firm\u00a0fail.<\/p>\r\n<p class=\"no-indent\">Managerial inadequacy is generally perceived as the major cause of small business failure.\u00a0Unfortunately, this term encompasses a very broad set of issues. It has been estimated that two\u00a0thirds of small business failures are due to the incompetence of the owner-manager.[footnote]Graham Beaver, \u201cSmall Business: Success and Failure,\u201d Strategic Change 12, no. 3 (2003): 115\u201322.[\/footnote] The identified problems cover behavioral issues, a lack of business skills, a lack of specific technical skills, and marketing myopia. Specifying every limitation of these owners would be prohibitive. However, some limitations are mentioned with remarkable consistency. Having poor communication skills, with employees and\/or customers, appears to be a marker for failure.[footnote]Sharon Nelton, \u201cTen Key Threats to Success,\u201d Nation\u2019s Business 80, no. 6 (1992): 18\u201324.[\/footnote] The inability to listen to criticism or divergent views is a marker for failure, as is the inability to be flexible in one\u2019s thinking.[footnote]Robert N. Steck, \u201cWhy New Businesses Fail,\u201d Dun and Bradstreet Reports 33, no. 6 (1985): 34\u201338.[\/footnote]<\/p>\r\n<p class=\"no-indent\">Ask many small business owners where their strategic plans exist, and they may point to their foreheads. The failure to conduct formal planning may be the most frequently mentioned item with respect to small business failure. Given the relative lack of resources, it is not surprising that small firms tend to opt for intuitive approaches to planning.[footnote]G. E. Tibbits, \u201cSmall Business Management: A Normative Approach,\u201d in Small Business Perspectives, ed. Peter Gorb, Phillip Dowell, and Peter Wilson (London: Armstrong Publishing, 1981), 105.[\/footnote][footnote]Jim Brown, Business Growth Action Kit (London: Kogan Page, 1995), 26.[\/footnote] Formal approaches to planning are seen as a waste of time,[footnote]Christopher Orpen, \u201cStrategic Planning, Scanning Activities and the Financial Performance of Small Firms,\u201d Journal of Strategic Change 3, no. 1 (1994): 45\u201355.[\/footnote] or they are seen as too theoretical.[footnote]Sandra Hogarth-Scott, Kathryn Watson, and Nicholas Wilson, \u201cDo Small Business Have to Practice Marketing to Survive and Grow?,\u201d Marketing Intelligence and Planning 14, no. 1 (1995): 6\u201318.[\/footnote] The end result is that many small business owners fail to conduct formal strategic planning in a meaningful way.[footnote]Isaiah A. Litvak and Christopher J. Maule, \u201cEntrepreneurial Success or Failure\u2014Ten Years Later,\u201d Business Quarterly 45, no. 4 (1980): 65.[\/footnote][footnote]Hans J. Pleitner, \u201cStrategic Behavior in Small and Medium-Sized Firms: Preliminary Considerations,\u201d Journal of Small Business Management 27, no. 4 (1989): 70\u201375.[\/footnote] In fact, many fail to conduct any planning;[footnote]Richard Monk, \u201cWhy Small Businesses Fail,\u201d CMA Management 74, no. 6 (2000): 12.[\/footnote][footnote]Anonymous, \u201cTop-10 Deadly Mistakes for Small Business,\u201d Green Industry Pro19, no. 7 (2007): 58.[\/footnote] others may fail to conduct operational planning, such as marketing strategies.[footnote]Rubik Atamian and Neal R. VanZante, \u201cContinuing Education: A Vital Ingredient of the \u2018Success Plan\u2019 for Business,\u201d Journal of Business and Economic Research 8, no. 3 (2010): 37\u201342.[\/footnote] The evidence appears to clearly indicate that a small firm that wishes to be successful needs to not only develop an initial strategic plan but also conduct an ongoing process of strategic renewal through planning.<\/p>\r\n<p class=\"no-indent\">Many managers do not have the ability to correctly select staff or manage them.[footnote]T. Carbone, \u201cFour Common Management Failures\u2014And How to Avoid Them,\u201dManagement World 10, no. 8 (1981): 38\u201339.[\/footnote] Other managerial failings appear to be in limitations in the functional area of marketing. Failing firms tend to ignore the changing demands of their customers, something that can have devastating effects.[footnote]Anonymous, \u201cTop-10 Deadly Mistakes for Small Business,\u201d Green Industry Pro19, no. 7 (2007): 58.[\/footnote] The failure to understand what customers value and being able to adapt to changing customer needs often leads to business failure.[footnote]Rubik Atamian and Neal R. VanZante, \u201cContinuing Education: A Vital Ingredient of the \u2018Success Plan\u2019 for Business,\u201d Journal of Business and Economic Research 8, no. 3 (2010): 37\u201342.[\/footnote]<\/p>\r\n<p class=\"no-indent\">The second major cause of small business failure is finance. Financial problems fall into three\u00a0categories: start-up, cash flow, and financial management. When a firm begins operation (startup), it will require capital. Unfortunately, many small business owners initially underestimate\u00a0the amount of capital that should be available for operations.[footnote]Howard Upton, \u201cManagement Mistakes in a New Business,\u201d National Petroleum News 84, no. 10 (1992): 50.[\/footnote] This may explain why most small firms that fail do so within the first few years of their creation. The failure to start with sufficient capital can be attributed to the inability of the owner to acquire the needed capital. It can also be due to the owner\u2019s failure to sufficiently plan for his or her capital needs. Here we see the possible interactions among the major causes of firm failure. Cash-flow management has been identified as a prime cause for failure.[footnote]Rubik Atamian and Neal R. VanZante, \u201cContinuing Education: A Vital Ingredient of the \u2018Success Plan\u2019 for Business,\u201d Journal of Business and Economic Research 8, no. 3 (2010): 37\u201342.[\/footnote][footnote]Arthur R. DeThomas and William B. Fredenberger, \u201cAccounting Needs of Very Small Business,\u201d The CPA Journal 55, no. 10 (1985): 14\u201320.[\/footnote] Good cash-flow management is essential for the survival of any firm, but small firms, in particular, must pay close attention to this process.<\/p>\r\n<p class=\"no-indent\">Small businesses must develop and maintain effective financial controls, such as credit\u00a0controls.[footnote]Roger Brown, \u201cKeeping Control of Your Credit,\u201d Motor Transportation, April 2009, 8.[\/footnote] For very small businesses, this translates into having an owner who has at least a fundamental familiarity with accounting and finance.[footnote]Arthur R. DeThomas and William B. Fredenberger, \u201cAccounting Needs of Very Small Business,\u201d The CPA Journal 55, no. 10 (1985): 14\u201320.[\/footnote] In addition, the small firm will need either an in-house or an outsourced accountant.[footnote]Hugh M. O\u2019Neill and Jacob Duker, \u201cSurvival and Failure in Small Business,\u201dJournal of Small Business Management 24, no. 1 (1986): 30\u201337.[\/footnote] Unfortunately, many owners fail to fully use their accountants\u2019 advice to manage their businesses.[footnote]Arthur R. DeThomas and William B. Fredenberger, \u201cAccounting Needs of Very Small Business,\u201d The CPA Journal 55, no. 10 (1985): 14\u201320.