Principal Topic

Most research on owner intentions and growth decisions examines the association at a single point in time. This static approach excludes the possibility that an owner’s intentions change over time. However, it is highly likely that intentions change notably given the on-going success/lack of success of the business and the on-going positive/negative experiences of the owner. Since the life-span of many businesses is short, it is likely that growth intentions will be scaled back relatively early in the firm’s existence. The principal topic of this research is change in the owner’s growth intentions over time, focusing on change during the first six months of a firm’s existence.

Method

The data for this study are drawn from the Wells Fargo/NFIB Series on Business Starts and Stops. In the data set, new business owners classify their intentions as: 1) grow the business into a large firm; 2) develop a business that provides a comfortable life-style; 3) create an income supplement (part-time firm); and 4) transition until a better opportunity arises. The set allows calculation of the number of months the business had been operating prior to expression of the owner’s growth intentions. The result is a monthly series of cross-sections covering the first six months of a firm’s life.

Results and Implications

The proportion of new business owners with growth, lifestyle, and part-time intentions does not change notably over the first six months. This pattern suggests that either the owner’s intentions change little in the venture’s early life or that changes occurring are random with individual changes cancelling one another and yielding a stable population. The former is more plausible given that the expected scale-back among the group with growth intentions never appears. Those with transitory intentions were different. They most frequently appeared in the initial months, particularly the first, and declined over time. The pattern indicates that as their intent, they transitioned to paid employment quickly.

CONTACT: Denny Dennis, NFIB Education Foundation, 1201 F Street, NW Suite 200, Washington, DC; (T) 202-554-9000; (F) 202-554-5572; denny.dennis@nfib.org