Business and Entrepreneur Characteristics influence on Business Performance of Professional Small Medium Enterprises

This study aims to examine the determinants of business performance of Small Medium Enterprises (SMEs) professional service businesses based in Malaysia. Specifically, the study analyses the relationships between entrepreneur and business characteristics with business performance. Factors associated with entrepreneur characteristics include gender, age, ethnicity, education, and working experience. While the business characteristics examined were based on years of establishment, start-up capital, number of employees, business's origin and legal status. The study adopts a quantitative approach whereby a questionnaire survey was used to gather data. The questionnaires were distributed to the owners of SMEs in Malaysia who are involved in providing professional services in the areas of law, architecture, engineering and accounting. A total of 2,376 businesses were identified and questionnaires were distributed via the conventional mail. Despite numerous efforts taken to improve the response rate, only three hundred and fifty three completed questionnaires were returned. It was found that generally the respondents perceived that the business performances of their companies were satisfactory and that they were gaining some form of financial profit. Further analysis on the relationship between the business characteristic and business performance found that the Years of Establishment, Business Set-Up, Number of Employees, Nature of Business, Business Ownership, Start-Up Capital, Business Structure, Source of Capital are significant to business performance. The study also examined the relationship between the entrepreneur characteristic and business performance and found that the gender and age of the entrepreneur significantly affect business performance. Businesses whose owners were male entrepreneurs and older comparatively perform better than businesses whose owners were females entrepreneurs and younger. It is hoped that the results of this study give insights into the characteristics of successful professional businesses, thus, assisting governments in formulating policies for the development of these SMEs.