Developing a model to predict critical failure factors of small and medium-sized enterprises: an empirical study of the UK fast food retail industry
Creators: name: Ilyas, Muhammad
Publisher: name: Zenodo
Year: 2024

description: Small and medium-sized enterprises (SMEs) contribute to accelerating economic development, jobs creation, development, and strengthening economies in developing and developed countries. However, regardless of the country and industry, SMEs face similar impedimentsthat influence their performance and survival rate. Literature suggests that SMEs face a high failure rate all over the world. Likewise, the failure rate is high in the UK therefore, this area of research needs further consideration, and no guidelines can be developed without identification of the roots for business failure. This research aims to identify the main causes of failure factors in the UK fast food retail stores, develop a model to predict failure, and propose a framework or recommendation to reduce the failure. this research is expected to enhance the business failure knowledge, solve a problem, contribute to SMEs failure literature, enhance the research design for SMEs failure research, offer an academic foundation to decision-makers, and provide an opportunity to academics to debate and evaluate SMEs failure factors in the UK fast-food retail sector. The present research contributes to enhance SMEs performance by identifying the factors linked to the SMEs performance and offers guidelines on how to enhance the chances of business success based on recommendations from successful and failed business owners.Success and failure were defined to measure the performance of SMEs. According to the definition employed in present research a business is considered failed if ceases to trade within three years and considered successful if continued to trade for more than three years.The survey was used to collect both types of data, and qualitative data provided the supporting role. The concurrent embedded mixed-method strategy is employed in this research.Questionnaires formed on the google forum were distributed by email and post to successful and unsuccessful SMEs owners to collect quantitative and qualitative data. First, descriptive data analysis was performed to differentiate the characteristics of entrepreneurs and their businesses. Next, exploratory factor analysis was performed to recognize the structure and relationship amongst the variables. Logistic regression analysis was executed to develop a prediction model for SMEs' success and failure and test the hypothesis. The main finding specifies that the model encompassing all the independent variables is statistically significant. The logistic regression analysis outcome reveals that seven factors are statistically significant in the model; these are the type of ownership, owner's experience, poor owner skills, business planning, business location, marketing and management, and intensity of competition. The mean score result shows that the enterprise factors are the first, environmental factors are the second, and entrepreneurial factors are the third most important factorsthat affect the business performance.Similarly, thematic analysis was performed to analyse the three open-ended questions. The results of qualitative data further support the quantitative data and suggest that the enterprise factors are the most important factors that play a crucial role in business performance. There are numerous failure factors in the literature, and it was not possible to include all those factors in one study due to limited time and resources therefore, to identify any missing failure factors from the model an open-ended question was added in the questionnaire to overcome this limitation. The results of the thematic analysis show that some important failure factors not included in this study were also identified. These factors include poor customer service and product quality, pandemic, poor inventory management, legal issues, neglecting home delivery, supplier issues, partnership issue, poor use of technology, and neglecting third-party applications. The last open-ended question results show that the successful and failed business owners recommended that managing these factors can help a business to minimize the risk of failure. These findings can be useful in other alike settings such as other retail sectors and European countries. Based on logistic regression analysis and recommendations results focusing on owners experience in the relevant field, owners skills, business planning, marketing, and advertisement, high-quality product and services, business location, business growth strategies, financial support, Inventory management, human resource management, business partnership issues, home delivery services, legal compliance, better use of technology, partnering with third-party online applications and managing competition can assist businesses to increase the chances of business success.