[\/footnote]<\/p>\r\n<p class=\"no-indent\">The last major factor identified with the failure of small businesses is the external environment.\u00a0There is a potentially infinite list of causes, but the economic environment tends to be most\u00a0prominent. Here again, however, confusing appears to describe the list. Some argue that\u00a0economic conditions contribute to between 30 percent and 50 percent of small business failures,\u00a0in direct contradiction to the belief that managerial incompetence is the major cause.[footnote]Jim Everett and John Watson, \u201cSmall Business Failures and External Risk Factors,\u201d Small Business Economics 11, no. 4 (1998): 371\u201390.[\/footnote] Two economic measures appear to affect failure rates: interest rates, which appear to be tied to bankruptcies, and the unemployment rate, which appears to be tied to discontinuance.[footnote]Jim Everett and John Watson, \u201cSmall Business Failures and External Risk Factors,\u201d Small Business Economics 11, no. 4 (1998): 371\u201390.[\/footnote] The potential impact of these external economic variables might be that small business owners need to be either planners to cover potential contingencies or lucky.<\/p>\r\n<p class=\"no-indent\">Even given the confusing and sometimes conflicting results with respect to failure in small\u00a0businesses, some common themes can be identified. The reasons for failure fall into three broad\u00a0categories: managerial inadequacy, finance, and environmental. They, in turn, have some\u00a0consistently mentioned factors (see Table 2.1 \"Reasons for Small Business Failure\"). These\u00a0factors should be viewed as warning signs\u2014danger areas that need to be avoided if you wish to\u00a0survive. Although small business owners cannot directly affect environmental conditions, they\u00a0can recognize the potential problems that they might bring. This text will provide guidance on\u00a0how the small business owner can minimize these threats through proactive leadership.<\/p>\r\n\r\n<h3>Table 2.1 Reasons for Small Business Failure<\/h3>\r\n<table style=\"border-collapse: collapse; width: 98.5835%; height: 353px;\" border=\"1\">\r\n<tbody>\r\n<tr style=\"height: 16px;\">\r\n<td style=\"width: 33.3333%; text-align: center; height: 16px;\"><span style=\"text-decoration: underline;\"><strong>Managerial Inadequacy\u00a0<\/strong><\/span><\/td>\r\n<td style=\"width: 33.3333%; text-align: center; height: 16px;\"><span style=\"text-decoration: underline;\"><strong>Financial Inadequacy\u00a0<\/strong><\/span><\/td>\r\n<td style=\"width: 64.8857%; text-align: center; height: 16px;\"><span style=\"text-decoration: underline;\"><strong>External Factors<\/strong><\/span><\/td>\r\n<\/tr>\r\n<tr style=\"height: 405px;\">\r\n<td style=\"width: 33.3333%; height: 337px;\">\r\n<ul>\r\n \t<li>Failure in planning (initial start-up\u00a0plan and subsequent plans)<\/li>\r\n \t<li>Inexperience with managing\u00a0business operation<\/li>\r\n \t<li>Ineffective staffing<\/li>\r\n \t<li>Poor communication skills<\/li>\r\n \t<li>Failure to seek or respond to criticism<\/li>\r\n \t<li>Failure to learn from past failures<\/li>\r\n \t<li>Ignoring customers\u2019 needs<\/li>\r\n \t<li>Ignoring competition<\/li>\r\n \t<li>Failure to diversify customer base<\/li>\r\n \t<li>Failure to innovate<\/li>\r\n \t<li>Ineffective marketing strategies<\/li>\r\n<\/ul>\r\n<\/td>\r\n<td style=\"width: 33.3333%; height: 337px;\">\r\n<ul>\r\n \t<li>Cash-flow problems<\/li>\r\n \t<li>Insufficient initial capitalization<\/li>\r\n \t<li>Inadequate financial records<\/li>\r\n \t<li>Not using accountants\u2019 insights<\/li>\r\n \t<li>Inadequate capital acquisition\u00a0strategies<\/li>\r\n \t<li>Failure to deal with financial\u00a0issues brought about by growth<\/li>\r\n<\/ul>\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\n&nbsp;<\/td>\r\n<td style=\"width: 64.8857%; height: 337px;\">\r\n<ul>\r\n \t<li>Downturn in economy<\/li>\r\n \t<li>Rising unemployment<\/li>\r\n \t<li>Rising interest rates<\/li>\r\n \t<li>Product or service no longer\u00a0desired by customers<\/li>\r\n \t<li>Unmatchable foreign\u00a0competition<\/li>\r\n \t<li>Fraud<\/li>\r\n \t<li>Disaster<\/li>\r\n<\/ul>\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\n&nbsp;<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nUltimately, business failure will be a company-specific combination of factors. Monitor101, a\u00a0company that developed an Internet information monitoring product for institutional investors\u00a0in 2005, failed badly. One of the cofounders identified the following seven mistakes that were\u00a0made, most of which can be linked to managerial inadequacy:[footnote]Roger Ehrenberg, \u201cMonitor 110: A Post Mortem\u2014Turning Failure into Learning,\u201d Making It!, August 27, 2009, accessed June 1, 2012,http:\/\/www.makingittv.com\/Small-Business-Entrepreneur-StoryFailure.htm[\/footnote]\r\n<ol>\r\n \t<li>The lack of a single \u201cthe buck stops here\u201d leader until too late in the game<\/li>\r\n \t<li>No separation between the technology organization and the product organization<\/li>\r\n \t<li>\u00a0Too much public relations, too early<\/li>\r\n \t<li>Too much money<\/li>\r\n \t<li>Not close enough to the customer<\/li>\r\n \t<li>Slowness to adapt to market reality<\/li>\r\n \t<li>Disagreement on strategy within the company and with the board<\/li>\r\n<\/ol>\r\n\u201cEntrepreneurs Turn Business Failure into Success\u201d\u00a0Bloomberg Businessweek's 2008 cover story highlights owners who turn business failure into success.\u00a0[footnote]http:\/\/www.businessweek.com\/magazine\/content\/08_70\/s0810040731198.htm[\/footnote]\r\n<div class=\"textbox key-takeaways\">\r\n<h3 itemprop=\"educationalUse\">Key Takeaways<\/h3>\r\n<ul>\r\n \t<li>There is no universal definition for small business success.\u00a0However, many small business owners see success as their\u00a0own independence.<\/li>\r\n \t<li>The failure rates for small businesses are wide ranging. There is\u00a0no consensus.<\/li>\r\n \t<li>Three broad categories of factors are thought to contribute to\u00a0small business failure: managerial inadequacy, financial\u00a0inadequacy, and external forces, most notably the economic\u00a0environment.<\/li>\r\n<\/ul>\r\n<\/div>\r\n<div class=\"textbox exercises\">\r\n<h3 itemprop=\"educationalUse\">Exercises<\/h3>\r\n<ol>\r\n \t<li>Starting a business can be a daunting task. It can be made even\u00a0more daunting if the type of business you choose is particularly\u00a0risky. Go to: www.forbes.com\/2007\/01\/18\/fairisaac-nordstromverizon-ent-fincx_mf_0118risky_slide.html?thisSpeed=undefined; where the\u00a0ten riskiest businesses are identified. Select any two of these\u00a0businesses and address why you think they are risky<\/li>\r\n \t<li>Amy Knaup is the author of a 2005 study \u201cSurvival and Longevity in the Business Employment Dynamics Data\u201d ( seewww.bls.gov\/opub\/mlr\/2005\/05\/ressum.pdf ). The article points to different survival rates for ten different industries. Discuss why there are significant differences in the survival rates among these industries.<\/li>\r\n<\/ol>\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3 itemprop=\"educationalUse\">Learning Objectives<\/h3>\n<ul>\n<li>Be able to explain what is meant by business success.<\/li>\n<li>Be able to describe the different components of business failure.