This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
There are many criteria which can be used to measure the success of small businesses. Mostly success criteria in research and education are evaluated by management and finance to maximize profit and growth of business. The success criteria are designed using management, entrepreneurship, business and psychological literature. Gorgievski et al, (2011) identify ten success criteria. These are profitability, growth, innovation, firm survival/continuity, contributing back to society, personal satisfaction, satisfied stakeholders, good balance between private life and work, public recognition, and utility or usefulness. These criteria are defined with the use of terms defining owner's success which range between performance of business and entrepreneurial and owner's aims and objectives. The combination of different criteria for a specific business has various impacts on business that can be positive or can be negative to each other (Marjan, Evelina, and Ute).
Six Important Key Criteria for SMEs
The six important key criteria which are important for SMEs in my opinion are growth, innovation, firm survival/continuity, contributing back to society, personal satisfaction, and utility or usefulness.The selected criteria's are most important for any business according to my observations and the key features of these criteria's. In order to explain the reason of selecting these criteria's the brief description is as under. I tried to explain the nature of each selected criterion and relate them with appropriate small and medium sized enterprises. In order to explain the criteria appropriately, the selected small and medium sized enterprises are explored to use them accordingly.
The innovation is also measured as key criteria to small business and entrepreneurship and used as performance principle. In a firm, innovation is considered as a critical part during firm activities which increases the growth and profitability of the firm. It mainly focuses on creation and uses a success standard. The innovation in firm activities takes place in different ways such as production of new product, integration of new technology, acquisitions, and strategic planning (Marjan, Evelina, and Ute). Innovation is necessary for a business to compete in the market the small and medium enterprises in United Kingdom are more innovative as compare to Europeas well as the ratio is also very high (Alan Hughes). Green Biologics Ltd. is an innovative industrial biotechnology company located in United Kingdom and produces environmentally supportable biochemical (EuropaBio, Butanol).
The criteria firm survival or continuity refers to staying power or longevity of a business. It is often not considered as good success criteria in literature because of any survival and economic failure in the short run. The strategy of protecting the company from any red is an accomplishment for starting good business but this success principle cannot be defined with this strategy. The firm survival or continuity criteria can be defined such as the business should be able to continue for unlimited time period. To continue a business for long time it should have high comfort in order to have satisfactory financial resources for large reformation possibility to maintain business competitive advantage. The longevity of business refers to have favorable family businesses in order to have financially possibility of transferring business to next generation (Marjan, Evelina, and Ute).The survival of a business is very necessary in order to enhance it with the passage of time. The enhancement and high production of a business takes time as Global Bioenergies is enhancing its company and production as time passes which makes it successful and competitive within just four years (Global Bioenergies, EuropaBio).
Contributing back to Society
The criterion is related to environmental and social performance of a business. The criterion is defined as getting objectives which are related to environment and social welfare instead of direct technical, legal and economic interest of a business. The criterion has philanthropic behavior which defined as supporting community actions, following environmental friendly performances, and giving to contributions. The social entrepreneurship is recently highlighting environmental performance and social performance as a success criterion (Marjan, Evelina, and Ute). The business for environmental and social welfare bring with good advantages, using environmental resources for social welfare is always beneficial for environment as well as society such as Promo2U is an example of such environmental entrepreneur which contributes to end life of fire house and utilizes resources for the social welfare (Matt Galvin).
The growth is the key criteria to entrepreneurship and directly related to wealth generation in business. The criteria growth is considered as performance measures in small business and entrepreneurship. The criteria refer to growth in number of employees, growth in market shares or distribution, and sales of a firm (Marjan, Evelina, and Ute). Growing business in any different accepts is always beneficial to the business and bring with enhancing business in many dimensions such as Webvan is an online grocery delivering business which adopted growth as success criteria and growing its products everyday in order to expand it broadly (Webvan).
The personal satisfaction is defined as elementary measure of performance which is considered as a criterion bearing many business decisions related to personal satisfaction of entrepreneur such as either to invest money and time or not, either to cut back or to shut down the business. It is studied that receiving satisfaction is a basic outcome of self-employment which highlights the worth of personal satisfaction. It is also considered as more important that an entrepreneur have personal satisfaction instead of financial success in business or any economic performance of business (Marjan, Evelina, and Ute). In businesspersonal satisfaction has much importance to encourage the business owner for doing business from heart. SME Matters follows personal satisfaction as success criteria during developing businesses and one of the projects which specialized in developing SME owner's skills and knowledge.It provides the owners withdifferent techniques and tool in order to help them for doing their business with bottom line growth and personal satisfaction (SME Matters).
Utility or Usefulness
The utility or usefulness refers to the usability of a product or service of a business production or development which is not only looks good but should have an important function in public. The production of products or services should takes place keeping in mind about usefulness in society. It can be easily define with the help of an example of development of microprocessor or software program are enabled or capable of movement and management of high amount of information which is very useful in society (Marjan, Evelina, and Ute). The products or services should be beneficial and useful for general public such as to-bbb is a biotechnological company which main objective is to enhance drug delivery across the blood brain barrier and developing innovative treatment for brain disorder(EuropaBio, to-BBB).
