The dependent variable for this study is business risks that are faced by small businesses in Singapore. One of the biggest challenges the small businesses in this country face include poor management of funds. Some of the businesses in this country are not able to get enough cash to cover their bills. According to the research, most small businesses fail, because entrepreneurs are not able to manage their income and capital effectively. Small businesses are started by entrepreneurs with a good idea that they feel will enable them to earn constant income. Financial analysts have revealed that some small businesses face poor money management problems, since they select wrong bankers to handle their financial transactions. This makes them incur high expenses, while paying for maintenance charges, overdraft fees and loan interest rates. Another key risk that affects small businesses is the fact that they heavily depend on the owner of the business.
Some small businesses are not able to operate without the assistance of the founder of the business. Overdependence on the owner results from the fact that some owners do not like delegating the process of decision making in their firm. In some instances, the owners of the business like performing the majority of responsibilities in their firm. In case the owner dies, it will be hard for such businesses to survive, since other employees will not know the strategies that they can use in order to ensure that the business continues to operate efficiently. Small businesses also face the risk of overdependence on a single client. This mainly occurs because these businesses are not able to fund a good marketing campaign, making it hard for consumers to know the products that they may be offering. Half of the income of some small businesses in Singapore comes from one client. This is a high risk, since overdependence of a single client may cause a business to face financial difficulties in case the client moves to a different supplier.
Small businesses in Singapore also face information technology risks. Most small businesses are not able to afford the funds, required to install a successful information systems infrastructure. Recent studies have revealed that small businesses are vulnerable to security failures due to weak information systems. Such businesses are vulnerable to identity and data theft and robotic attacks. The wireless networks of these businesses may also be weak and unprotected, exposing them to external attacks. Small businesses also face technological risks, since they have poor back up strategies. According to the research, 50 percent of all organizations seize their operations, after losing crucial data regarding their business processes.
Poor back up strategies may also cause a business to back up wrong data and this may hinder its optimum operations. Small businesses face the risk of virus exposure. Some of the businesses do not have the anti-virus software to protect them against external virus attacks. A study conducted by BBC revealed that most personal computers that are unprotected become infected in eight seconds as soon as they become connected to the Internet. Virus attacks can make essential customer files become infected. Customer data may be lost because of this.
The independent variables include the outsourcing of activities in the small businesses. One of the key independent variables in the study is business process outsourcing (BPO). In business process outsourcing, small businesses hire other companies to handle their business processes. This form of outsourcing is very common in India. According to the research, companies are able to save many costs if they adopt cost-saving measures. Small companies, engaging in small business outsourcing, may perform back office outsourcing or front office outsourcing. Another key independent variable in terms of the study is technology outsourcing. Researchers argue that small businesses should outsource their information technology functions, since it will help them to have high class IT specialists.
Skilled IT specialists are pivotal to an organization, since they are able to come up with innovations in order to deal with challenges that may occur in the market place. Small businesses will also have an opportunity of having the high quality software that matches their specific organization needs. The overhead costs of small businesses will also reduce because of outsourcing activities. Salaries that would have been paid to the IT staff are saved because of this. Finance and accounting outsourcing is also an independent variable of this study.
Finance and accounting outsourcing enables a company to use expert services, while maintaining its book keeping activities. Small businesses also benefit, since they are able to gauge their financial performance more appropriately. Outsourcing tax services helps a company to earn tax gains, since companies that are experts in the accounting field are able to identify strategies that they can use in order to save their tax expenditure.
The last independent variable in this study is knowledge process outsourcing. In knowledge process outsourcing, small businesses in Singapore outsource high-level tasks to other organizations that have enough expertise required to perform such tasks. India is also famous for knowledge process outsourcing. Companies outsource activities that require an intensive creativity, tracking, sharing and disseminating of knowledge. Small businesses can outsource tasks such as the web application development, engineering services, business research and analytics, market and clinical research.