<\/li>\n<li>Understand that statistics on business failure can be confusing and contradictory.<\/li>\n<li>Understand that small business failure can be traced to managerial inadequacy, financial issues, and the external environment.<\/li>\n<li>Understand that small business owners need to be able to formally plan and understand the\u00a0accounting and finance needs of their firms<\/li>\n<\/ul>\n<\/div>\n<h1><strong>What Is a Successful Small Business?<\/strong><\/h1>\n<p>Ask the average person what the purpose of a business is or how he or she would define a\u00a0successful business, and the most likely response would be \u201cone that makes a profit.\u201d A more\u00a0sophisticated reply might extend that to \u201cone that makes an acceptable profit now and in the\u00a0future.\u201d Ask anyone in the finance department of a publicly held firm, and his or her answer\u00a0would be \u201cone that maximizes shareholder wealth.\u201d The management guru Peter Drucker said\u00a0that for businesses to succeed, they needed to create customers, while W. E. Deming, the quality\u00a0guru, advocated that business success required \u201cdelighting\u201d customers. No one can argue,\u00a0specifically, with any of these definitions of small business success, but they miss an important\u00a0element of the definition of success for the small business owner: <strong><em>to be free and independent<\/em><\/strong>.<\/p>\n<p class=\"no-indent\">Many people have studied whether there is any significant difference between the small business owner and the entrepreneur. Some entrepreneurs place more emphasis on growth in their definition of success.<a class=\"footnote\" title=\"William Dunkelberg and A. C. Cooper. \u201cEntrepreneurial Typologies: An Empirical Study,\u201d Frontiers of Entrepreneurial Research, ed. K. H. Vesper (Wellesley, MA: Babson College, Centre for Entrepreneurial Studies, 1982), 1\u201315.\" id=\"return-footnote-34-1\" href=\"#footnote-34-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a> However, it is clear that entrepreneurs and small business owners define much of their personal and their firm\u2019s success in the context of providing them with independence. For many small business owners, being in charge of their own life is the prime motivator: a \u201cfervently guarded sense of independence,\u201d and money is seen as a beneficial byproduct.<a class=\"footnote\" title=\"\u201cReport on the Commission or Enquiry on Small Firms,\u201d Bolton Report, vol. 339 (London: HMSO, February 1973), 156\u201373.\" id=\"return-footnote-34-2\" href=\"#footnote-34-2\" aria-label=\"Footnote 2\"><sup class=\"footnote\">[2]<\/sup><\/a> <a class=\"footnote\" title=\"Paul Burns and Christopher Dewhurst, Small Business and Entrepreneurship, 2nd ed. (Basingstoke, UK: Macmillan, 1996), 17.\" id=\"return-footnote-34-3\" href=\"#footnote-34-3\" aria-label=\"Footnote 3\"><sup class=\"footnote\">[3]<\/sup><\/a> <a class=\"footnote\" title=\"Graham Beaver, Business, Entrepreneurship and Enterprise Development(Englewood Cliffs, NJ: Prentice Hall, 2002), 33.\" id=\"return-footnote-34-4\" href=\"#footnote-34-4\" aria-label=\"Footnote 4\"><sup class=\"footnote\">[4]<\/sup><\/a> Oftentimes, financial performance is seen as an important measure of success. However, small businesses are reluctant to report their financial information, so this will always be an imperfect and incomplete measure of success. <a class=\"footnote\" title=\"Terry L. Besser, \u201cCommunity Involvement and the Perception of Success Among Small Business Operators in Small Towns,\u201d Journal of Small Business Management 37, no 4 (1999): 16.\" id=\"return-footnote-34-5\" href=\"#footnote-34-5\" aria-label=\"Footnote 5\"><sup class=\"footnote\">[5]<\/sup><\/a> Three types of small business operators can be identified based on what they see as constituting success:<\/p>\n<ol>\n<li>An artisan whose intrinsic satisfaction comes from performing the business activity<\/li>\n<li>The entrepreneur who seeks growth<\/li>\n<li>The owner who seeks independence<a class=\"footnote\" title=\"M. K. J. Stanworth and J. Curran, \u201cGrowth and the Small Firm: An Alternative View,\u201d Journal of Management Studies 13, no. 2 (1976): 95\u2013111.\" id=\"return-footnote-34-6\" href=\"#footnote-34-6\" aria-label=\"Footnote 6\"><sup class=\"footnote\">[6]<\/sup><\/a><\/li>\n<\/ol>\n<p>When discussing failure rates in small business, there is only one appropriate word: confusion. There are wildly different values, from 90 percent to 1 percent, with a wide range of values in between.<a class=\"footnote\" title=\"Roger Dickinson, \u201cBusiness Failure Rate,\u201d American Journal of Small Business 6, no. 2 (1981): 17\u201325.\" id=\"return-footnote-34-7\" href=\"#footnote-34-7\" aria-label=\"Footnote 7\"><sup class=\"footnote\">[7]<\/sup><\/a> Obviously, there is a problem with these results, or some factor is missing. One factor that would explain this discrepancy is the different definitions of the term failure. A second factor is that of timeline. When will a firm fail after it starts operation?<\/p>\n<p>The term failure can have several meanings.<a class=\"footnote\" title=\"A. B. Cochran, \u201cSmall Business Failure Rates: A Review of the Literature,\u201dJournal of Small Business Management 19, no. 4, (1981): 50\u201359.\" id=\"return-footnote-34-8\" href=\"#footnote-34-8\" aria-label=\"Footnote 8\"><sup class=\"footnote\">[8]<\/sup><\/a> Small-business failure is often measured by the cessation of a firm\u2019s operation, but this can be brought about by several things:<\/p>\n<ul>\n<li>An owner can die or simply choose to discontinue operations.<\/li>\n<li>The owner may recognize that the business is not generating sufficient return to warrant the effort that is\u00a0being put into it. This is sometimes referred to as the failure of opportunity cost.<\/li>\n<li>A firm that is losing money may be terminated to avoid losses to its creditors.<\/li>\n<li>There can be losses to creditors that bring about cessations of the firm\u2019s operations<\/li>\n<li>The firm can experience bankruptcy. Bankruptcy is probably what most people think of when they hear\u00a0the term business failure. However, the evidence indicates that bankruptcies constitute only a minor\u00a0reason for failure.<\/li>\n<\/ul>\n<p>Failure can therefore be thought of in terms of a cascading series of outcomes (see Figure 2.1 &#8220;Types of Business Failures&#8221;). There are even times when small business owners involved in a closure consider the firm successful at its closing.<a class=\"footnote\" title=\"Don Bradley and Chris Cowdery, \u201cSmall Business: Causes of Bankruptcy,\u201d July 26, 2004, accessed October 7, 2011, www.sbaer.uca.edu\/research\/asbe\/2004_fall\/16.pdf.\" id=\"return-footnote-34-9\" href=\"#footnote-34-9\" aria-label=\"Footnote 9\"><sup class=\"footnote\">[9]<\/sup><\/a> Then there is the complication of considering the industry of the small business when examining failure and bankruptcy. The rates of failure can vary considerably across different industries; in the fourth quarter of 2009, the failure rates for service firms were half that of transportation firms.