The Educational Needs of Small Business Owners: A Look into the Future

Glenn Muske
Asst. Professor/Extension Home-Based and Micro Business Specialist
Department of Design, Housing and Merchandising
Oklahoma State University
Stillwater, Oklahoma
Internet address: muske@okstate.edu

Nancy Stanforth
Assoc. Professor
Dept. of Fashion Design and Merchandising
Kent State University
Kent, Ohio
Internet address: nstanfor@kent.edu

Introduction

Small businesses represented a significant driving force behind the economic boom of the 90s. These businesses employed more than 56% of all workers. Between 1990 and 1994, small businesses generated 38% of the gross national product (Berns, 1991; Chun & Griffin, 1996; Nelton, 1989). Small businesses accounted for virtually all of the net new jobs created between 1987 and 1992(Ashmore, 1996). Women and minority small businesses made an important contribution to the economy, generating over $3 trillion in sales and receipts (Chun, 1998).

Future economic expansion will depend on the continued success of small business owners. One factor found to predict business success has been education and training of the small business owner. Much of that training has come from continuing education programs, such as that offered by the Cooperative Extension Service. Seventy-four percent of home-based business owners in one southern state depended on continuing education to fulfill their educational needs (Burns, 1994). Similar studies by Burns in 1989 and Berns in 1991 support that finding. Berns studied 9,000 entrepreneurs and found that continuing education in financial management, personnel, marketing, and business planning was regularly requested.

The purpose of the study described here was to examine the anticipated continuing educational needs of current college students. Today, entrepreneurship courses have seen tremendous growth at the college level. With such an explosion it might be anticipated that today's college student will already have acquired the educational programs needed to operate his or her own business. Confirming this will help Cooperative Extension plan its future entrepreneurial support role.

Background

The number of small businesses in the U.S. economy quickly grew during the 1990s. Today, more than 99% of the 23 million U.S. businesses are classified as small, using the standards of the U.S. Small Business Administration. Over 70% of U.S businesses have 20 employees or fewer (Buck, 1997; Frauenfelder, 1997; U.S. Census, 1998).

The growth in the number of small businesses is expected to continue into the new millennium. According to futurist Watts Wacker of SRI Consulting, the number of small businesses is expected to increase by 50% over the next 10 years (Chun, 1998). Nearly 900,000 new companies started each year, with over 90% classified as small businesses, and it is estimated that 50% are home-based (Case, 1996; Frauenfelder, 1997).

One primary reason for the growth in the number of small businesses is that "being your own boss" continues to be a part of the American dream (Batory & Batory, 1997). In a N.Y Times survey, over 75% of people indicated that having one's own business was one measure of success. Muske and Stanforth (1998) note that nearly 60% of non-business college students thought they would be owning their own business at some time. Other studies of college students, including both business and non-business majors, note similar results (Brenner, Pringle, & Greenhaus, 1991; Crant, 1996; Duke, 1996; Kay, 1996; Scott & Twomeny, 1988).

A second reason for starting a business is disillusionment with corporate America, causing many to look for alternative employment choices (Kay, 1996). Corporations are no longer viewed as lifetime employers, even if the individual would like that to be the case. Global competition, corporate hiring freezes, downsizing, and changing skill needs have altered the business/employee relationship. Nor can workers expect that corporate jobs will fulfill their psychological and sociological needs.

Quality of life represents a third reason for starting a business. Many employees view quality of life as important as money or status (Buck, 1997; Kay, 1996). Owning a business provides income and time flexibility that is not easily available when working in a large corporation (Brackey, 1998). Entrepreneurship represents an alternative means for many to achieve their desired lifestyle (Buck, 1997; Duffy & Stevenson, 1984; Kay, 1996). Entrepreneurship also provides an income potential greater than what the corporate world might offer and sufficient to keep up with one's peers (Bryant, 1999).

The technological revolution has made working at home or in a small business more viable. Technology has allowed workers to produce quality output from their desktop computers without regard to firm size or location, and has enabled rapid communication worldwide (Kay, 1996).

Another issue that has sparked people's interest in starting a business is the "glass ceiling," often regarded as a gender issue. Often women are not able to rise beyond a certain level within the corporate environment. To fully realize their potential, they choose to start their own businesses (Chun, 1998).

These reasons for growth are predicted to continue and to drive the increasing numbers of individuals starting a business. At the same time, however, many businesses fail or do not achieve the success needed to continue a growing economy. Success, measured simply by staying in business, is an elusive goal for many entrepreneurs.

Research indicates that as many as 60% of all small businesses fail within 5 years of start up (Case, 1996; Kirchoff, 1993). One way to increase business success rates has been through education and training (Danco, 1994; Ede, Calcich, & Panigrahi, 1998; Jenkins & Jenkins, 1997; Luisser, 1995; Robinson & Sexton, 1994; Sage, 1993). Education can reduce mistakes that are costly in terms of both time and money (Hatten, 1997).

One obvious source for such education is higher education. Entrepreneurial courses and programs have experienced a huge growth in numbers (Block & Stumpf, 1992; Gartner & Vesper, 1993, Vesper & Gartner, 1997). Today, as many as 1,000 two- and four-year colleges and universities offer formal entrepreneurship programs, up from only 50 in 1975 (Vesper, 1993; White & Shank, 1999).

