Strategies to Obtain Working Capital for small Business.: A Qualitative Multiple Case Study

Abstract

Abstract

Small business owners who cannot access working capital risk business survival through liquidity shortages, lost customers, and falling profitability. The purpose of this qualitative multiple case study grounded in the pecking order theory was to explore the strategies employed by small business owners to obtain working capital for business continuity beyond 5 years. The participants included 8 small business owners in Maryland with successful strategies to obtain working capital for business continuity beyond 5 years. Data were collected through semistructured 1-on-1 interviews. Thematic analysis followed Yin’s (2017) 5-phase process of compiling, disassembling, reassembling, interpreting, and concluding. Five key themes emerged: (a) financing through retained earnings, (b) financing through nontraditional lending sources, (c) limited access to external funding in the early years, (d) reliance on external financing during later and critical business stages, and (e) minimizing operational costs and expenses. A key recommendation is that entrepreneurs use internal financing as much as possible to sustain operations, minimizing the need for external funds. One implication of these findings includes the potential for small business owners to sustain operations for more than 5 years, thereby providing jobs and generating tax revenue for citizens and communities.