Robert Blackburn; David Stokes
1 October 2000
International Small Business Journal
1 October 2000
International Small Business Journal
ONE MAJOR WEAKNESS OF OUR contemporary knowledge on business owners and running the smaller enterprise is a relative low level of understanding of process issues. In particular, there is much to be done to further our understanding of the motivations, rationales and experiences of small business owners. Although variable-- centred research has an important role to play in isolating correlations between variables, using postal or telephone methods, attention needs to be paid to process issues. In particular, there is a need to undertake more qualitative and longitudinal research on the entrepreneur to underpin the 'snapshot' quantitative profiles of small firms and their owner-managers (see Scott and Rosa, 1996 for discussion). Face-to-face data collection methods of research are important in meeting this agenda and can overcome some of the weakness of postal and telephone surveys.
However, it can be argued that all these survey methods may suffer from a problem of business owners meeting the needs and expectations of the researcher, rather than presenting a candid picture of business ownership. In other words, the worlds of the academic researcher and owner-manager are culturally different and any one-off faceto-face interview is essentially an artificial setting. Attempts at overcoming these weaknesses have included ethnographic studies of businesses (Holliday, 1995) although these are in a minority. One alternative way of reducing the culture gap, that can exist between researchers and business owners, is the use of focus groups. In particular, this research method offers the possibility of a shift in the power balance from the researcher to business owners, which may benefit knowledge generation.
In this paper, we aim to present the rationale for a study in the form of a series of focus groups conducted with business owner-managers. An emphasis is placed on detailing the method, in order to inform other researchers of the suitability of the approach for investigations involving owner-managers and its potential for generating additional and alternative data to our existing knowledge base.
Focus Groups as a Research Method
There are many different types and uses of focus groups. Although the origins of the research technique known as focus group interviews or discussions lay in sociology, market researchers have been largely responsible for its development and extensive use. However, Merton and colleagues are generally accredited with the earliest publications which described focus groups as a method of data collection for the studies on the effectiveness of World War II training and propaganda films (e.g. Merton and Kendall, 1946; Merton et al, 1956). Originally termed the `focused interview', the method was quickly adopted in marketing research as a means of product testing and has become the predominant qualitative method in this field (Berg, 1998). A recent survey of market research practitioners indicated that in 1997, 65 per cent of qualitative market research expenditure in Europe was devoted to groups (Association of Qualitative Research Practitioners, 1999). Morgan (1998, p40) suggests that the developments made by marketing researchers in focus group methods were not as influential on the social sciences as they could have been, primarily because of their commercial application mainly to test market reaction to products. Not until the 1980s, when marketing and medical research textbooks provided expositions of the methods, was there a renewed interest in focus groups in the social sciences more broadly (e.g. Goss, 1996; Robinson, 1999). In the 1990s, Berg (1998, p103) suggests that we may be witnessing ". . . a reversal in the elitist attitude that focus group interviewing belongs to the somehow vulgar realm of marketing research".
Definitions and Applications
There are many definitions of what constitutes a focus group (Morgan, 1988, pp9-10; Morgan, 1998, ppl-2; Powell et a4 1996; Stewart and Shamdasani, 1990). Essentially, a focus group is "an interview style designed for small groups" (Berg, 1998, p100), typically involving from six to 10 people' discussing and commenting on particular topics or concepts under the guidance of a moderator. A key distinguishing feature of the focus group approach is the ability of individuals from a similar community to interact:
"The hallmark of focus groups is the explicit use of the group interaction to produce data and insights that would be less accessible without the interaction found in a group (Morgan, 1988, p12).
Focus groups can be relatively structured, with specific questions asked of each group member, or very unstructured, depending on the research purpose (Fontana and Frey, 1994). They can be used as a stand-alone technique, or an integral part of as more complicated design in which they precede, supplement, or triangulate results from other methods (Denzin, 1989). For example, focus groups are useful vehicles for generating research hypotheses, testing research methods, or interpreting previously obtained survey results. Focus groups are particularly useful for learning about participants' conceptualisations of particular phenomina and the language they use to describe them (Stewart and Shamdasani, 1990, p15). However, it is questionable whether we should assume that groups are limited always to a support role. Morgan (1998, p51) argues convincingly that it is a myth that focus groups must be backed up by other methods or merely prepare the way for `real research'. They are commonly used in market research contexts to stimulate new ideas and product concepts or to diagnose problems with products, services or institutions. The extent to which they can stand alone in small business research, however, is unexplored.