This study adopted a quantitative research design. The quantitative study was conducted due to several reasons. It eliminates personal bias. Researchers are not allowed to make personal judgments regarding the data collected from the study. Therefore, the conclusions of the study will be credible and reliable. Data collected from the qualitative study is also more objective and accurate as compared to the data that may be collected using quantitative means. Validity and reliability of the data collected under quantitative study is ascertained by prescribing all the procedures that are involved during data collections. The data collection method for this study was open ended questionnaires. The questionnaires were delivered to all the study participants by trained personnel. Questionnaires were chosen as the main method for data collection, since they are an effective method of collecting data, when all the responses are gathered in a standardized way. Certainty and objectivity of the data collected will be achieved because of this. Data collection using questionnaires is also faster and cheaper, since it saves costs that would have incurred if the period for data collection was long. Questionnaires enable an efficient collection of data, since they able collection of data from a large sample. However, there is a risk that the participants may fail to return the questionnaires sent to them. In addition, some of the participants may give dishonest responses.
The questionnaire will have 10 questions. 10 questions were chosen, since this number is appropriate to avoid boredom. If the questionnaire is excessively long, the participants may become tired, which will make it hard for them to concentrate, while giving their responses for the study. The questionnaire will be divided into two sections. In the first section, the participants will be required to state their personal information. They will be required to give their age, gender and marital status. In addition, they will state the type of small scale business that they own and operate. The next section of the questionnaire will contain ten questions. The participants will be required to state some of the business risks that they face. In addition, the participants will be required to give their opinion on whether they feel that it is important for small businesses to assess the risks that may be facing them. Participants will also be required to give their opinion regarding the most prevalent risk that affects most small businesses in Singapore. This will give the researchers an idea of the risk that predominantly affects small businesses located in Singapore. The respondents will also be required to state whether they know about outsourcing. In addition, the respondents will enumerate the crucial activities that they feel can be outsourced in order to minimize the risks that may affect their business operations. The respondents will also state whether they outsource some of these activities in their business. Furthermore, they will be required to give their opinion on whether outsourcing has succeeded in minimizing the risks that affect their operations. The participants will also be required to give their overall opinion on whether they strongly feel that outsourcing of more business operations will enable a company to avoid the major business risks that they face. By knowing this information, the researchers will be able to assess whether outsourcing has an impact on reducing the risks that a firm faces.
Several measures will be undertaken to ensure that the data collected from the questionnaires is accurate and reliable. All the data collecting and recording agents will undergo an extensive training. It helps to ensure that they record the data that is collected by the questionnaires. In addition, four independent people will review all the questions that are in the questionnaire. The number of participants, who will return the filled questionnaires, will be recorded. This data will be useful, when calculating the response rate of the questionnaires. In addition, data from questionnaires not filled appropriately will not be considered during the analysis of the data collected from this study.
The researchers in this study should conduct a pilot study by pretesting the questionnaire. All the questionnaires will be pretested prior to the actual day of data collection. One of the designed questionnaires will be presented to 12 small-scale business owners in Singapore. This will enable the researchers to establish whether the collected data will be credible and reliable in terms of determining the relationship between business outsourcing and reduction of risks in Singapore (Hartus 2010). The time that each respondent takes to fill the questionnaire will be noted. Respondents will also be asked to state the questions that they felt were unclear. After this, the questionnaires will be revised, considering the insights given by the respondents participating in the pretesting of questionnaires. It is critical for the researchers participating in this study to pretest the questionnaires.
During the pilot study, the researchers will determine the feasibility of the of the study. From the feasibility study, they will be able to know whether the strategies that they will adopt for data collection will generate the research information that they require for their study. Time for the whole study will also be estimated, since the researchers can estimate the time for the whole study by looking at the time that the pilot study participants take, while filling the questionnaire. The pilot study for this research will allow the researchers to estimate the cost of the study. They will determine the cost required to print the questionnaires. In addition, the researchers will estimate the travelling costs that will be incurred, while they distribute the questionnaires to the participants. The pilot study for this research will enable researchers to know the adverse events that may affect their research in Singapore. During the research process, the participants may become hostile. In some cases, they may not be willing to give information that will assist the process of research. During pilot study, the researchers will also be able to estimate the appropriate sample size that is representative of the whole population.
