The effect of changes in the business environment on the factors leading to local small business failure : an investigation

Abstract

Business failure has always been a subject that foreign literature explored in detail to try and reduce this harsh reality. In 1999, Christopher Borg, conducted a study whereby he discovered that in the local small business environment entities were still operating given a number of deficiencies within them. These deficiencies were attributed to the fact that Malta had a low level of competition from foreign entities since there were protectionist measures taken by the local government. Since then, Malta faced a number of challenges, most notably the fact that it joined the European Union resulting in higher levels of competition. Other business environment changes were also as challenging. The study endeavours to assess any improvements made in tackling selected causes of business failure within the micro local business setting. For such purpose, a survey was carried out among one hundred and forty-five (145) local micro entities. The results show that although micro entities had improved in certain areas such as the use of accounting records and budgeting and planning, yet bad debts had dominated on the negative side. On the other hand, there has been a reduction in the number of factors that can lead to failure within the micro business environment.