Claimed advantages and disadvantages
It is claimed that focus groups are an extremely flexible research method, with . . . very elastic boundaries" (Morgan, 1998, p35). A particular benefit of the method is the opportunity of ". . . gaining insights into people's shared understanding of everyday life . . ." (Gibbs, 1997). This widely-claimed advantage has been described as the ,synergistic group effect' in which the snowballing and stimulation of ideas are aided by participants' feelings of security and spontaneity generated by their interactions with other group members (Stewart and Shaqmdasani, 1990, p19). The psychological security derived from group membership may be particularly relevant to researching owner-managers since it refers to the likelihood that individuals will be more open about their views, feelings and experiences in a group of peers rather than on a one-to-one basis with an interviewer:
"Participants are more likely to be candid because the focus is on the group rather than the individual; the respondent soon realises that the things he or she says are not necessarily being identified with him or her" (Hess, 1990, p19).
It is also claimed that group discussions may generate more critical comments than interviews (Robinson, 1999). Other claimed advantages include timing and costs. Some research requires instantaneous response to particular events as they occur, which may not be practical through individual interviews. This was relevant to the research described here as the use of groups facilitated the collection of business owners' immediate reactions to government statements, or the launch of new initiatives. The use of longitudinal focus groups also meant that these first reactions could be compared later to more considered views. The belief that focus groups are less expensive to conduct than individual interviews is less clear as much depends on the research design (Berg, 1998).
Group dynamics do present some particular problems as well as advantages. It may be argued that the researcher sacrifices detailed accounts by participants for the benefit of a collective view, influenced by the `group effect' (Catterall and Maclaren, 1997). Merton et al (1956) identified early on that the moderator required particular skills to counteract three potential problems with groups: first, the possible domination of the group by one person or a small coalition of participants; secondly, the reluctance of some individuals to speak at all; and thirdly, the need to ensure that the entire group has an opportunity to air their views without overly restricting the discussion to a preconceived agenda.
More recent literature discusses the principal problems specific to focus groups: including the possible domination of the group by a few strong personalities, and a possible negative reaction to the moderator by members of the group (e.g. Webb, 1995). There are also particular concerns over the nature of the group consensus view which may be overly influenced by conformity pressures (Furnham, 1998). Finally, the literature is much less abundant in terms of the analysis of information collected in focus groups, than how to set them up and run them. Indeed, this may be the least developed aspect of the focus group methodology. Robinson (1999) cites Kitzinger (1994) for example, who found that in a review of over 40 published reports on focus groups none had concentrated on the conversation between participants.
Do such issues make focus groups inherently unreliable as a research method for examining business owners, or can they be mitigated successfully by the skills of the moderator, reliable data collection and rigorous analytical methods? Some detractors have made judgements based on positivist, rather than qualitative perspectives, citing the difficulties in making generalisations from the deliberately unrepresentative samples typical of focus group research criticisms which could equally be made of individual interview research (e.g. Malhotra, 1996; Furnham, 1998). Undoubtedly, focus groups do have particular strengths as well as weaknesses and a substantial literature on the approach2 has emerged as it has gained popularity in the 1990s. The emphasis of this paper is to report on the suitability and practicality of its application to the study of small business owner-managers in the light of these debates.
Focus Groups in Small Business Research
Despite the potential merits of focus groups for specific issues within academic research, and their prolific use by market researchers, political opinion pollsters and consultants, there has been a relatively low published use in small business and entrepreneurship research. In a study of how government could establish and improve direct consultation with UK small businesses about legislative or regulatory changes, MacMillan et al (1988) used panel discussions after individual interviews with 50 business owners. Their aim was to clarify and explore further the ". . . preferences for, and strengths and weaknesses of, five new methods of consultation" (MacMillan et al 1988, p30). Thus, these discussions provided some validation and triangulation of the results and proposals deriving from face-to-face interviews. Although the authors did not use the term focus group, their approach and use of panels fits within the criteria of a focus group discussed above.
Curran and Blackburn (1994) reported using focus group discussions in Nottingham and Islington to explore the reasons behind an overall low level of local networking. They were concerned particularly to examine the variations by location amongst business owners found in their individual interviews with 350 small business owners. The research method adopted was similar to that of MacMillan et al (1988) in that it used the same respondents in the discussion groups to help explain earlier findings. They differ in that Curran and Blackburn (1994) sought to understand how business owners relate to their local environment whilst MacMillan et al. (1988) aimed to influence the communication channels of public policy.
More recently, Vyakarnam et al. (1997) reported on a study of ethical behaviour in small firms using focus groups. Although they recognised the advantages of the approach and go so far as to suggest some theorisation, they qualify their results by describing them as 'exploratory', requiring a larger research programme before generalisability can be attained. In this case, focus groups were used as a prelude to further research.
In the USA, focus groups have also been used in entrepreunership research and again their use is not widespread and usually as an adjunct, or supplement, to further research. For example, Sullivan et al (1997) explored the potential of entrepreneurial activities in transitional rural females from poverty toward economic self-sufficiency. Focus groups were used in this case to provide a basis for hypothesis generation prior to qualitative testing. Elsewhere, focus groups have been used in an action learning setting where entrepreneurs assist each other in discussing and solving problems (Hutt, 1979). In this case, Hutt (1979) argues that group interviews generate spontaneous discussion and views with greater levels of candour.
