Who is the Small Business Owner and What Does Owning Their Business Mean to Them?

As SB Works’ role in the local business community begins to grow, it is important to understand the role of the small business in the economy. This means understanding the small business owner. Who is it that wants to run their own business? Do they value their own autonomy most, or did they choose their path merely for economic survival – as the only reasonable work option?

Profiling the prospective microenterprise owner has proven very difficult for researchers. There is a lack of data accurately depicting the type of person most likely to pursue self-employment, as well as data that can predict the chances that business owners will build a profitable business and measuring its effect on their overall financial status. Business owners frequently withhold their own performance data from researchers. There is also a complication of data regarding the unit of analysis. What is being analyzed: is it the business or the owner? Owners and the firms they run are distinct entities. An owner may leave a business that he or she started, even without the business failing – a reality that happens quite a lot. And other common factors confuse the data, including multi-founder businesses and households with dual incomes and additional sources of income.

The question then must be asked: Can the characteristics of small business owners be measured in any useful way? With this amount of difficulty, certain researchers have suggested using subjective evaluations of organizational performance when accurate objective measurements are unavailable. Researchers can analyze what kind of person starts a microenterprise, what traits drive them, and what issues and concerns they share.

Microenterprise owners have shown while income does matter to the very small business owner, they get more social utility (i.e. characteristics that benefit a majority of the population) from other aspects of their microenterprise. There is essentially less disutility, or harmful impact, from risk for someone who would start a microenterprise and a greater utility, or usefulness, from having the independence they desire. The very small business owner persists despite lower initial earnings and lower earnings growth. This has been demonstrated across industries. An artist will choose to continue to be an artist even though other employment options would more likely result in greater income; they feel more useful and have higher esteem from being able to create.

What’s all this mean? Essentially, the success or failure of a microenterprise is defined differently for each owner depending on their own unique set of needs, aspirations, and desires. Success is not the same as ͞optimal performance͟ and can be viewed as the very small business owner attaining their personalized and specific goals.

This specialized understanding of the driving force behind business owners – and how they determine their own success – is at the core of SB Works’ approach to serving their needs. We understand the basics of what drives them, and the importance of letting them define their own success and failure.