<a class=\"footnote\" title=\"\u201cEquifax Study Shows the Ups and Downs of Commercial Credit Trends,\u201dEquifax, 2010, accessed October 7, 2011 www.equifax.com\/PR\/pdfs\/CommercialFactSheetFN3810.pdf\" id=\"return-footnote-34-10\" href=\"#footnote-34-10\" aria-label=\"Footnote 10\"><sup class=\"footnote\">[10]<\/sup><\/a><\/p>\n<figure id=\"attachment_38\" aria-describedby=\"caption-attachment-38\" style=\"width: 367px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-content\/uploads\/sites\/23\/2018\/12\/Figure-1-BIG-300x211.jpg\" alt=\"\" class=\"wp-image-38\" width=\"367\" height=\"258\" srcset=\"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-content\/uploads\/sites\/23\/2018\/12\/Figure-1-BIG-300x211.jpg 300w, https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-content\/uploads\/sites\/23\/2018\/12\/Figure-1-BIG-768x541.jpg 768w, https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-content\/uploads\/sites\/23\/2018\/12\/Figure-1-BIG-1024x722.jpg 1024w, https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-content\/uploads\/sites\/23\/2018\/12\/Figure-1-BIG-65x46.jpg 65w, https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-content\/uploads\/sites\/23\/2018\/12\/Figure-1-BIG-225x159.jpg 225w, https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-content\/uploads\/sites\/23\/2018\/12\/Figure-1-BIG-350x247.jpg 350w, https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-content\/uploads\/sites\/23\/2018\/12\/Figure-1-BIG.jpg 1172w\" sizes=\"auto, (max-width: 367px) 100vw, 367px\" \/><figcaption id=\"caption-attachment-38\" class=\"wp-caption-text\">Figure 2.1 Types of Business Failures<\/figcaption><\/figure>\n<p style=\"text-align: left;\">The second issue associated with small business failure is a consideration of the time horizon. Again, there are wildly different viewpoints. The Dan River Small Business Development Center presented data that indicated that 95 percent of small businesses fail within five years.<a class=\"footnote\" title=\"Don Bradley and Chris Cowdery, \u201cSmall Business: Causes of Bankruptcy,\u201d July 26, 2004, accessed October 7, 2011,www.sbaer.uca.edu\/research\/asbe\/2004_fall\/16.pdf.\" id=\"return-footnote-34-11\" href=\"#footnote-34-11\" aria-label=\"Footnote 11\"><sup class=\"footnote\">[11]<\/sup><\/a> Dun and Bradstreet reported that companies with fewer than twenty employees have only a 37 percent chance of surviving four years, but only 10 percent will go bankrupt.<a class=\"footnote\" title=\"Don Bradley and Chris Cowdery, \u201cSmall Business: Causes of Bankruptcy,\u201d July 26, 2004, accessed October 7, 2011,www.sbaer.uca.edu\/research\/asbe\/2004_fall\/16.pdf\" id=\"return-footnote-34-12\" href=\"#footnote-34-12\" aria-label=\"Footnote 12\"><sup class=\"footnote\">[12]<\/sup><\/a> The US Bureau of Labor Statistics indicated that 66 percent of new establishments survive for two years, and that number drops to 44 percent two years later.<a class=\"footnote\" title=\"Anita Campbell, \u201cBusiness Failure Rates Is Highest in First Two Years,\u201d Small Business Trends, July 7, 2005, accessed October 7, 2011,smallbiztrends.com\/2005\/07\/business-failure-rates-highest-in.html\" id=\"return-footnote-34-13\" href=\"#footnote-34-13\" aria-label=\"Footnote 13\"><sup class=\"footnote\">[13]<\/sup><\/a> It appears that the longer you survive, the higher the probability of your continued existence. This makes sense, but it is no guarantee. Any business can fail after many years of success.<\/p>\n<h1>Why Do Small Businesses Fail?<\/h1>\n<p>There is no more puzzling or better studied issue in the field of small business than what causes\u00a0them to fail. Given the critical role of small businesses in the US economy, the economic\u00a0consequences of failure can be significant. Yet there is no definitive answer to the question.<\/p>\n<p class=\"no-indent\">Three broad categories of causes of failure have been identified: managerial inadequacy,\u00a0financial inadequacy, and external factors. The first cause,managerial inadequacy, is the most\u00a0frequently mentioned reason for firm failure.<a class=\"footnote\" title=\"T. C. Carbone, \u201cThe Challenges of Small Business Management,\u201d Management World 9, no. 10 (1980): 36.\" id=\"return-footnote-34-14\" href=\"#footnote-34-14\" aria-label=\"Footnote 14\"><sup class=\"footnote\">[14]<\/sup><\/a> Unfortunately, it is an all-inclusive explanation, much like explaining that all plane crashes are due to pilot failure. Over thirty years ago, it was observed that \u201cwhile everyone agrees that bad management is the prime cause of failure, no one agrees what \u2018bad management\u2019 means nor how it can be recognized except that the company has collapsed\u2014then everyone agrees that how badly managed it was.\u201d<a class=\"footnote\" title=\"John Argenti, Corporate Collapse: The Causes and Symptoms (New York: McGraw-Hill, 1976), 45.\" id=\"return-footnote-34-15\" href=\"#footnote-34-15\" aria-label=\"Footnote 15\"><sup class=\"footnote\">[15]<\/sup><\/a> This observation remains true today.<\/p>\n<p class=\"no-indent\">The second most common explanation cites financial inadequacy, or a lack of financial strength\u00a0in a firm. A third set of explanations center on environmental or external factors, such as a\u00a0significant decline in the economy.\u00a0Because it is important that small firms succeed, not fail, each factor will be discussed in detail.\u00a0However, these factors are not independent elements distinct from each other. A declining\u00a0economy will depress a firm\u2019s sales, which negatively affects a firm\u2019s cash flow. An owner who\u00a0lacks the knowledge and experience to manage this cash flow problem will see his or her firm\u00a0fail.<\/p>\n<p class=\"no-indent\">Managerial inadequacy is generally perceived as the major cause of small business failure.\u00a0Unfortunately, this term encompasses a very broad set of issues. It has been estimated that two\u00a0thirds of small business failures are due to the incompetence of the owner-manager.<a class=\"footnote\" title=\"Graham Beaver, \u201cSmall Business: Success and Failure,\u201d Strategic Change 12, no. 3 (2003): 115\u201322.\" id=\"return-footnote-34-16\" href=\"#footnote-34-16\" aria-label=\"Footnote 16\"><sup class=\"footnote\">[16]<\/sup><\/a> The identified problems cover behavioral issues, a lack of business skills, a lack of specific technical skills, and marketing myopia. Specifying every limitation of these owners would be prohibitive. However, some limitations are mentioned with remarkable consistency. Having poor communication skills, with employees and\/or customers, appears to be a marker for failure.<a class=\"footnote\" title=\"Sharon Nelton, \u201cTen Key Threats to Success,\u201d Nation\u2019s Business 80, no. 6 (1992): 18\u201324.\" id=\"return-footnote-34-17\" href=\"#footnote-34-17\" aria-label=\"Footnote 17\"><sup class=\"footnote\">[17]<\/sup><\/a> The inability to listen to criticism or divergent views is a marker for failure, as is the inability to be flexible in one\u2019s thinking.<a class=\"footnote\" title=\"Robert N. Steck, \u201cWhy New Businesses Fail,\u201d Dun and Bradstreet Reports 33, no. 6 (1985): 34\u201338.