However, given the volume of research on small business owners, the focus interview has been relatively under used. No doubt the lack of published research using the focus group approach amongst small businesses belies a widespread use by consultants and practitioners in policy generation and evaluation, paralleling the earlier use in marketing which was also typified by an absence of public reporting. Yet, this low use of focus groups as a research tool by academics studying entrepreneurs and small businesses is perhaps surprising. Academics and practitioners have articulated a desire to understand more fully the world of the business owner, often as an underlying foundation of their own particular theory of the business owner or for the basis of improved policy (Gibb, 1998). Yet, to date, focus groups have been used rarely and in some cases with limited confidence. A number of factors could contribute to this relative low use: a lack of understanding of what rigorously conducted focus groups can achieve, a view that they are the domain of marketing (despite origins in sociology), a perception that recruitment of entrepreneurs to attend groups away from their business premises is more difficult than interviewing them in situ, or a lack of experienced moderators of focus groups amongst small business researchers. By describing in some detail the use of focus groups in a particular study of ownermanagers, the authors of this paper hope to inform others who may be considering using groups for their research.
Aims of the Research
The aim of the study described here is to understand more fully the world of business owners by opening up a long term dialogue with them concerning a range of topical and business issues.
Each focus group had three broad objectives: i) to generate data on owner managers' experiences of and rationales for running a business, including their views on current challenges in the business environment;
ii) to ascertain their views on changes to their external business environment including government policy (e.g. the launch of a single European currency; legislation to curb late payment of invoices to small business);
iii) to explore the norms, perspectives and practices of their world as entrepreneurial business managers, including their approaches to specific issues (e.g. succession planning, and finding new customers).
Thus, the topic agenda contained a specific discussion area, which related to each of these three objectives.
A particular aim of the study was to develop longer-term perspectives through the longitudinal use of the groups, which were held twice a year in different locations, involving a core of the same people. Whilst we aimed to let the results and analysis stand alone as a data generation method, they may also be used to explain results found using other techniques in other studies, or form a preliminary research base on which other methods can build.
A longitudinal, multi-stage method
The literature suggests that the main stages of organising focus groups involve planning, recruiting, moderating, analysing and reporting (Berg, 1998). In this research, fine-tuning was needed in each of these stages to meet the specific needs of the research objectives and to take into consideration the particular demands of researching small businesses and their owners (Figure 1). These included ensuring that the business owners were aware that the research was independent, was not a `sales pitch' or connected with any governmental regulatory agency and that confidentiality in the results could be guaranteed.
The research comprises five focus groups held every six months with the same, or at least some of the same, business owners. Since the aim is to have a dialogue with business owners and thus generate data on their experiences and views, the research design included repeat discussions with participants drawn from a pool of business owners.
A claimed advantage of a longitudinal method is that participants can build up a rapport and trust with each other and the researcher. In advocating this method, Kaden (1977) suggests that the first ever group discussion is limited by the fact that participants are strangers. Ideally, in the second group meeting there is less need for an `ice-breaker', and discussion flows more freely, with more control by the participants and less influence from the moderator. If the group does well, trust develops and the groups may be more prepared to explore issues as a unit (Kitzinger, 1995). This allows the moderator to adopt a less directive role and concentrate on the participants' accounts. Group members are also more likely to ask questions of each other and present alternative views after a certain level of trust has been established.
Developing a Topic Agenda
Merton et at (1956) outlined four broad criteria for the effective focus group which relate directly to our approach to the content of the topic agenda:
i) Range refers to the breadth of relevant observations that the participants produce. Thus, whilst it was important that we followed the topic agenda and covered factors that we considered to be significant, it was also critical that we allowed the discussion to offer new approaches or facts.
ii) Specificity covers the need for detailed accounts of the participants' experiences. This was achieved through the narratives of business owners in relation to the topics.
iii) Depth refers to the ability of participants to be involved in the topic under discussion. This is a particular problem when they are invited to discuss an issue on which they have no experience on which to draw, or when external information, such as government proposals, form the basis for discussion. However, even when documentation was given to participants to read, such as a summary of government proposals on late payment legislation, depth was provided by the participants' detailed accounts of payment practices in their industry.
iv) Personal context relates to the way in which the discussion on a particular topic reveals the world perspective of the participants. This may result in a common, generalised view or a diversity of perspectives reflecting personal or sectoral differences. This was important in our focus groups since one of the aims was to understand more fully the attitudes and norms of business owners in their particular context. Whilst individual interviews can uncover these perspectives, the dynamic of a focus group can provide an immediate, direct juxtaposition of views through peer group discussion.
