Millions of small businesses exist in the United States, and the revenue from these enterprises accounts for a majority of the country's GDP (Hayes, Chawla, & Kathawala, 2015; Stoll & Ha-Brookshire, 2012). Several industries support small businesses, including social welfare, tourism and the retail industries. These businesses drive the U.S. economy; however, the majority of these businesses do not survive past the first few years of operation (Popescu, 2014; Radipere & Van Scheers, 2014). Hence, the purpose of this qualitative interpretative phenomenological analysis (IPA) was to identify what areas of leadership and management have the most influence on small business failure. The problem was the failure of small businesses in the marketplace and the consequences of small business failure, which included negative social and economic stigmas (Simmons et al., 2014), cognitive and motivational consequences (Sserwanga & Rooks, 2014) and financial and psychological costs (Ucbasaran et al., 2013).
Small businesses’ leadership faces obstacles to entering the market, which include a lack of necessary capital, market competition, business atmosphere and the necessary education (Karakaya & Parayitam, 2013; Lofstrom et al., 2014). After beginning operations, contributing factors to failure of a business become apparent. These predictors include regular reorganization of the company and assets, such as changing cash flow, liabilities, total assets, returns and earning capabilities (Andreeva, Calabrese, & Osmetti, 2016; Bhandari & Iyer, 2013; Lussier & Corman, 2015).
Small businesses remain a major part of the U.S. economy, but the success rates of these businesses are poor (Hayes et al., 2015). The lack of strong leadership and managerial experience within a company might have contributed to these failures (Nummela et al., 2016). One might posit that leadership and management represent joint attributes that a successful company needs to survive in the marketplace (Yan & Yan, 2013). In fact, some researchers have studied why these businesses do not survive the first few years of operation. Some of these reasons included gender inequalities (Loscocco & Bird, 2012; Wu & Chua, 2012), a lack of human resources (HR) and personnel management (Arasti et al., 2012), missing managerial and practical business understanding in staff (Nummela et al., 2016), marginal human capital (Rauch & Rijsdijk, 2013) and poor capital financial management (Gaskill et al., 1994; Jackson et al., 2015).