Here is the critical review of the selected six criteria according to the nature of each criterion. Examples of some of the UK's SMEs are used to explain each of the above criteria
. I also tried to explain the situation in which each criterion is not suitable.
Innovation as success criteria should not always work for the business to be successful as it did not appropriate for many kind of businesses. It also requires high amount of resources i.e. hardware resources, software resources, natural resources, or money which are difficult to manage for anentrepreneursuch as medicine, biotechnology, transportation, and many more. To became a business innovative, it also require hiring high level of employment and manage them resources and salary that is not possible for all entrepreneurs at different stages of business. Such as it is very difficult for an average entrepreneur to establish business like Green Biologics Ltd. as it require huge amount of resources to complete the project.
Considering firm survival or continuity as success criteria did not optimal and beneficial for different businesspersons when the business is going in high level of loss or requiring high amount of time. It is difficult to manage the business and business needs when it faces high loss at the start of the business or any huge loss at any stage of business. Managing different expenses of business during loss or while business taking time in order to produce output or product or service. It becomes problematic to manage all expenses while there is no production for long period of time and business can face very dangerous situation. For example, taking risk during establishment of business like to-BBB can be very hazardous which creates problems for entrepreneurs as well as for employees. It can be high level of costly and require highly qualified employees whose resources cannot be managed easily.
Contributing back to Society
The criterion is not easy and simple in its nature and requiresthinking and work to some extent. Using environmental resources which has no importance in their placesin order to use them for social welfareis difficult task. It also requires resources to do such kind of tasks and management of resources. For example, in order to recycle fire house resource in Promo2U requires some resources for different stages of recycle them. It is not easy job to recycle leather into usable things but a time consuming and expensive task to some extent.
Growth as success criteria in a business for any metric of the business such as production, employment, resources, environment and many more is not easy to manage, cost effective and efficient. Growing business can become an issue according to the finance and resources of the business. It is difficult to grow business in any aspect without any prior planning or management and also require time and cost. Growing business such as Green Biologics Ltd is not an easy job it requires a lot of work in order to grow it in any aspect. It requires high amount of resources to do this and long time period.
Considering personal satisfaction as success criteria is very rare because of high competition in today's business. Someone needs to do business which should have high market need and competition in order be successful. It becomes very difficult to start a business in this age and considering personal satisfaction make it more impossible. There are many kinds of businesses which did not appropriate for some noble society but the most successful in today's society. In such kind of businesses, personal satisfaction is high level of hurdle. It is very uncommon that an entrepreneur is satisfy himself with his work according to his requirements of different aspects like economy and nature of business such as it is not necessary the owner of Webvan who is growing his business very fast is also happy and satisfied with this kind of business. The nature of a business has much importance while considering satisfaction but rare to find.
Utility or Usefulness
Usefulness of products and services is not important for businesses while searching for some solution to a problem. In business of such kind, the entrepreneur needs not to consider utility or usefulness as success criteria. It becomes difficult to keep the entrepreneur or employees to be motivated for the finding of solutions if usefulness of services or productions or solutions are considered as metric to success. It can stop the business if there is no finding for specific time duration and needs more time and resources for finding the solution. It did not work for such kind of businesses and become a barrier for business such as to-BBB is that kind of business which is discovering solutions to problems related to brain disorder. To-BBB should not consider usefulness of their solutions because it did not motivate the entrepreneur to continue the business.
There are approximately 4.8 million businesses in United Kingdom, employed 23.9 million employees and generating turnover £3,100 billion as combined (Federation of Small Business). According to Doug Richard there are 4.4 million SMEs in United Kingdom, 99.7% proportion of enterprises who are SMEs, 47.5% is proportion of workforce employees of United Kingdom are in SMEs and 48.7% proportion of turnover which is generated by SMEs (Doug Richard). This statistics shows the importance of SMEs in United Kingdom so government should take notice for growing small and medium sized enterprises. Success criteria should be consideredaccording to the current scenario of businesses. In BIS 2010 Economic Paper, there are 79% United Kingdom SMEs who has objective to grow business and enhancing innovation in their businesses in 2007 (BIS Department for Business Innovation and Skills). I think the government should focus on growth and innovation as success criteria and need to implement for enhancing its business worldwide.It will be good if policies are made according to these statistics which enhance the value of small and medium sized enterprises for the state. Growth and innovation has much importance in their nature and help the entrepreneur to be successful in today's business. There is lot of competition in every type of small, medium and large businesses around the world, so keeping innovation and growth as success criteria can become high advantage for the business. With the passage of time, a business needs to be innovative for catching high rate of customer as well as the growth of business after success. It is necessary to enhance business if it getting good rates from its customers. Today's technology is also becoming very high and competition is also increasingin any field of business. Considering growth and innovation as success criteria can be very beneficial and advantageous. Utility and usefulness can also be consider while considering growth and innovation because it is the basic metric which help in finding the rate of business. So, the United Kingdom government can take growth, innovation and utility or usefulness as success criteria for small and medium sized enterprises because of their high advantages and statistics.