The development of a topic agenda (Figure 2) for the discussions followed the aims of the research and set the boundaries for the degree of structure by the moderator. We aimed for a 'middle' approach: there were a number of set research topics to initiate discussion but the moderator allowed a free-flowing discussion within the broad topic areas. In the second round focus groups, where both moderator and participants were more likely to have an understanding of the conventions of the focus group, less control by the moderator was required.
Topics fell into one of several categories (Figure 2): i) The current trading climate was useful as a warm up, introductory discussion and gave participants the opportunity to explain their own business context. We could build up a longitudinal perspective on the state of the small business economy from their degrees of optimism and pessimism, although their views had very distinctive sectoral and personal variations.
ii) Their views on the main challenges in the internal and external business environment allowed them to say what was most important to them before any prompting by specific items on the topic agenda. Despite the slow down in the national economy during the period between the first focus groups (October, 1997) and more recent ones in 1999, the most commonly mentioned challenges related to the recruitment, motivation and retention of the 'right' staff in all groups.
iii) The likely impact of government policies in relation to small firms usually led to lively debates. Topics covered in this category included the impact of the new British Labour Government, late payment legislation, policies to reduce unemployment, particularly amongst young people (the `New Deal'), the introduction of the single European currency, initiatives to reduce the impact of the `millennium bug' and annual government budget statements.
iv) Topical issues concerned management or personal problems particularly relevant to entrepreneurs and business owners, including succession planning, finding customers and the use of information technology. Selection of the special issues was left until the week or so before focus groups began to ensure topicality.
Recruiting Businesses
Focus groups were held in London, Manchester, Reading, Kidderminster and Glasgow for the first round of groups. Hartlepool was substituted for Glasgow in the second, and subsequent rounds when it was decided to conduct the research in England only. The choice of locations was based on the notion that there would be different experiences according to distinctive local environments and, a priori, these specific locations provided varying socio-economic contexts. Whilst it is accepted that these focus groups can not aim to be truly representative of the small business population as a whole, it was important to ensure that the results could be illustrative of the possible regional and sectoral variations and therefore provide a limited level of generalisability for the results.
Finding and recruiting business owners to join the pool of participants for the focus groups initially required considerably more resources than planned. It was important that group membership was homogeneous in that they were all business owners but at the same time, there was a need to accommodate the diversity of activities in which SMEs operate. Invited participants were stratified according to business and personal criteria, including gender. A range of business activities were chosen, covering manufacturing, construction and services. It was decided to concentrate on established independent, small and medium-sized enterprises (SMEs), rather than micro businesses, for which turnover parameters of a minimum of 500,000 and a maximum of 3,000,000 were adopted. Business owners were drawn from a number of sources including FAME, Lotus One Source and other local business directories. These lists were supplemented by up to two clients of the sponsor in each of the locations.
The incentives we offered were for the owner to meet like-minded people and exchange experiences of running a business. We also promised to give them a copy of the results of the group discussions and make public their collective views, for example, on government policies. In addition, we were able to cover their expenses. Once a business owner accepted an invitation to attend the focus group they were sent a confirmation letter together with the details of the venue and the broad format of the meeting. Details of attendees in the first round of focus groups are shown in Appendix 1.
Recruiting business owners, to attend a group discussion at a pre-set data and venue away from their business, proved to be a time consuming exercise. These constraints alone may be a reason why focus groups of this nature have escaped the methodological toolkit of small business researchers'. The acceptance rate to invitations was as low as 1 in 10 and the process as a whole involved well over 100 telephone calls per location, including screening and repeat calls. However, the precise composition of the focus groups was carefully regulated at the recruitment stage in order to ensure that there was a broad sector spread of businesses.
Names of owners who were unable to attend but wanted to be involved were added to the pool of potential participants for subsequent focus groups in that location. For other business owners, attending a meeting, away from their business, at a pre-set time, with strangers to discuss their experiences in the pursuit of raising knowledge proved relatively unattractive compared with the need to run their business.
Role of the Moderator
The literature on focus groups suggests that the success or otherwise of the method depends on the moderator (Krueger, 1977a; Stewart and Shamdasani, 1990). The moderator is the facilitator of the group, the one who makes introductions, outlines the topics to be addressed and acts, to a greater or lessor extent, to control the direction of the ensuing discussion. The moderator has to have empathy and a positive regard for participants whilst striving to remain distant and objective. Moderators also have to be self-disciplined in order to allow a free-flowing discussion but at the same time be prepared to interrupt, if the discussion becomes too unfocused, or probe or move on when needed. It is the key role, which ensures that the group covers all of the items on the topic agenda and keeps to an agreed timetable. In the proceedings of the focus group, the moderator's first question is critical in breaking the ice, since after each participant has said something it becomes easier to make further contributions. With small business focus groups it was particularly important to avoid domination by any participant, making sure that everybody had their say and enabling some level of consistent data collection between focus groups. Obviously, the role of the moderator is a complex one involving technical and social skills. Before we ran our focus groups, researchers attended a course on moderating focus groups which, in retrospect, proved invaluable for the success of the research programme. Hence, the focus groups were moderated by two members of staff who had been on a moderating course.
