A scheme to increase profitability in entrepreneurial SMEs

Abstract

Purpose

This article aims to demonstrate how small entrepreneurial firms can employ low cost market research techniques in the area of service evaluation to prioritise the sales effort, increase sales and improve margins.

Design/methodology/approach

“Triangulation” has been used. Secondary data included academic sources and internal company records. Primary data included exploratory depth interviews and group discussions, a questionnaire‐based survey and the construction of case studies.

Findings

It can be seen from the case study results presented that a customer service appreciation survey can yield useful and actionable information, which can be used creatively by entrepreneurs to bring about significant improvements in business performance in a short space of time.

Research limitations/implications

It would have been better if more extensive data were available on customers to allow for more sophisticated quota sampling controls.

Practical implications

A model of small firm growth is discussed and the concept of crisis points in the early stages of the life cycle of small entrepreneurial firms is examined. The paper demonstrates how a low risk growth strategy, which minimises the possibility of the firm encountering a “crisis point”, can be chosen.

Originality/value

The content of the article is original in the sense that particular emphasis is placed on the concept of “leveraging.” The study shows that such a “leveraged”‐based scheme is particularly relevant in a customer multiple sourcing purchasing situation.

Citation

Reynolds, P.L. and Lancaster, G. (2006), "A scheme to increase profitability in entrepreneurial SMEs", Journal of Small Business and Enterprise Development, Vol. 13 No. 3, pp. 395-410. https://doi.org/10.1108/14626000610680271