Study identifies issues faced as small businesses increase employee base

RP news wires
Tags: business management, talent management

Stark differences occur in what matters most to small business owners as their companies evolve from very small entities with fewer than 10 employees to sizeable enterprises approaching 100 employees that resemble larger corporations, according to a new report from The Guardian Life Small Business Research Institute.

Among the compelling findings are that "personal freedom" and "maintaining work-life balance" – often key reasons why an entrepreneur starts a company – decline as small businesses grow larger. On the other hand, "creating opportunities for others" – an unexpected pleasure of running a growing business – increases. The Institute's analysis is based on a comprehensive and methodologically innovative new study, The Guardian Life Index: What Matters Most to America's Small Business Owners.

Maintaining productivity becomes increasingly difficult for small business owners as the size of their company grows. Businesses of two to nine employees tend to revolve around the owner and typically generate far higher revenues per employee than ones with 50-99 employees – between 100 percent and 400 percent higher on average, according to The Guardian Life Index. At the same time, expanding the business becomes a more dominant focus of small business owners at larger firms. Among owners of companies with 50 to 99 employees, 53 percent say they are planning to expand their business. However, at the other end of the spectrum, 58 percent of owners of companies with fewer than ten employees say they are just trying to maintain business as usual.

"Growth unleashes immense opportunities and challenges for small business owners," explained Mark D. Wolf, director of The Guardian Life Small Business Research Institute. "As companies move beyond a small, tight-knit team and become larger, more complex organizations, they increasingly look beyond their own expertise for information, operational support and professional guidance."

According to The Guardian Life Index, the following trends emerge as small businesses grow larger:

In analyzing the shifting focus, needs and priorities of small business owners, The Institute segmented and defined four types of small businesses based on the number of employees:

"These categories provide a much richer way of understanding what matters most to small business owners at different stages of business development," said John Krubski, the researcher who designed the methodology and conducted the study underpinning The Guardian Life Index. Added Krubski, a former Yankelovich Research executive and futurist, "Regardless of the type of industry, a clear progression takes place – as employee base increases – across a wide spectrum of management and professional development issues."