Running the Focus Groups
To date, the SBRC has run 20 focus groups with over 100 business owners held in the local offices of the sponsor or their associates. The advantage of using the sponsor's offices was the minimisation of costs of room hire and the raising of the profile of the sponsor in the business community. The drawback may be a possible deterrent to business attendance given that the offices are in a chartered accountancy practice. The latter was minimised by informing business owners only once they had agreed to attend. Each moderator was accompanied by an assistant who was responsible for the final layout of the room, the audio recording of the event and note taking during the discussion to capture non-verbal signals and nuances4. We aimed to have six participants in each group. For the first round, up to 10 participants were invited to each group as attendance rates were unknown. Subsequently, eight participants were invited to each because the discussion of groups over eight proved were less manageable. Table 1 indicates the numbers attending the first two rounds of groups including the percentage of those returning for the second time. This has remained high and therefore reduced the recruitment resources required for groups after the first round.
The patterns in the numbers attending show, to some extent, that the researchers were undergoing a learning process on how to organise focus groups and recruit business owners. In Reading, the first focus group held, there was heavy over-recruitment mainly because the research team did not know what the `no show' rate would be5. Following this, the researchers adjusted downwards the target number of attendees accepting participation to eight. Overall, we estimate the attendance rate to be 74 per cent with a maximum of over 90 per cent and a minimum of 38 per cent at specific groups. In other words, our `no show' rate averages 26 per cent. However, the low number of businesses attending the focus group in London in March, 1998 also indicates that there still remains an element of unpredictability in the `no show' rate. Eight business owners said they would attend the London group. Telephone calls to the five nonattendees revealed a variety of unforeseen business and personal reasons rather than any particular size or sector non-response bias. Achieving a target number of participants is not merely a practical consideration of cost effectiveness. Substantively, there are likely to be different dynamics in different sized groups. In the small London group, greater demands were made on each participant and more personal and individual contributions were allowed. The fact that all participants had attended the first group helped minimise the possibility of exhausting the topic agenda since they were strongly committed to the group, having already met each other.
Conducting and Observing the Focus Group
Business owners who were prepared to take part in the groups were invited to a 2hour meeting, including lunch, ending at around 1.00 pm. The moderator and assistant sought to provide a friendly introductory environment which was established over tea and coffee. Here, business owners and researchers mingled informally to encourage a relaxed atmosphere. Participants were then called around a table by the moderator who introduced themselves, their assistant and the representative from the sponsor. Thanks were extended to the business owners for attending and the purpose of the meeting was again explained. The conventions of the group discussions were outlined together with reassurances about guarantees of confidentiality. Any initial anxieties or questions about the proceedings were invited. Each participant was asked to introduce themselves and their business background before the topics on the agenda were addressed.
In practice, the focus groups were able to cover the topic agenda within the one and a half to two hours allocated. Moderator intervention was mainly restricted to prompts, probes and moving the discussion on when a particular issue had been exhausted. There was no domination of the groups by one or two individuals. The assistant moderator and representative from the sponsor did not contribute or intervene in the discussion and sat away from the main table to be as unobtrusive as possible whilst witnessing the discussion. Once the formal proceedings were brought to a close, participants continued discussions over lunch. They were presented with their expenses on leaving.
In the second and subsequent rounds of focus groups, for many business owners there was an already established rapport and this meant that the organisers could concentrate on introducing new group members. It was clear that there were also benefits to the participants who in many cases had exchanged business cards at the end of their first meeting, six months earlier, and were now keen to hear how each other's businesses were developing.
Ethics and Managing the Sponsor
Focus group research raises a number of ethical issues. We were particularly concerned to ensure confidentiality in the discussions and that participants could not be identified in any publications. As a result, any published results are made anonymous and the tapes and transcripts of the interviews were retained by the researchers. A further issue was how to manage the relationship with the sponsor as it was important that participants were aware of the sponsor's role but without any commercial obligations or overtones.
Reimbursing the expenses of respondents for entrepreneurship research has not received much attention in the literature. There is some discussion that paying respondents can increase response rates and does have advantages in ethnographic research particularly where there is an imbalance in the power relations between researcher and the researched (Thompson, 1996). In mail surveys the argument tends to imply that payments can introduce bias in results. In this study, however, it was considered that reimbursement of expenses at a flat rate was an indication to the participants that the researchers valued their time and energy. The reimbursement of expenses was not, however, a key element of the recruitment and reward strategy used, as it was felt that this would bias the results. Only after the discussions were completed did participants receive payment to cover their expenses.
