Graduate Students Study Critical Success Factors

By Karen Sandborn
Marketing Director, Madonna University

Madonna University graduate students and their professor, interested in determining what small businesses consider to be Critical Success Factors (CSF) for doing business, conducted an exploratory study as part of Madonna’s qualitative research methods class, during the Fall 2010 and Fall 2011 academic semesters. Of the 53 small businesses (under 500 employees) that participated in the study, 45 were based in Livonia.

Purpose of the study:

• identify the current CSF of small businesses and
• interpret whether they have changed significantly from those shown in literature

Each student asked five businesses from varying industries the same 10 questions and recorded the responses. Once transcribed, the responses totaled 300 pages. Business identities were kept confidential, and all recorders were erased once the data was validated.

Results of the research:
Both groups of interviews revealed similar results, despite the diverse industries, sizes and legal entities of the participants. While this review process is ongoing, Madonna students learned that quality, customers and finances are the top critical success factors. These factors are similar to those reported in other literature.

Other conclusions:

• Many businesses said they had adjusted their CSFs due to the economic downturn. Between 30-39% believe these changes are permanent. 43-48 believe they are just temporary.
• The general economy and increasing operating costs were identified as the top hindrances to profitability, with financial issues and competition close behind.
• Obtaining financing has become more difficult for 37-43 percent of those surveyed. The remainder reported no effect due to good banking relationships, or not needing financing. Only one business said it was easier.
• Overall, businesses indicated many advantages to operating in Livonia

Next Steps:
Madonna University’s Patricia Pelavin, Ph.D., adjunct faculty member for the master’s class, wants to continue this project by embarking on a quantitative pilot study. “As a result of our qualitative research, we have compiled a list of critical success factors that we would like to have small businesses rank in an online survey,” said Pelavin, who is currently working to find a Chamber of Commerce, or small business group willing to share their list so the survey could be sent out sometime this fall. “We really need a list of 300-500 businesses in order to have an adequate pilot sample for this type of research,” she said.

When she meets with potential partners, Pelavin is quick to share the benefits of this type of research. “This is a wonderful opportunity for our students to gain research experience and to collaborate with businesses,” she said. “While the identity of the study participants is confidential, the results will be shared with them, so that they can make strategic planning enhancements for their companies. Everybody wins.”