Over the last several months, students at Northeastern University conducted a research study aimed aimed at discovering the commonalities shared by small business owners and entrepreneurs.

Graduate and undergraduate students, advised by business professor Matthew Allen, found the following:

Of the 48 respondents identified as small business owners and entrepreneurs, most had several years of experience in their industry before starting their own business.

Average industry experience from the group was 17 years, Imean) while the most common response was 10 years (mode).‚  Of the respondents 58 percent have a family member working with the company, which indicates a trend towards family business.

Fifty-two percent of the businesspeople had completed a bachelor’s degree, 25 percent had achieved a master’s degree and 13 percent had not studied further than high school.

Frequent preparation and review of financial statements is commonly believed to be a necessary component to success in small businesses.‚ The survey reports that 52 percent of those surveyed review financial statements prepared on a monthly basis. while 35 percent only prepare financial statements annually and 12 percent never prepare or review financial statements.‚ Two thirds of respondents contract with a third party accounting professional to prepare these financial statements.‚ On the software side, Quicken was by far the most popular accounting software with 65 percent usage. Peachtree came in second with 13 percent.

These small business owners and entrepreneurs responded most commonly as having two years in operation with their current small business.‚ Seventy-three percent of them provided their own startup funding, while 10 percent received bank loans, eight percent were funded by friends and family and six percent used equity financing.‚ 

Regarding workload, 83 percent of all respondents said they operated in their business full time, 10 percent worked part-time on their own enterprise and six percent considered their small business a hobby.‚ About a third actually owned their own office space, and the rest leased it.

When asked to rank factors for success on a scale of 1-8, the below are the results that were obtained.‚  Most important factors were given a 1, while least important factors were ranked 8.‚  From the results we see that Cash Flow and Sales were most commonly ranked as the most important factor among responses:

When asked about the biggest challenge that their company currently faces, 36 percent chose the economy, 13 percent chose personnel, 8 percent chose customers, and 6 percent chose financing.‚ 

When asked their firm’s most relevant competitive advantage, a third of them chose quality, 29 percent chose innovative products/services, 29 percent chose customer service, and 16 percent chose low prices (more than one selection allowed).

Employee termination was relatively low, — each company reported firing only one person on average.

Regarding succession planning and compensation, 27 percent of respondent’s companies have a formal employee selection process, 27 percent of companies have a formal employee evaluation process, and 40 percent of all firms have a formal method for setting compensation.

Innovation is a theme common throughout these firms. The overall estimation for the group is that 48 percent of net 2008 sales came from products or services less than two years old.‚ About a third of firms surveyed have a formal process for developing new products and services.‚ Also interesting is that 48 percent of all companies responding have a formal process for evaluating the quality of products and services.

Lastly performance had several noteworthy results which we now see.‚ The average profit growth for all companies surveyed was 10 percent.‚ However, the most common response was two percent, and nearly 20 percent of those responding had negative revenue growth in 2007.‚  As compared to their competitors in the market, most firms surveyed felt that they were slightly worse in marketing and slightly more profitable.‚ Those surveyed felt that they were equal in terms of their sales growth and market share with their competitors.

Blast Magazine participated in this survey