Key steps of development in SMEs : stepping back from failure

Abstract

This paper seeks to add to the concept of linear small to medium-sized enterprise growth research through the analysis of existing linear growth models, and common causes of failure. Two literature reviews starting with a collection of linear growth models, followed by an examination of the common causes of SME failure identify the key steps in the SME development process. These key steps involve the attitude and skill of the entrepreneur and managers, recruitment and motivation of employees, organizational structure, and the formalization of processes. The specific steps of development build upon each other, and therefore facilitate the future success of the business. Although key steps can be delayed for a length of time with limited negative effects if the company possesses complementary strengths, the implementation of these steps is key to long-term success and reaching the full potential of the firm. If steps of development are missed, the company must loop back and make necessary adjustments to increase the potential for success in future stages. This concept gives support to the linear growth model as a roadmap for ideal SME internal development in the face of growth.