\" id=\"return-footnote-34-18\" href=\"#footnote-34-18\" aria-label=\"Footnote 18\"><sup class=\"footnote\">[18]<\/sup><\/a><\/p>\n<p class=\"no-indent\">Ask many small business owners where their strategic plans exist, and they may point to their foreheads. The failure to conduct formal planning may be the most frequently mentioned item with respect to small business failure. Given the relative lack of resources, it is not surprising that small firms tend to opt for intuitive approaches to planning.<a class=\"footnote\" title=\"G. E. Tibbits, \u201cSmall Business Management: A Normative Approach,\u201d in Small Business Perspectives, ed. Peter Gorb, Phillip Dowell, and Peter Wilson (London: Armstrong Publishing, 1981), 105.\" id=\"return-footnote-34-19\" href=\"#footnote-34-19\" aria-label=\"Footnote 19\"><sup class=\"footnote\">[19]<\/sup><\/a><a class=\"footnote\" title=\"Jim Brown, Business Growth Action Kit (London: Kogan Page, 1995), 26.\" id=\"return-footnote-34-20\" href=\"#footnote-34-20\" aria-label=\"Footnote 20\"><sup class=\"footnote\">[20]<\/sup><\/a> Formal approaches to planning are seen as a waste of time,<a class=\"footnote\" title=\"Christopher Orpen, \u201cStrategic Planning, Scanning Activities and the Financial Performance of Small Firms,\u201d Journal of Strategic Change 3, no. 1 (1994): 45\u201355.\" id=\"return-footnote-34-21\" href=\"#footnote-34-21\" aria-label=\"Footnote 21\"><sup class=\"footnote\">[21]<\/sup><\/a> or they are seen as too theoretical.<a class=\"footnote\" title=\"Sandra Hogarth-Scott, Kathryn Watson, and Nicholas Wilson, \u201cDo Small Business Have to Practice Marketing to Survive and Grow?,\u201d Marketing Intelligence and Planning 14, no. 1 (1995): 6\u201318.\" id=\"return-footnote-34-22\" href=\"#footnote-34-22\" aria-label=\"Footnote 22\"><sup class=\"footnote\">[22]<\/sup><\/a> The end result is that many small business owners fail to conduct formal strategic planning in a meaningful way.<a class=\"footnote\" title=\"Isaiah A. Litvak and Christopher J. Maule, \u201cEntrepreneurial Success or Failure\u2014Ten Years Later,\u201d Business Quarterly 45, no. 4 (1980): 65.\" id=\"return-footnote-34-23\" href=\"#footnote-34-23\" aria-label=\"Footnote 23\"><sup class=\"footnote\">[23]<\/sup><\/a><a class=\"footnote\" title=\"Hans J. Pleitner, \u201cStrategic Behavior in Small and Medium-Sized Firms: Preliminary Considerations,\u201d Journal of Small Business Management 27, no. 4 (1989): 70\u201375.\" id=\"return-footnote-34-24\" href=\"#footnote-34-24\" aria-label=\"Footnote 24\"><sup class=\"footnote\">[24]<\/sup><\/a> In fact, many fail to conduct any planning;<a class=\"footnote\" title=\"Richard Monk, \u201cWhy Small Businesses Fail,\u201d CMA Management 74, no. 6 (2000): 12.\" id=\"return-footnote-34-25\" href=\"#footnote-34-25\" aria-label=\"Footnote 25\"><sup class=\"footnote\">[25]<\/sup><\/a><a class=\"footnote\" title=\"Anonymous, \u201cTop-10 Deadly Mistakes for Small Business,\u201d Green Industry Pro19, no. 7 (2007): 58.\" id=\"return-footnote-34-26\" href=\"#footnote-34-26\" aria-label=\"Footnote 26\"><sup class=\"footnote\">[26]<\/sup><\/a> others may fail to conduct operational planning, such as marketing strategies.<a class=\"footnote\" title=\"Rubik Atamian and Neal R. VanZante, \u201cContinuing Education: A Vital Ingredient of the \u2018Success Plan\u2019 for Business,\u201d Journal of Business and Economic Research 8, no. 3 (2010): 37\u201342.\" id=\"return-footnote-34-27\" href=\"#footnote-34-27\" aria-label=\"Footnote 27\"><sup class=\"footnote\">[27]<\/sup><\/a> The evidence appears to clearly indicate that a small firm that wishes to be successful needs to not only develop an initial strategic plan but also conduct an ongoing process of strategic renewal through planning.<\/p>\n<p class=\"no-indent\">Many managers do not have the ability to correctly select staff or manage them.<a class=\"footnote\" title=\"T. Carbone, \u201cFour Common Management Failures\u2014And How to Avoid Them,\u201dManagement World 10, no. 8 (1981): 38\u201339.\" id=\"return-footnote-34-28\" href=\"#footnote-34-28\" aria-label=\"Footnote 28\"><sup class=\"footnote\">[28]<\/sup><\/a> Other managerial failings appear to be in limitations in the functional area of marketing. Failing firms tend to ignore the changing demands of their customers, something that can have devastating effects.<a class=\"footnote\" title=\"Anonymous, \u201cTop-10 Deadly Mistakes for Small Business,\u201d Green Industry Pro19, no. 7 (2007): 58.\" id=\"return-footnote-34-29\" href=\"#footnote-34-29\" aria-label=\"Footnote 29\"><sup class=\"footnote\">[29]<\/sup><\/a> The failure to understand what customers value and being able to adapt to changing customer needs often leads to business failure.<a class=\"footnote\" title=\"Rubik Atamian and Neal R. VanZante, \u201cContinuing Education: A Vital Ingredient of the \u2018Success Plan\u2019 for Business,\u201d Journal of Business and Economic Research 8, no. 3 (2010): 37\u201342.\" id=\"return-footnote-34-30\" href=\"#footnote-34-30\" aria-label=\"Footnote 30\"><sup class=\"footnote\">[30]<\/sup><\/a><\/p>\n<p class=\"no-indent\">The second major cause of small business failure is finance. Financial problems fall into three\u00a0categories: start-up, cash flow, and financial management. When a firm begins operation (startup), it will require capital. Unfortunately, many small business owners initially underestimate\u00a0the amount of capital that should be available for operations.<a class=\"footnote\" title=\"Howard Upton, \u201cManagement Mistakes in a New Business,\u201d National Petroleum News 84, no. 10 (1992): 50.\" id=\"return-footnote-34-31\" href=\"#footnote-34-31\" aria-label=\"Footnote 31\"><sup class=\"footnote\">[31]<\/sup><\/a> This may explain why most small firms that fail do so within the first few years of their creation. The failure to start with sufficient capital can be attributed to the inability of the owner to acquire the needed capital. It can also be due to the owner\u2019s failure to sufficiently plan for his or her capital needs. Here we see the possible interactions among the major causes of firm failure. Cash-flow management has been identified as a prime cause for failure.<a class=\"footnote\" title=\"Rubik Atamian and Neal R. VanZante, \u201cContinuing Education: A Vital Ingredient of the \u2018Success Plan\u2019 for Business,\u201d Journal of Business and Economic Research 8, no. 3 (2010): 37\u201342.\" id=\"return-footnote-34-32\" href=\"#footnote-34-32\" aria-label=\"Footnote 32\"><sup class=\"footnote\">[32]<\/sup><\/a><a class=\"footnote\" title=\"Arthur R. DeThomas and William B. Fredenberger, \u201cAccounting Needs of Very Small Business,\u201d The CPA Journal 55, no. 10 (1985): 14\u201320.\" id=\"return-footnote-34-33\" href=\"#footnote-34-33\" aria-label=\"Footnote 33\"><sup class=\"footnote\">[33]<\/sup><\/a> Good cash-flow management is essential for the survival of any firm, but small firms, in particular, must pay close attention to this process.<\/p>\n<p class=\"no-indent\">Small businesses must develop and maintain effective financial controls, such as credit\u00a0controls.<a class=\"footnote\" title=\"Roger Brown, \u201cKeeping Control of Your Credit,\u201d Motor Transportation, April 2009, 8.\" id=\"return-footnote-34-34\" href=\"#footnote-34-34\" aria-label=\"Footnote 34\"><sup class=\"footnote\">[34]<\/sup><\/a> For very small businesses, this translates into having an owner who has at least a fundamental familiarity with accounting and finance.