An unanticipated issue arose once the results of the discussions were published, regarding access to business owners. The SBRC was approached by the mass media seeking names and telephone numbers of participants, in order to develop their own particular story using a case study. In these cases, researchers approached business owners directly, asking if they were able to help out. Only if permission was granted were their details passed on to the journalist.
Analysis of the Groups: An Example of Discussions on Motivations and Business Succession
There are a variety of methods of analysing data from focus groups (see Catterall and Maclaren, 1997; Krueger, 1997b). Morgan (1988) suggests that there are two basic approaches: an ethnographic summary, or systematic coding via content analysis. Our analysis of the focus groups fit into the former and results are presented following the identification of major themes in transcripts together with notes made by the moderators and observers. These methods are considered amongst the most rigorous and time-intensive (see Krueger, 1997b). The approach was guided by the topic agenda and initial analyses were made on a topic-by-topic basis (see Horwath Clark Whitehill/ SBRC, 1998), although where unexpected themes emerged we were able to incorporate them into the analysis. Of course, as with all ethnographic qualitative research there comes a time when order has to take place in theme building and the presentation of findings. In our case, this occurred only after a series of iterations with the transcripts and discussions with the researchers. Clearly, the analysis was a time consuming exercise.
One theme that has been long running in the literature is that of business owners' motivations to work and their business succession and exit strategies (e.g. Berman-Brown and Coverley, 1999; Cromie and Adams, 1997; Morris et al, 1997; Scase and Goffee, 1987; Stanworth and Curran, 1973). Investigating motivations and succession issues using focus group methods was particularly interesting because it would necessitate business owners discussing personal plans, if they had any. To what extent would business owners be prepared to explain their own specific cases in a group setting? What issues were involved in the business exit process and were these as straightforward as some of the textbook and advisory literature suggest.
In discussing their exit strategies, it was obvious that these could not be divorced from their motivations for running a business. Unsurprisingly, these included the self-satisfaction and challenges that business ownership brings, that they receive the rewards for their efforts6:
Bill I'm in my early 40s, I've been doing it 21 years. My main motivation is enjoyment. I have worked for other people on and off on a consultancy basis, and I have thought of leaving. But no, I just like working for myself really
Rick I am doing what I want to do, I enjoy going to work. On a Monday I don't think, 'Oh God, it is Monday'. I think, 'Oh right, what am I going to this week? What can I get my teeth into? Bill sounds the same.
Bill Oh yes, absolutely.
Bob I can't imagine myself retired at all ... (Location One)//
However, there were also some less positive and negative reasons for continuing in business.
Running a business was fraught with uncertainty, rendering planning difficult:
Andy ... well you get on a treadmill don't you . . . You get into a bad habit and you stick with it and you're trying to make an honest pound ... ... At the end of the day I don't think many people have these advance life time plans that the insurance companies believe and it suddenly dawns on you one day, that you ought to be making a will and looking at how people follow on in your business activities ... because we've always talked about 5 year plans but anyone who's tried 5 year plans and looked back 5 years later found they were absolute nonsense. The market didn't work anything like you thought it would go when you thought it was going to go up, it went down. When you thought it was going to go down, it suddenly shot up. You know it's swings and roundabouts all the time isn't it? ... (Location Two)//
Martin I am second generation in my business if you like. It's a family business. My son may come into the business in the next few months. I have had thoughts in the last few years of just retiring and buggering off into the sunset with the cash. I've done it since I was 15, now I'm 51. It is a bit of a treadmill, I have not done anything else except selling furniture and carpets. That is how it is. If you are successful at it, then the rest goes with that . . . (Location Three)//
Overall, those that were conscious of the need to have succession planning were in fact constrained by the vagaries of their product or service market. When mixed with a feeling of responsibility to their employer, an inability to delegate and even being trapped, the whole notion of `business succession' is far more complex than many studies and practitioners would lead us to believe.
In discussing business succession specifically, the focus groups revealed that, overall, business owners were well aware of their need to plan their retirement and find an exit route. Indeed, some had well drawn out plans. Yet the main problem was developing a plan alongside the dayto-day demands of running a business and balance the needs of a current income with a future income. Some business owners wanted to leave or sell their business as soon as they could but this was not straightforward. Issues of finding a suitable buyer at the right price, the ability to `let it go', the complication of the family and securing a satisfactory future income and ways of occupying their time once retired, were expressed by many participants.
However, again the topic agenda provided some spin-off points when discussing the issue of succession. In the following transcripts, business owners discussed the particular issues facing them in their decision making about pensions as well as sharing the benefits of group interaction:
Phillip I've always regretted not putting enough into the pension fund. People say to me when I'm young I didn't have the money ... the last few years I put a lot in [to a pension] by not taking a salary for three months . .. I got tax rebates so it didn't really cost me a lot of money. I suppose when you have got a family it is difficult. My biggest advice to people who are young today is to put money aside for the pension fund.
