Does the Owner’s Vision Influence the Growth of Small Firms?

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The respondents of the SFD (Small Firm Diaries) project have different goals and vision about their small business. Some of the respondents run their small business just to get their daily meal and support their family, some of them aim to grow their business and a few respondents have a vision to become a big firm and even want to grow to factory-size. In this story we will discuss some SFD research respondents’ vision about their business and their attitude to growth and their general mind-set. 

When the project started, during the census survey, most of the firms were just starting to revive from the first corona shock and most of them were earning a very small amount or zero profit.  All the small firms were directly or indirectly affected by a range of factors like continuous price increments of raw materials, shortage of raw material, and reduction of demand.  However, the firms responded differently to these problems. We observed significant differences among firms on coping with challenges and their attitude and view on achieving their goals. Some respondents’ stories are presented in the next paragraphs.

ET371, ET737 and ET532 are neighboring carpentry firms. During the census survey, these firms were in a comparable position. However, their views about their future were quite different. During my visits the first four weeks, ET371 said, “my profitability continuously declined through time and I became hopeless about this business.  So, I am planning to shift my business”.   Although he didn’t start a new business, he still wants to switch business. Throughout the three months the study is running his financial transactions didn’t show significant improvement from the very low level when the study commenced.

As said, ET737 is another respondent who owns a carpentry shop, very near to ET371 of the previous paragraph. When the research started, her firm was also just reviving from Corona shock and she was struggling to get customers. During that time, she was hopeful about the recovery of her business. Even if she faced high prices for raw material, her business shows improvement and she also has a plan to expand her business further.

ET532 is another one of the visionary respondents, with a carpentry firm near to the two firms described in the previous two paragraphs. During the first week of the research, he had a vision to expand his business further and he was also quite sure that he will own a wood furniture production factory in near future. Like all the other firms, his business was affected by major economic shock when we started the SFD study. However, he changed his target customers from middle income earners to higher income earners who are less sensitive to price increment. He could attract these high-end customers by making unusual wood products and also by opening a new showroom to attract new potential customers. He is also a risk taker as compared to other firms. Despite the above-mentioned economic adversities, three months later he opened a new showroom by spending a lot of money for rent and repair. Currently, he pays around 40,000 birr/month for rent, which is quite expensive and shows his vision to expand his business. He also has a plan to increase sales by employing new salespersons on commission. His business revenue increased dramatically the past few months.   Unlike many firms he was not afraid of failure, rather he considers his failure as a lesson for his future move. For instance, a year ago he had a printing house with one of his friends, but this business was not as profitable as he expected and he decided to close it. However, he learned a lesson that diversifying a business makes an owner less focused and diversified businesses are difficult to manage. Now he decided to concentrate on his carpentry business and expand it.  ET532 always said “success starts and ends in the firm owner’s mind, and its fruit is determined by the owner’s decision power”. To explain his idea more, he reflected on the past years of his business. He has been working in the carpentry business for the last six years. All these years his business didn’t show significant change Nine months he started to see clearly “I can make my business much better than its current status” and then he decided to take action. After that, he has spent a lot of money to expand his business and try his best to get new customers.  His decision made him more profitable.  

Like ET532, ET632 is a visionary entrepreneur who owns an auto-repair shop. He opened his auto-shop just a few months before the research started, which means he started just as the Covid-19 pandemic started. He has a vision to make his auto-repair shop the number one of its kind by providing high quality service with reasonable prices. During our first visit he had very few customers. But now the number of his customers has dramatically increased.  His revenue keeps growing. ET632 believes the success of the business highly depends on the owner’s capacity to create an efficient institution which can operate independently from the owners. In this case, he tries his best to build his business as an institution. He also tries his best to record all his financial transactions and he plans to evaluate his business’ monthly, quarterly and yearly performance. ET532 also shares ideas with ET632 – he also believes that creating an efficient institution is the basis for the success of any business.

ET677 is another respondent who owns carpentry firm. He makes excellent wood arts. However, currently he has become less hopeful about his business because of the current market shock. He is in the process of making his final decision between switching to another business or to expand the carpentry business and utilize his maximum potential. Over the past three months his revenue, it has stayed more or less at the low levels of since the study began.

Another carpentry firm, ET546, has an owner with few ambitions. He engages in his business just to not have to stay at home and just to supplement his pension income. His modest aim is just to get some profit so as to cover his business and personal expenses. Unlike other respondents’ he hardly knows his income and expenditures. Rather, his employee knows his income and expenses. Similar to ET677, his business didn’t show significant change in revenue over the last three months. Moreover, in our interviews he emphasizes his problems rather than solutions.

ET179 and ET885 are yet two more respondents with a carpentry business in similar places. They are not that visionary. Rather they work just to cover their monthly expenses. Most of the time their transaction is similar, in some weeks they even might not have revenue. 


Based on the differences in the respondents’ mind-set and their reactions to the adverse circumstances the past three months, we can distinguish between optimistic and visionary firm owner/managers and pessimistic firm owner/managers with limited ambitions and plan. As the above discussion makes clear, the optimistic, visionary firms show improvements and their profit has started to increase after the low economic situation when the study started. The pessimistic and less visionary firms show little or no change since the start of the study and most of them earned very limited profit during the last three months.