<a class=\"footnote\" title=\"Arthur R. DeThomas and William B. Fredenberger, \u201cAccounting Needs of Very Small Business,\u201d The CPA Journal 55, no. 10 (1985): 14\u201320.\" id=\"return-footnote-34-35\" href=\"#footnote-34-35\" aria-label=\"Footnote 35\"><sup class=\"footnote\">[35]<\/sup><\/a> In addition, the small firm will need either an in-house or an outsourced accountant.<a class=\"footnote\" title=\"Hugh M. O\u2019Neill and Jacob Duker, \u201cSurvival and Failure in Small Business,\u201dJournal of Small Business Management 24, no. 1 (1986): 30\u201337.\" id=\"return-footnote-34-36\" href=\"#footnote-34-36\" aria-label=\"Footnote 36\"><sup class=\"footnote\">[36]<\/sup><\/a> Unfortunately, many owners fail to fully use their accountants\u2019 advice to manage their businesses.<a class=\"footnote\" title=\"Arthur R. DeThomas and William B. Fredenberger, \u201cAccounting Needs of Very Small Business,\u201d The CPA Journal 55, no. 10 (1985): 14\u201320.\" id=\"return-footnote-34-37\" href=\"#footnote-34-37\" aria-label=\"Footnote 37\"><sup class=\"footnote\">[37]<\/sup><\/a><\/p>\n<p class=\"no-indent\">The last major factor identified with the failure of small businesses is the external environment.\u00a0There is a potentially infinite list of causes, but the economic environment tends to be most\u00a0prominent. Here again, however, confusing appears to describe the list. Some argue that\u00a0economic conditions contribute to between 30 percent and 50 percent of small business failures,\u00a0in direct contradiction to the belief that managerial incompetence is the major cause.<a class=\"footnote\" title=\"Jim Everett and John Watson, \u201cSmall Business Failures and External Risk Factors,\u201d Small Business Economics 11, no. 4 (1998): 371\u201390.\" id=\"return-footnote-34-38\" href=\"#footnote-34-38\" aria-label=\"Footnote 38\"><sup class=\"footnote\">[38]<\/sup><\/a> Two economic measures appear to affect failure rates: interest rates, which appear to be tied to bankruptcies, and the unemployment rate, which appears to be tied to discontinuance.<a class=\"footnote\" title=\"Jim Everett and John Watson, \u201cSmall Business Failures and External Risk Factors,\u201d Small Business Economics 11, no. 4 (1998): 371\u201390.\" id=\"return-footnote-34-39\" href=\"#footnote-34-39\" aria-label=\"Footnote 39\"><sup class=\"footnote\">[39]<\/sup><\/a> The potential impact of these external economic variables might be that small business owners need to be either planners to cover potential contingencies or lucky.<\/p>\n<p class=\"no-indent\">Even given the confusing and sometimes conflicting results with respect to failure in small\u00a0businesses, some common themes can be identified. The reasons for failure fall into three broad\u00a0categories: managerial inadequacy, finance, and environmental. They, in turn, have some\u00a0consistently mentioned factors (see Table 2.1 &#8220;Reasons for Small Business Failure&#8221;). These\u00a0factors should be viewed as warning signs\u2014danger areas that need to be avoided if you wish to\u00a0survive. Although small business owners cannot directly affect environmental conditions, they\u00a0can recognize the potential problems that they might bring. This text will provide guidance on\u00a0how the small business owner can minimize these threats through proactive leadership.<\/p>\n<h3>Table 2.1 Reasons for Small Business Failure<\/h3>\n<table style=\"border-collapse: collapse; width: 98.5835%; height: 353px;\">\n<tbody>\n<tr style=\"height: 16px;\">\n<td style=\"width: 33.3333%; text-align: center; height: 16px;\"><span style=\"text-decoration: underline;\"><strong>Managerial Inadequacy\u00a0<\/strong><\/span><\/td>\n<td style=\"width: 33.3333%; text-align: center; height: 16px;\"><span style=\"text-decoration: underline;\"><strong>Financial Inadequacy\u00a0<\/strong><\/span><\/td>\n<td style=\"width: 64.8857%; text-align: center; height: 16px;\"><span style=\"text-decoration: underline;\"><strong>External Factors<\/strong><\/span><\/td>\n<\/tr>\n<tr style=\"height: 405px;\">\n<td style=\"width: 33.3333%; height: 337px;\">\n<ul>\n<li>Failure in planning (initial start-up\u00a0plan and subsequent plans)<\/li>\n<li>Inexperience with managing\u00a0business operation<\/li>\n<li>Ineffective staffing<\/li>\n<li>Poor communication skills<\/li>\n<li>Failure to seek or respond to criticism<\/li>\n<li>Failure to learn from past failures<\/li>\n<li>Ignoring customers\u2019 needs<\/li>\n<li>Ignoring competition<\/li>\n<li>Failure to diversify customer base<\/li>\n<li>Failure to innovate<\/li>\n<li>Ineffective marketing strategies<\/li>\n<\/ul>\n<\/td>\n<td style=\"width: 33.3333%; height: 337px;\">\n<ul>\n<li>Cash-flow problems<\/li>\n<li>Insufficient initial capitalization<\/li>\n<li>Inadequate financial records<\/li>\n<li>Not using accountants\u2019 insights<\/li>\n<li>Inadequate capital acquisition\u00a0strategies<\/li>\n<li>Failure to deal with financial\u00a0issues brought about by growth<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/td>\n<td style=\"width: 64.8857%; height: 337px;\">\n<ul>\n<li>Downturn in economy<\/li>\n<li>Rising unemployment<\/li>\n<li>Rising interest rates<\/li>\n<li>Product or service no longer\u00a0desired by customers<\/li>\n<li>Unmatchable foreign\u00a0competition<\/li>\n<li>Fraud<\/li>\n<li>Disaster<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Ultimately, business failure will be a company-specific combination of factors. Monitor101, a\u00a0company that developed an Internet information monitoring product for institutional investors\u00a0in 2005, failed badly. One of the cofounders identified the following seven mistakes that were\u00a0made, most of which can be linked to managerial inadequacy:<a class=\"footnote\" title=\"Roger Ehrenberg, \u201cMonitor 110: A Post Mortem\u2014Turning Failure into Learning,\u201d Making It!, August 27, 2009, accessed June 1, 2012,http:\/\/www.makingittv.com\/Small-Business-Entrepreneur-StoryFailure.htm\" id=\"return-footnote-34-40\" href=\"#footnote-34-40\" aria-label=\"Footnote 40\"><sup class=\"footnote\">[40]<\/sup><\/a><\/p>\n<ol>\n<li>The lack of a single \u201cthe buck stops here\u201d leader until too late in the game<\/li>\n<li>No separation between the technology organization and the product organization<\/li>\n<li>\u00a0Too much public relations, too early<\/li>\n<li>Too much money<\/li>\n<li>Not close enough to the customer<\/li>\n<li>Slowness to adapt to market reality<\/li>\n<li>Disagreement on strategy within the company and with the board<\/li>\n<\/ol>\n<p>\u201cEntrepreneurs Turn Business Failure into Success\u201d\u00a0Bloomberg Businessweek&#8217;s 2008 cover story highlights owners who turn business failure into success.\u00a0<a class=\"footnote\" title=\"http:\/\/www.businessweek.com\/magazine\/content\/08_70\/s0810040731198.htm\" id=\"return-footnote-34-41\" href=\"#footnote-34-41\" aria-label=\"Footnote 41\"><sup class=\"footnote\">[41]<\/sup><\/a><\/p>\n<div class=\"textbox key-takeaways\">\n<h3 itemprop=\"educationalUse\">Key Takeaways<\/h3>\n<ul>\n<li>There is no universal definition for small business success.\u00a0However, many small business owners see success as their\u00a0own independence.