Sam (interrupts) but that takes it out of the business Phillip . . . the biggest problem is keeping enough cash within the business to fund the day-to-day activities of the business . . . there's a finite amount of money to take out of the business and if you put in a pensions scheme it's gone . . . (Location Two)//
Even when a plan was drawn up, sticking to it was considered a significant problem as expressed by a different group:
Moderator: Has anyone other than Gary taken advice on exit routes?
Lilian We took advice when we made our plan in the first place about moving ourselves away from the front end of the business. How we geared our pension schemes.
Mike I've taken advice and their advice was you need to be bigger. . . to make the amount of money you need to actually walk away from it ... I'm in the process of doing that ... we also had a minority venture capital shareholder and the advice was to get rid of them and I'd been wanting to do that anyway so I went to the bank and borrowed the money to buy out the venture capitalist . . . if you want to sell and retire deciding how much that sum of money is.../ ... you have to focus quite hard on that. . . I do the arithmetic on that - not every day.
Marina We started this actually about two years ago and we have taken advice and put plans into place. I do believe that it is very important to have those plans and the correct ones. They always advise you to get bigger and you have to be a certain size and then you will realise X, Y and Z. I just say `always think about it yourself, what it means to you at that moment in time ... you can go on and on and on. And what Lilian said earlier about `it's gone past the date you made your plans for, but now you've gone into a time when you can't really sell because you have got to nurse it along for the next year' and that's really what I mean David (the moderator) that sometimes you can go on in life and you can be too long (making the decision to sell).
Gary Perhaps 2 years ago was the right time.
Marina So if you do make a plan and you do say 5 years, on the fifth year that is right - do it. And somebody will come along and say but if you were 10 million you would get X amount for it don't be swayed by it.
Lilian It's very easy to get side-tracked along the way. The other danger time is when it is going brilliantly that's quite dangerous as well because if the business is going well - no real problems anywhere you think it will go on forever and it'll be wonderful. You know `call me from Barbados occasionally'.
Marina In 3 months all hell will have broken loose and you think what did I do that for? I remember people saying to me 'what are you doing, why are you' . . . You know I was 30 something at the time - they said 'what the hell are you doing this for?' Selling everything up. I said that's my plan. And they really thought that I had left the planet, that strange woman what is she doing? But that was my plan and I stuck with it.
Lilian There's definitely a greed factor - grow it a bit, make more (Location Four).
The conversation showed clearly the tension between drawing a satisfactory income while running the business and investing in a pension. Choosing the right moment for 'exiting' was considered critical but the reality of this process was complex. Some owners wanted to exit now but were continuing in business in order to accumulate sufficient funds for their retirement. However, the major point to come through was the overall uncertainty attached to running a business and exit planning. This uncertainty renders planning a pension difficult and creates a culture of `we're in it on our own' no matter how much advice one seeks.
Handing the business over to a family member was also not straightforward. In some cases a member of the family was working in the business with the business owner. However, for others their views on any offspring taking over their business ranged from ambivalence to resistance:
Michael. . . talking about your family taking over the business - that's something I wouldn't do with my family because I don't think they've got the fire. I just don't think my daughters have go the same fire as I've got.
Mike You're forcing them down a particular channel - there are so many things they can do ... I think that they may or may not have the right qualities to do that - they may wish to go out and do other things . . . plus you might think that in giving them a thriving business you're spoiling them so I just think this whole family business thing is an absolute can of worms.
Gary If they're in it already though it's a different situation.
Mike ... Well I accept that ... my exit strategy is that at some point I've got to sell the business and I think the management team realise that. So they know when we're discussing share options there's only one point - you know we were discussing what's the point in owning shares in a private business - there is only one point when it is worth it and that's when the business is sold. So what it is, is when the business is sold they get a share of the benefit - so that's the sort of logic there.
Lilian I think the crucial thing if you are growing a business to sell (not put it back through a family) is to make sure that you are no longer a key part of it. There were many years when we were the business and selling it wouldn't have been a success unless we would have stayed with it. But we worked very hard to remove ourselves from the front line (Location Four)//
For one respondent, the combined experience of running a business and skills needed were enough to discourage subsequent family involvement:
John It can cause resentment [among existing staff], because you've got a lot of people who are very good at what they do. To get somebody who is not qualified and not experienced can be very disheartening. I think it's very old fashioned if your off spring is going to take over the business.. ./... My daughter is three years old; I hope she won't be going into my business. I would not advise her to. I hope she would do something more professional, I hope she would be a doctor or something like that, so not having to worry about the day-today stresses and strains (Location Five) / /
Methodologically, the discussion on business succession reveals the high level of detail which focus groups can engender as a result of the group interaction. Business owners were very open about their own particular circumstances and in some cases were in the very process of disengaging from their business, providing data of specificity and depth. Any reservations we had that business owners would be reluctant to open-up in front of their peers on such a sensitive issue were not borne out. The results show a much wider spread of experiences and views on business succession strategies than elsewhere, and that the `Peter Pan' syndrome found in family businesses elsewhere (BermanBrown and Coverley, 1999) was in a minority in this study.7
Conclusions
This paper has examined the use of focus groups as a method of researching the world of the small business owner. The results draw on a series of ongoing focus groups which will provide a longitudinal perspective. Although focus groups have been used rarely in small business research in the past, the results illustrate the potential contribution of this method as a vehicle to adding to our picture of the motivations, rationales and experiences of small business owners.