261 participants of this study will be male. 239 participants will be female. The sample selected will come from cities such as Toa Paoyoh, Choa Chu Kang, Bedok and Tampines. The main reason for selecting participants from these cities is that many small scale businesses are located within these areas. In addition, some of the businesses in these areas have already introduced outsourcing.
The method of sampling that will be used in this study is the probability sampling. In the probability sampling, each sample member has a non-zero probability of selection. The specific probability sampling method that will be used in this study is the stratified sampling. When a researcher uses the stratified sampling, the entire population is first divided into strata . After this, participants are randomly selected from the strata. Researchers use the stratified sampling due to several reasons. One of the reasons is desire of researchers to focus on a certain subgroup of the population. This is the reason that the proposed study wants to use the stratified sampling, since it focuses on small businesses located in Tampines, Bedok, Cho Chu Kang and Toa Paoyoh. Researchers of this study will have several advantages due to using the stratified sampling.
The analysis of the data collected from the participants of this research will be done using the SPSS software. This software is used to perform a statistical analysis. It performs functions, such as linear regression, in order to predict numerical outcomes. It also performs a cluster analysis, factor analysis and discriminant tests. This software also performs ANOVA tests, correlation analysis, non parametric tests and t-tests (Pallant 2010). The regression analysis will be carried out in order to determine the relationship between business risks and the different outsourcing activities of small businesses in Singapore.
An estimated regression equation will be developed using the estimate of parameter values. A multiple regression equation will be developed in order to conduct this analysis. The significance of the regression line will be tested in order to ensure that the analysis of data is effective. Testing the regression equation determines how relevant the equation is in terms of accurately predicting the value of Y given the X value. F-test will be carried out to establish how significant the regression equation is. The explained variance will be divided by the unexplained variance. If the F-value obtained is larger than 4, then the equation developed under this study will be statistically significant.
The correlation analysis will also be performed basing on the collected data of this study. The correlation coefficient will be determined and used to assess the linear association between the dependent and independent variables of this study. A correlation coefficient of +1 means that the variables under study are perfectly related. A correlation coefficient of 0 means that no linear relationship exists in terms of the values under study. Analysis of variance will be carried out on the data collected. Moreover, ANOVA analyzes whether there exists a significant differenceion the means of the data collected in a particular study.
This will be achieved by using t-tests. Researchers use t-tests in order to assess whether two groups of collected data are statistically different. The value obtained from the t-test will be positive if the first mean is larger than the second one. Non parametric tests will also be conducted on the data collected from this study. These tests are performed, when the assumptions of the t-tests are violated. This especially happens, when the data collected is ordinal in nature and not at least interval. Non-parametric tests compare medians rather than means.
Overall, the main objective of this research is to measure the impact of outsourcing on activities performed by small businesses in order to minimize the risks that affect their operations. The major risks that are faced by small businesses in Singapore include the poor money management, overdependence of a single client and information technology risks. The independent variables in this study include business process outsourcing, information technology outsourcing and knowledge process outsourcing. This research will utilize a quantitative research design, since the conclusion of this research design is both credible and reliable. Data will be collected by using questionnaires. The questionnaire will have 10 open ended questions.
A pilot study will also be conducted before the actual day of the research. The purpose of this pilot study is to assess the feasibility, time and cost that will be incurred during the actual process of research. The sampling method that will be utilized in this research is the stratified sampling. This method was chosen, since it enables a researcher to focus on a certain subgroup during the research. The data analysis will be performed using the SPSS statistical software. The correlation and regression analysis will be performed on the data collected. In addition, ANOVA and t-tests will also be conducted on the data collected.