<\/li>\n<li>The failure rates for small businesses are wide ranging. There is\u00a0no consensus.<\/li>\n<li>Three broad categories of factors are thought to contribute to\u00a0small business failure: managerial inadequacy, financial\u00a0inadequacy, and external forces, most notably the economic\u00a0environment.<\/li>\n<\/ul>\n<\/div>\n<div class=\"textbox exercises\">\n<h3 itemprop=\"educationalUse\">Exercises<\/h3>\n<ol>\n<li>Starting a business can be a daunting task. It can be made even\u00a0more daunting if the type of business you choose is particularly\u00a0risky. Go to: www.forbes.com\/2007\/01\/18\/fairisaac-nordstromverizon-ent-fincx_mf_0118risky_slide.html?thisSpeed=undefined; where the\u00a0ten riskiest businesses are identified. Select any two of these\u00a0businesses and address why you think they are risky<\/li>\n<li>Amy Knaup is the author of a 2005 study \u201cSurvival and Longevity in the Business Employment Dynamics Data\u201d ( seewww.bls.gov\/opub\/mlr\/2005\/05\/ressum.pdf ). The article points to different survival rates for ten different industries. Discuss why there are significant differences in the survival rates among these industries.<\/li>\n<\/ol>\n<\/div>\n<hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-34-1\">William Dunkelberg and A. C. Cooper. \u201cEntrepreneurial Typologies: An Empirical Study,\u201d Frontiers of Entrepreneurial Research, ed. K. H. Vesper (Wellesley, MA: Babson College, Centre for Entrepreneurial Studies, 1982), 1\u201315. <a href=\"#return-footnote-34-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><li id=\"footnote-34-2\">\u201cReport on the Commission or Enquiry on Small Firms,\u201d Bolton Report, vol. 339 (London: HMSO, February 1973), 156\u201373. <a href=\"#return-footnote-34-2\" class=\"return-footnote\" aria-label=\"Return to footnote 2\">&crarr;<\/a><\/li><li id=\"footnote-34-3\">Paul Burns and Christopher Dewhurst, Small Business and Entrepreneurship, 2nd ed. (Basingstoke, UK: Macmillan, 1996), 17. <a href=\"#return-footnote-34-3\" class=\"return-footnote\" aria-label=\"Return to footnote 3\">&crarr;<\/a><\/li><li id=\"footnote-34-4\">Graham Beaver, Business, Entrepreneurship and Enterprise Development(Englewood Cliffs, NJ: Prentice Hall, 2002), 33. <a href=\"#return-footnote-34-4\" class=\"return-footnote\" aria-label=\"Return to footnote 4\">&crarr;<\/a><\/li><li id=\"footnote-34-5\">Terry L. Besser, \u201cCommunity Involvement and the Perception of Success Among Small Business Operators in Small Towns,\u201d Journal of Small Business Management 37, no 4 (1999): 16. <a href=\"#return-footnote-34-5\" class=\"return-footnote\" aria-label=\"Return to footnote 5\">&crarr;<\/a><\/li><li id=\"footnote-34-6\">M. K. J. Stanworth and J. Curran, \u201cGrowth and the Small Firm: An Alternative View,\u201d Journal of Management Studies 13, no. 2 (1976): 95\u2013111. <a href=\"#return-footnote-34-6\" class=\"return-footnote\" aria-label=\"Return to footnote 6\">&crarr;<\/a><\/li><li id=\"footnote-34-7\">Roger Dickinson, \u201cBusiness Failure Rate,\u201d American Journal of Small Business 6, no. 2 (1981): 17\u201325. <a href=\"#return-footnote-34-7\" class=\"return-footnote\" aria-label=\"Return to footnote 7\">&crarr;<\/a><\/li><li id=\"footnote-34-8\">A. B. Cochran, \u201cSmall Business Failure Rates: A Review of the Literature,\u201dJournal of Small Business Management 19, no. 4, (1981): 50\u201359. <a href=\"#return-footnote-34-8\" class=\"return-footnote\" aria-label=\"Return to footnote 8\">&crarr;<\/a><\/li><li id=\"footnote-34-9\">Don Bradley and Chris Cowdery, \u201cSmall Business: Causes of Bankruptcy,\u201d July 26, 2004, accessed October 7, 2011, www.sbaer.uca.edu\/research\/asbe\/2004_fall\/16.pdf. <a href=\"#return-footnote-34-9\" class=\"return-footnote\" aria-label=\"Return to footnote 9\">&crarr;<\/a><\/li><li id=\"footnote-34-10\"> \u201cEquifax Study Shows the Ups and Downs of Commercial Credit Trends,\u201dEquifax, 2010, accessed October 7, 2011 www.equifax.com\/PR\/pdfs\/CommercialFactSheetFN3810.pdf <a href=\"#return-footnote-34-10\" class=\"return-footnote\" aria-label=\"Return to footnote 10\">&crarr;<\/a><\/li><li id=\"footnote-34-11\">Don Bradley and Chris Cowdery, \u201cSmall Business: Causes of Bankruptcy,\u201d July 26, 2004, accessed October 7, 2011,www.sbaer.uca.edu\/research\/asbe\/2004_fall\/16.pdf. <a href=\"#return-footnote-34-11\" class=\"return-footnote\" aria-label=\"Return to footnote 11\">&crarr;<\/a><\/li><li id=\"footnote-34-12\">Don Bradley and Chris Cowdery, \u201cSmall Business: Causes of Bankruptcy,\u201d July 26, 2004, accessed October 7, 2011,www.sbaer.uca.edu\/research\/asbe\/2004_fall\/16.pdf <a href=\"#return-footnote-34-12\" class=\"return-footnote\" aria-label=\"Return to footnote 12\">&crarr;<\/a><\/li><li id=\"footnote-34-13\">Anita Campbell, \u201cBusiness Failure Rates Is Highest in First Two Years,\u201d Small Business Trends, July 7, 2005, accessed October 7, 2011,smallbiztrends.com\/2005\/07\/business-failure-rates-highest-in.html <a href=\"#return-footnote-34-13\" class=\"return-footnote\" aria-label=\"Return to footnote 13\">&crarr;<\/a><\/li><li id=\"footnote-34-14\">T. C. Carbone, \u201cThe Challenges of Small Business Management,\u201d Management World 9, no. 10 (1980): 36. <a href=\"#return-footnote-34-14\" class=\"return-footnote\" aria-label=\"Return to footnote 14\">&crarr;<\/a><\/li><li id=\"footnote-34-15\">John Argenti, Corporate Collapse: The Causes and Symptoms (New York: McGraw-Hill, 1976), 45. <a href=\"#return-footnote-34-15\" class=\"return-footnote\" aria-label=\"Return to footnote 15\">&crarr;<\/a><\/li><li id=\"footnote-34-16\">Graham Beaver, \u201cSmall Business: Success and Failure,\u201d Strategic Change 12, no. 3 (2003): 115\u201322. <a href=\"#return-footnote-34-16\" class=\"return-footnote\" aria-label=\"Return to footnote 16\">&crarr;<\/a><\/li><li id=\"footnote-34-17\">Sharon Nelton, \u201cTen Key Threats to Success,\u201d Nation\u2019s Business 80, no. 6 (1992): 18\u201324. <a href=\"#return-footnote-34-17\" class=\"return-footnote\" aria-label=\"Return to footnote 17\">&crarr;<\/a><\/li><li id=\"footnote-34-18\">Robert N. Steck, \u201cWhy New Businesses Fail,\u201d Dun and Bradstreet Reports 33, no. 6 (1985): 34\u201338. <a href=\"#return-footnote-34-18\" class=\"return-footnote\" aria-label=\"Return to footnote 18\">&crarr;<\/a><\/li><li id=\"footnote-34-19\">G. E. Tibbits, \u201cSmall Business Management: A Normative Approach,\u201d in Small Business Perspectives, ed. Peter Gorb, Phillip Dowell, and Peter Wilson (London: Armstrong Publishing, 1981), 105. <a href=\"#return-footnote-34-19\" class=\"return-footnote\" aria-label=\"Return to footnote 19\">&crarr;<\/a><\/li><li id=\"footnote-34-20\">Jim Brown, Business Growth Action Kit (London: Kogan Page, 1995), 26. <a href=\"#return-footnote-34-20\" class=\"return-footnote\" aria-label=\"Return to footnote 20\">&crarr;<\/a><\/li><li id=\"footnote-34-21\">Christopher Orpen, \u201cStrategic Planning, Scanning Activities and the Financial Performance of Small Firms,\u201d Journal of Strategic Change 3, no. 1 (1994): 45\u201355. <a href=\"#return-footnote-34-21\" class=\"return-footnote\" aria-label=\"Return to footnote 21\">&crarr;<\/a><\/li><li id=\"footnote-34-22\">Sandra