Dear Upananda,

I agree with you that most of small business owners remained in the same business for the rest of their lives. I believe this is because they got enough experience of their business, and didn`t want to risk changing their business.

It's very important, and complicated question. Actually, growth of small business is one of eight research streams that form the whole discipline of entrepreneurship.

The complexity of the question comes from the interdisciplinary nature of growth and a huge number of factors that can trigger or suppress growth.

A classical view for small business growth assumes that the growth is earned by the firms that are active is in producing new products, and penetrating new markets.

A classical paper here is the work of Smallbone, Leig and North
 "The characteristics and strategies of high growth SMEs". They monitored almost 1000 firm from 1979 to 1991 and identified major similarities for high growth.

Another classical perspective can be represented by the article in Harvard business review by Churchill and Lewis 1983 "The five stages of small business growth". They suggest that small firms grow through a multiphase lifecycle. Each phase holds a test with a unique package of challenges. Only when firm passes this phase's test, it graduates to the next phase. They stated five sequential phases:

1) In the initial phase, entrepreneur struggles for "existence"; 2) Next entrepreneur struggle for 'Survival', 3) Then experience the phase of "Growth" where entrepreneur succeeds in it if he/she was able to provide resources for growth; 4) Then he attain the phase of "taking-off"; 5) Finally end at the phase of "resources maturity" where firm is already big but need to work on generating best return on investment.

........

It is interesting to say that none of the mentioned streams of research held to profound empirical investigations. And until the very moment there is no answer. However, there are some researchers -me included- are now doing allot of efforts to study the old problem of growth using new methodologies. I am very optimistic that your question (that has been asked obsessively since 1952) will be answered soon in the next few years.

Dear Amr,

Thank you very much for your evidence based answer. But I am little bit worried about Leig and North
's research on examining 1000 firms. Could you please send me information to get that paper.

Upananda

Hi Upananda,

Here is the link fir the abstract

http://www.emeraldinsight.com/journals.htm?articleid=872004

Dear Amr,

Thanks very much for your prompt attention.

Upananda

Dear Jesus,

Thanks very much for your response.

According to my understanding, the trend, confine to one business, may deals with risk taking propensity, and the priority of objective of starting a small business.

Maybe some business models are just not suitable for high growth (limited regional markets) or neglect additional ways for monitization (new customer segments, new partners, new value propositions, ...)

Thanks for your reponse

I think the issue is now no longer of the interest to many. However, whilst reading the Q&A I just want to include some points that might be of the interest to Upananda.

I believe the understanding of the unique characteristics of the small firm explains why they remain small and in the same business for a long time. If someone ask them whether they want to make more money or not, definitely the answer will be big yes. However, if we ask whether they are willing to put the same energy when they started their businesses, I believe that not all are willing to do so. Each has they own reasons based on their experience while taking care of the existing business.

I always mention to the entrepreneurs during my talks that their success is actually from the result of their positive entrepreneurial behavior and also because of the uncontrollable factor (business luck), However, they must believe that the controllable factors must be there first before they leave it to the uncontrollable factors.

With the limitations that the small firms face (ie capital and manpower), I believe they appreciate the ability to be in the business compared to those who have failed (the majority) and this probably hinders them from looking at other opportunities and jeopardizing the existing business. For me, life is boring by doing one thing in and out everyday. However, if by exploring new things, it affects me and my family, then I need to think twice. Moreover, age is catching up and more are depending on me.

I think majority of small businesses are in this category where many are struggling to make it in their business environment. For those who are without the cited shortfalls (of small business owner-manager), they grow bigger.

In answering your question, there is no solid answer and the answer is unique and known to each owner of the small firms. Similar to the reasons of business success, when the uncontrollable factors are considered, we can not answer why one business that come out with the same product earlier than the other one fail whereas others that come later success even though they carry the same product and cover the same market. Each of us decide on our own life, to take more challenges, can not take more challenges or challenges are not in their radar anymore.

Anyhow, I discover there are some family businesses actually grow, however, not by being larger company but by having more similar companies belonging to the member of the family. The parent company remains the same size and so are the companies belonged to the children. In this case, we need to look at the desire of the owner on how he wants to company to progress. I believe all have their own planning particularly when it is affecting their love ones. 

Family legacy