Key Success Factors of Small Businesses in Sri Lanka

Abstract

Small Businesses are considered the stamina of any economy as they play a critical role by generating jobs, accelerating regional development, empowering innovations and stimulating many economic functions. Small Businesses are more important to a developing country like Sri Lanka where inflation, poverty and unemployment are now serious problems in the economy. It is estimated that only one in three Small Businesses survive to their fifth anniversary. Thus, the study was initiated to identify the key success factors of Small Businesses in Sri Lanka. This was carried out as a cross sectional field study among a sample of 246 Small Businesses in the country except the Eastern province. Convenience sampling was applied to select the sample. Data were collected via a self - administered, pre - tested questionnaire that met accepted standards of validity and reliability. Descriptive statistics, simple ranking and factor analysis were performed to analyze data. It is found that, availability of financial resources, available human resource, management skills of the owner, proper planning, cash & credit management, suppliers' support, marketing strategy, customer loyalty, business location and the government support are the top ten key success factors of Small Businesses. Findings revealed that nine out of top ten success factors are management related. The findings of this study serve as a guideline for Small Businesses, Management Practitioners & Policy Makers in the country. It is recommended to review the support given by the government and the Small and Medium Enterprise Development Policy in Sri Lanka.