Hogarth-Scott, Kathryn Watson, and Nicholas Wilson, \u201cDo Small Business Have to Practice Marketing to Survive and Grow?,\u201d Marketing Intelligence and Planning 14, no. 1 (1995): 6\u201318. <a href=\"#return-footnote-34-22\" class=\"return-footnote\" aria-label=\"Return to footnote 22\">&crarr;<\/a><\/li><li id=\"footnote-34-23\">Isaiah A. Litvak and Christopher J. Maule, \u201cEntrepreneurial Success or Failure\u2014Ten Years Later,\u201d Business Quarterly 45, no. 4 (1980): 65. <a href=\"#return-footnote-34-23\" class=\"return-footnote\" aria-label=\"Return to footnote 23\">&crarr;<\/a><\/li><li id=\"footnote-34-24\">Hans J. Pleitner, \u201cStrategic Behavior in Small and Medium-Sized Firms: Preliminary Considerations,\u201d Journal of Small Business Management 27, no. 4 (1989): 70\u201375. <a href=\"#return-footnote-34-24\" class=\"return-footnote\" aria-label=\"Return to footnote 24\">&crarr;<\/a><\/li><li id=\"footnote-34-25\">Richard Monk, \u201cWhy Small Businesses Fail,\u201d CMA Management 74, no. 6 (2000): 12. <a href=\"#return-footnote-34-25\" class=\"return-footnote\" aria-label=\"Return to footnote 25\">&crarr;<\/a><\/li><li id=\"footnote-34-26\">Anonymous, \u201cTop-10 Deadly Mistakes for Small Business,\u201d Green Industry Pro19, no. 7 (2007): 58. <a href=\"#return-footnote-34-26\" class=\"return-footnote\" aria-label=\"Return to footnote 26\">&crarr;<\/a><\/li><li id=\"footnote-34-27\">Rubik Atamian and Neal R. VanZante, \u201cContinuing Education: A Vital Ingredient of the \u2018Success Plan\u2019 for Business,\u201d Journal of Business and Economic Research 8, no. 3 (2010): 37\u201342. <a href=\"#return-footnote-34-27\" class=\"return-footnote\" aria-label=\"Return to footnote 27\">&crarr;<\/a><\/li><li id=\"footnote-34-28\">T. Carbone, \u201cFour Common Management Failures\u2014And How to Avoid Them,\u201dManagement World 10, no. 8 (1981): 38\u201339. <a href=\"#return-footnote-34-28\" class=\"return-footnote\" aria-label=\"Return to footnote 28\">&crarr;<\/a><\/li><li id=\"footnote-34-29\">Anonymous, \u201cTop-10 Deadly Mistakes for Small Business,\u201d Green Industry Pro19, no. 7 (2007): 58. <a href=\"#return-footnote-34-29\" class=\"return-footnote\" aria-label=\"Return to footnote 29\">&crarr;<\/a><\/li><li id=\"footnote-34-30\">Rubik Atamian and Neal R. VanZante, \u201cContinuing Education: A Vital Ingredient of the \u2018Success Plan\u2019 for Business,\u201d Journal of Business and Economic Research 8, no. 3 (2010): 37\u201342. <a href=\"#return-footnote-34-30\" class=\"return-footnote\" aria-label=\"Return to footnote 30\">&crarr;<\/a><\/li><li id=\"footnote-34-31\">Howard Upton, \u201cManagement Mistakes in a New Business,\u201d National Petroleum News 84, no. 10 (1992): 50. <a href=\"#return-footnote-34-31\" class=\"return-footnote\" aria-label=\"Return to footnote 31\">&crarr;<\/a><\/li><li id=\"footnote-34-32\">Rubik Atamian and Neal R. VanZante, \u201cContinuing Education: A Vital Ingredient of the \u2018Success Plan\u2019 for Business,\u201d Journal of Business and Economic Research 8, no. 3 (2010): 37\u201342. <a href=\"#return-footnote-34-32\" class=\"return-footnote\" aria-label=\"Return to footnote 32\">&crarr;<\/a><\/li><li id=\"footnote-34-33\">Arthur R. DeThomas and William B. Fredenberger, \u201cAccounting Needs of Very Small Business,\u201d The CPA Journal 55, no. 10 (1985): 14\u201320. <a href=\"#return-footnote-34-33\" class=\"return-footnote\" aria-label=\"Return to footnote 33\">&crarr;<\/a><\/li><li id=\"footnote-34-34\">Roger Brown, \u201cKeeping Control of Your Credit,\u201d Motor Transportation, April 2009, 8. <a href=\"#return-footnote-34-34\" class=\"return-footnote\" aria-label=\"Return to footnote 34\">&crarr;<\/a><\/li><li id=\"footnote-34-35\">Arthur R. DeThomas and William B. Fredenberger, \u201cAccounting Needs of Very Small Business,\u201d The CPA Journal 55, no. 10 (1985): 14\u201320. <a href=\"#return-footnote-34-35\" class=\"return-footnote\" aria-label=\"Return to footnote 35\">&crarr;<\/a><\/li><li id=\"footnote-34-36\">Hugh M. O\u2019Neill and Jacob Duker, \u201cSurvival and Failure in Small Business,\u201dJournal of Small Business Management 24, no. 1 (1986): 30\u201337. <a href=\"#return-footnote-34-36\" class=\"return-footnote\" aria-label=\"Return to footnote 36\">&crarr;<\/a><\/li><li id=\"footnote-34-37\">Arthur R. DeThomas and William B. Fredenberger, \u201cAccounting Needs of Very Small Business,\u201d The CPA Journal 55, no. 10 (1985): 14\u201320. <a href=\"#return-footnote-34-37\" class=\"return-footnote\" aria-label=\"Return to footnote 37\">&crarr;<\/a><\/li><li id=\"footnote-34-38\">Jim Everett and John Watson, \u201cSmall Business Failures and External Risk Factors,\u201d Small Business Economics 11, no. 4 (1998): 371\u201390. <a href=\"#return-footnote-34-38\" class=\"return-footnote\" aria-label=\"Return to footnote 38\">&crarr;<\/a><\/li><li id=\"footnote-34-39\">Jim Everett and John Watson, \u201cSmall Business Failures and External Risk Factors,\u201d Small Business Economics 11, no. 4 (1998): 371\u201390. <a href=\"#return-footnote-34-39\" class=\"return-footnote\" aria-label=\"Return to footnote 39\">&crarr;<\/a><\/li><li id=\"footnote-34-40\">Roger Ehrenberg, \u201cMonitor 110: A Post Mortem\u2014Turning Failure into Learning,\u201d Making It!, August 27, 2009, accessed June 1, 2012,http:\/\/www.makingittv.com\/Small-Business-Entrepreneur-StoryFailure.htm <a href=\"#return-footnote-34-40\" class=\"return-footnote\" aria-label=\"Return to footnote 40\">&crarr;<\/a><\/li><li id=\"footnote-34-41\">http:\/\/www.businessweek.com\/magazine\/content\/08_70\/s0810040731198.htm <a href=\"#return-footnote-34-41\" class=\"return-footnote\" aria-label=\"Return to footnote 41\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":30,"menu_order":2,"template":"","meta":{"pb_show_title":"on","pb_short_title":"Success and Failure in Small Businesses","pb_subtitle":"","pb_authors":[],"pb_section_license":"cc-by-nc-sa"},"chapter-type":[],"contributor":[58],"license":[54],"class_list":["post-34","chapter","type-chapter","status-publish","hentry","contributor-mpauley","license-cc-by-nc-sa"],"part":408,"_links":{"self":[{"href":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-json\/pressbooks\/v2\/chapters\/34","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-json\/wp\/v2\/users\/30"}],"version-history":[{"count":29,"href":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-json\/pressbooks\/v2\/chapters\/34\/revisions"}],"predecessor-version":[{"id":1603,"href":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-json\/pressbooks\/v2\/chapters\/34\/revisions\/1603"}],"part":[{"href":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-json\/pressbooks\/v2\/parts\/408"}],"metadata":[{"href":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-json\/pressbooks\/v2\/chapters\/34\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-json\/wp\/v2\/media?parent=34"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-json\/pressbooks\/v2\/chapter-type?post=34"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-json\/wp\/v2\/contributor?post=34"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.library.upei.ca\/smallbusinessmanagement\/wp-json\/wp\/v2\/license?post=34"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}