One major advantage of this over other qualitative methods derives from group interaction. Business owners were shown to empathise, explain, challenge, contradict and advise on, each other's accounts of their experiences in relatin to particular topics. The reason for this level of openness may derive from a shift in the power relationship between researcher and researched. In focus groups the researcher is in a minority and participants are amongst their peer group. This seems to make them more willing to discuss topics openly in their own language, than in one-to-one research environments. This was exemplified in the discussions on motivations and exit strategies. Here, the method was particularly useful as a means of allowing business owners to express their views and experiences unimpeded by the constraints inherent in one-to-one discussions with a researcher. Thus, focus groups are an effective way of unearthing personal detailed views and experiences.
Although the groups were guided by a topic agenda, they were able to 'snowball' their views on issues, presenting a wider context, for their own position. For example, views on motivations and exit routes often generated a wider discussion on pensions and the insecurity of business ownership. The advantage of this method over face-to-face interviews is that each speaker provides a platform for another to contribute, rather than responding only to a pre-determined list of questions. Here, business owners were preared to add to or qualify what had been said previously, providing a much more complete picture of their world. It is often argued that one drawback of the focus group method is the trade-off between individual accounts and details for the sake of a `group think' or view. This was not found in these group discussions. Participants provided long, detailed narratives about their experiences of running a business which often revealed their values and motivations.
Of course, choosing any research method involves certain trade-offs and the focus group approach is no exception. Running focus groups with small business owners proved to be relatively time consuming, requiring considerable, detailed planning and follow-up with owner-managers, compared with face-toface interviews. The recording, transcribing and analysing of the material collected is also relatively time consuming. Although the results were considered valid, to the extent that the participants understood the issues under consideration and they did reveal a great deal about the culture of the business owner, care must be taken about generalising results to the whole business population. Finally, convincing the audiences of small business research that the results are of significance is more difficult than when presenting quantitative results. This mission has not been assisted by the proliferation of focus group use for marketing purposes and more recently by political parties.
However, the analysis of the data emerging from group interaction can provide a rich understanding of process issues in the SME as well as the rationales of business owners and, on balance, we would argue that focus groups should be used more widely by those seeking to understand the world of the business owner. From our experience so far, the method outlined generates data of range, depth, specificity and personal context. It is also argued from our experience when carefully contexualised in the literature that these may be able to stand alone, as a means of unpacking and exploring in detail a conventional wisdom. Focus groups may also be used to complement data from other methods within the same research programme as a means of exploring the cultural norms, values and languages of business owners and for helping to develop explanations for patterns found in survey data. Ultimately, using longitudinal focus groups with small firms in the method proposed can help break down the barriers between researchers and the subjects they seek to understand.
Acknowledgements
The authors would like to acknowledge Horwath Clark Whitehill for sponsoring this research. The paper benefited from discussions with our colleagues Dr. John Kitching and Dr. Laura Spence and from comments by the two Journal referees. Thanks are also due to those assisting in the running of the groups and the business owners for their valuable participation.
Footnotes:
1 There appears some difference of opinion in the ideal number of participants. Morgan (1998, p10) for example, suggests 6 to 8, while Stewart and Shamdasani (1990, p10) 8 to 12.
2 The most comprehensive recent publication is a 6 volume Focus Group Kit (see for example Morgan, 1998).
3 We could find no reports of researchers of entrepreneurship having to abandon attempts at running focus groups although the resource intensiveness has, hitherto, not been discussed adequately.
4 It may be possible to video record focus groups but we were constrained by the layout and size of the rooms used. This would capture visual as well as verbal language although it may affect the behaviour of respondents.
5 Morgan (1998, p44) suggests that the common rule of thumb is to over-recruit by 20 per cent but this depends on who these participants are and where the groups are located. We anticipated that the absence rate would be higher for business owners than customers because of the demands of their business and general reluctance to be involved in research.
6 The transcriptions are taken verbatim from the focus group discussions and appear as the conversation flowed from one participant to the next. There are markings in the text to help explain the discussion: '...' indicates a pause; `.../...' is where text has been omitted; '...//' shows the end of a particular discussion on one location.
7 See Appendix Two for a guide to conducting focus groups in SMEs.
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