Critical Business Knowledge and Competencies: Diagnosing through the Business Life-Cycle

INTRODUCTION Women-owned businesses play an increasingly important role in the economic development of our society. To encourage and develop these businesses both public and private sector organizations have created and provide business assistance such as: training, literature, funding, consulting, etc. However, there is little understanding of which types of assistance are beneficial and when a particular type of assistance should be provided. Categorizing the problems and growth patterns of small businesses in a systematic way should improve the efficiency and effectiveness of the delivery of these support services. In addition, small business owners would be able to assess current challenges and anticipate key requirements as their business grows. In response, this study empirically investigates the classification of women-owned small businesses in the business life-cycle, the priorities and problems they face, and their usage and satisfaction with assistance providers. Haire (1959) was among the first to propose that the development of a business follows some uniform pattern. The concept of modeling business life-cycle stages is prevalent in management literature, Churchill and Lewis (1983) and Smith, Mitchell and Summer (1985) provide good reviews and discussion of the concept. This study utilizes a four stage life-cycle model (Kazanjain, 1988) that is consistent with most models found in the literature and explicitly describes stages as linked to dominant problems, see figure 1. Cowan (1988) reviews and critics the concept and classification of organizational problems. Cowan notes that there has been little integration of empirical results around conceptually derived problem categories. Much of the research in problem classification has been conducted with executives in larger organizations; and therefore, may not be generalizable to women small business owners. To avoid some of the limitations of predefined problem categories this study will empirically derive a suitable problem classification. Industry structure may have a strong influence on the nature and timing of problems a firm faces. Industries differ most strongly in their fundamental strategic implications along a number of key dimensions, Porter (1980) provides a framework for classifying industries as: Emerging, Fragmented, Mature or Declining. Emerging: The industry is newly formed or reformed by technological innovations, shifts in relative cost relationships, emergence of new consumer needs, or other economical and sociological changes that elevate a new product or service to the level of a potentially viable business opportunity. Fragmented: No firm in the industry has a significant market share that can strongly influence the industry outcome. There are a large number of small and medium-sized companies, many of them privately held. Low barriers to entry, little economies of scale and diverse market needs characterize the industry. Mature: The period of rapid industry growth has slowed to modest growth causing more competition for market share, greater emphasis on cost and service, overcapacity, and sophisticated buyers. New products and applications are harder to come by and manufacturing, marketing, distribution, and selling methods are often undergoing change. Declining: Unit sales in the industry have declined for a period of time and are not explained by business cycles or short-term discontinuities. Margins are shrinking and there are few competitors. Little research has been conducted in the classification of business-owners and their stages of development. Therefore, an empirically developed classification system based on experience will be utilized. The major business assistance providers in the state (Minnesota) in which the study was conducted were identified and included for evaluation. Figure 2 illustrates the proposed model for linking management priorities and problems to the growth patterns of a business and to the required knowledge and/or competencies. …