For a variety of reasons, though, many students do not have an opportunity to take entrepreneurship courses while in college. Business colleges report that classes are filled to capacity with their own students and many have substantial prerequisites for enrollment. Thus a non-business student has limited opportunities to get this training while in college (Stanforth and Muske, 1999).

Cooperative Extension has long assisted the home and micro business owner as well as rural and community development through educational programs. These programs have responded to the needs of the business owner (Burns, 1994). The Extension programs in each of 40 states have a designated person to oversee micro business development. For future planning, it is important that the Cooperative Extension Service look at prospective demand for entrepreneurship education.

This paper discusses the entrepreneurial intentions and continuing business education needs of the non-business student. Do these students see themselves as future entrepreneurs? Do they anticipate that they will need educational support beyond college courses, such as those offered by Cooperative Extension's non-formal education programs? If so, what programs does this group anticipate needing? Such information will be useful in the development and planning of Extension programs and outreach efforts as we enter the new millennium.

Method

Students in non-business classes in two Land Grant universities completed a self-administered questionnaire. The questionnaire included questions regarding the students' continuing education plans for business management classes. Students were asked what subject content they would be interested in taking through some form of continuing education. The choice of subject matters was derived from Duke's (1996) study. Demographic information included the respondent's major, year in school, family experience with entrepreneurship, age, and gender.

The study discussed here has two limitations that affect its applicability. The most important is that the survey measured intended behaviors, that is, what students were planning to do. Many factors may cause their actual behavior to differ. For example, students who now are planning to become entrepreneurs may never achieve that goal, and others who did not consider entrepreneurship may indeed end up owning a business. Entrepreneurial ventures are often unplanned (Jenkins & Jenkins, 1997).

A second limitation is that students were from two universities and primarily from two colleges within those universities. Thus the results may not be applicable to all areas of the country and across other colleges even within the same university.

Having noted these limitations, the authors nonetheless believe that their findings have implications for future Extension programming.

Results

Three hundred eighty-three students completed the questionnaire. The majority were female (68.1%). A variety of majors were represented, with 43.9% from Human Environmental Sciences and 38.9% Agriculture, for a total of 82.8% from these two areas. The majority (76.2%) were 20 years of age or younger (Table 1).

Nearly half of the respondents (46.6%) indicated that their families owned a business, which included ownership of farms and ranches. Forty percent indicated that their fathers owned a business, while 16.4% indicated that their mothers owned a business. The other businesses were jointly owned or held in some other form of business structure.

Twenty four percent of the respondents said they are definitely going to open their own business some time during their lifetime. An additional 60% indicated they might start a business. These two groups were considered the prospective entrepreneurs in this study.

As might be expected, the needs of the potential entrepreneurs differed significantly from those who did not see themselves becoming business owners. Among the prospective entrepreneurs, students anticipated most needing education in small business financing, basic accounting, and business growth. However, there was not a great deal of difference with each course being listed by 32% to 40% of the respondents. Students were least interested in personnel management and retailing (both at 32%) (Table 2). Ten percent of the students overall said they would be taking all of the listed courses.

Women and men did not differ significantly in seeing themselves as becoming entrepreneurs. In examining the responses according to college major, only in the agriculture college did men and women differ significantly (c2=12.8588, p=.00161). This finding might be expected because male students majoring in agriculture are more likely to return to a family farm than are female students. Men and women potential entrepreneurs did not differ, however, in their perceived future educational needs.

Continuing Education Needs	Percent Who Anticipate Taking
Small Business Financing	39.8
Basic Accounting	39.7
Growth	38.9
Small Business Start-Up	38.9
Small Business Management	38.2
Small Business Planning	38.2
Entrepreneurship	36.9
Marketing	35.4
Personnel Management	32.8
Retailing	32.5

Discussion

Continued economic expansion depends on successful small business owners. One important factor to that success has been education and training. In a 1999 survey of its members, the Oklahoma Home-Based Business Association found that the primary need of the membership was for information. The top four topics included marketing, taxes, financial resources, and record keeping (Muske, 1999). The students in this study expressed similar needs to current business owners.

Today's college student represents a future audience for small business courses already offered by state Extension Services. Support of small business owners, both potential and existing, will remain an important focus for the Cooperative Extension Service. The potential audience includes today's owners and tomorrow's potential owners. The programs will include business development efforts as well as programs that allow the owner to keep up with today's rapidly changing environment. Education is a life-long requirement, becoming a necessity in the development and maintenance of a successful business enterprise (Roth, 1996).

Cooperative Extension small business programs can build on three advantages.

• First, Extension has always, and will continue, to provide programs to outlying areas. Our programs represent one of the few rural opportunities for continuing education. In many rural areas, Cooperative Extension programs already provide local business owners with updates and information. Extension professionals who live in the area become uniquely qualified to identify and address local needs and issues.
• Second, Extension is typically well known and respected for its ability to provide nonbiased, timely, valuable information. Extension professionals have the ability to draw information from top university researchers making them unique sources for small rural businesses.
• Third--and extremely important from the perspective of the small business owner--Extension has ability to provide very directed and specific information. Small business owners focus on very specific issues. When attending a workshop, they want the information provided quickly, and they want it to the point. Extension professionals understand because they work with that perspective on a daily basis.

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