Impact of Small Businesses on Local Economies

This document provides a comprehensive analysis of the importance of small businesses in the UK economy. It examines the role of SMEs in contributing to local economic development, job creation, and innovation. The assignment discusses various studies and research papers that highlight the positive impact of SMEs on the UK's economy, including their contribution to GDP, employment rates, and entrepreneurship. It also touches upon the challenges faced by SMEs and the importance of public policies in supporting their growth and success.

Entrepreneurship
Table of Contents
INTRODUCTION...........................................................................................................................4

TASK 1............................................................................................................................................4
P1 Different types of entrepreneurial ventures and their relation to typology of
entrepreneurship.....................................................................................................................4
P2 Similarities and differences between entrepreneurial ventures.........................................6
TASK 2............................................................................................................................................8
P3 Assess and interpret impact of micro and small business on economy............................8
P4 Small and start-ups contribution to growth of social economy after Brexit...................10
TASK 3..........................................................................................................................................12
P5 Characteristics and traits of successful entrepreneurs and difference with business manager
..............................................................................................................................................12
P6 Assess entrepreneurial personality reflect their motivation and mindset........................14
TASK 4..........................................................................................................................................15
P7 Background and experience hinder or foster entrepreneurship.......................................15
CONCLUSION..............................................................................................................................16

INTRODUCTION
Entrepreneurship is a process which is executed by an individual to set up new business
to generate profit and take financial risks. Market opportunities that is unmet needs of people are
identified by them to provide products and services for fulfilling their demands. This helps them
to develop an idea and convert them into reality that is establishing firm. It is essential that
person have capability and willingness to incorporate and manage a venture. Along this, they
even require to allocate resources properly for creation of value in market (Blackburn, Hart and
Wainwright, 2013). This assignment defines different entrepreneurial ventures and their relation
with typologies. Impact of micro and small business on the economic and social growth of
country is stated. Key aspects of an entrepreneurial personality reflection on their mindset and
motivation is defined. Besides this, experience and background foster or hinder entrepreneurship
is also described in report.
TASK 1
P1 Different types of entrepreneurial ventures and their relation to typology of entrepreneurship
Entrepreneurship: This is an act by which an individual incorporate a new venture for
making revenue. This is creative approach in which business operations are organised and
managed by an entrepreneur. Along this, people are lead and make to function effectively for
attainment of goals and objectives. Thus, entrepreneurship is process through which economic
and social value of nation improves. These are different forms of enterprises which are
mentioned beneath: Small business entrepreneurship: These are organisation which are started and managed
by an individual which require to generate income for maintaining their livelihood. For
example: Grocery store, plumber, hairdresser, electrician, etc. are various firms which are
lead by a single person. Social entrepreneurship: These are firms which are set up by person for developing,
funding and implementing solutions in respect to social and environmental problems.
For- profit, hybrid and non- profit are kinds of this whose aim is to enhance conditions of
society. Thus, items and services are provided in according to needs of community
people.

 Scalable start-up entrepreneurship: These are business which are incorporated and run
by person for changing the world. Innovative and creative business ideas are formulated
and implemented in firm which helps entrepreneur to make high growth and profitability.
Along this, they are also able to increase market share and enlarge firm by delivering new
and creative products and services to people. Large entrepreneurship: These are companies which are managed by business persons
which make decisions and run system for making good profitability. This helps firm to
have adequate funds, material and manpower for execution of operations effectively.
New technologies are implemented in system which aids top personnel to deliver
different offerings to people. Thus, large scale firms have branches in different places
which benefit them to have large customer base, thereby enhance sales and revenue.
Entrepreneurial ventures: It can be referred to organisation which keeps innovation at
first priority for utilising market opportunities. This helps entrepreneur to make social and
economic value by delivering creative products and services in market. These are various types
of entrepreneurial ventures which are as follows: Lifestyle entrepreneurial venture: These are firms which are run by people to make
money for maintaining their living standards. Such enterprise are incorporated by
individual for completion of their passion and require to conduct activities economically. Survival entrepreneurial venture: These are business whose aim is to sustain firm's
position and market share for longer time. Advanced technologies and tools are
implemented in system which helps management to execute activities effectively.
Production costs are reduced and workers perform tasks for delivering quality products
and services to people (Carsrud and Brännback, 2011). Hence, business person is able to
attain financial obligations of venture by making revenue in good amount. Corporate sector- These organisations are operate their business with the intention of
earning money and making profit through their business. Private sector enterprise is the
part of the economy and these organisations run by individuals and companies for
making profit and not state controlled. There are various type of business which are
operate by private sector such as small and mid sized businesses, large corporations and
multinationals, professionals and trade associations, trade unions, sole proprietorships
and partnerships.

 Public sector- This kind of organisations and enterprises are owned by government of
the country. They do not operate their business not for making profit or increase sale but
also work for the society welfare and employment of the local people. Some public
enterprises are placed under public ownership cause of social reasons. The main objective
of these enterprises is to prevent concentration of economic power and growth of private
monopolies. These sector help the government to enforce social control on trade and
industry for ensuring equatable distribution of products and services.
Typology of entrepreneurship: Entrepreneurial ventures have relation with typologies
which is described below:- Female entrepreneur: These are individual whose goal is to enhance quality of life of
women and girls. For this, they take risk and execute production activities for making
income from business. Serial entrepreneur: These are people who have innovative and creative business ideas
which they incorporate in setting new firm. They start new ventures and sell them to
another person after some time for creating another one.
 Social entrepreneur: These are individual who set up firm for overcoming problems of
community. Their aim is to develop and enhance society by fulfilling needs and demands
of people.
P2 Similarities and differences between entrepreneurial ventures
Small, social, scalable start- ups and large are various types of entrepreneurial venture
which have certain similarities and difference in respect to their resources, functionality and
goals. Besides this, entrepreneur also have variances and similarities which is described below:
Venture Similarities Difference
Small and social
entrepreneurial venture
 In both small and
social venture, business
person implement
innovation and creative
business ideas in firm
(Chrisman and et. al.,
2012). This helps them
 Small venture goal is to
create and maintain its
position in market and
brand value. For this,
entrepreneur require to
make system function
through which there is

to use funds, material
and workforce
properly. Along this,
operations are
conducted effectively
which lead in
accomplishment of
business goal and
objectives.
 Small business provide
employment or
generate profit to local
people and social
enterprises work for the
welfare of the society.
growth in sales and
profit.
 While, social firm aim
is to develop and
improve state of
community. For this,
items and services are
provided in according
to needs of people
(Dennis Jr, 2011).
 Social enterprises focus
on the positive impact
the business makes on
society while small
business focus on
generating profit and
measures its
performance on the
business.
Venture Similarities Difference
Scalable start- ups and large
entrepreneurial venture
 Both ventures provide
different items and
services in respect to
demands and
requirements of people.
 Business person make
changes and implement
innovative technologies
in system to provide
 Scalable start-ups are
venture which require
use of resources
effectively for
expanding their
business and revenue.
 While, large venture
have resources in good
amount which define

creative products and
services to customers
(Drucker, 2014).
 In both enterprises the
people who are work
there gain experience
and improve their
knowledge.
that firms have large
market reach and
customer base. This
benefits business
person to enhance sales
volume and
profitability.
 There are huge risk
with huge returns and
the people who are
working with a start up
they do not think that
they doing a job they
are part of something
bigger and its a
valuable experience. In
big organisation people
are work there as job
and receive standard
pay.
Venture Similarities Difference
Lifestyle and survival
entrepreneurial venture
 Both lifestyle and
survival venture
require to generate
adequate profit for
maintaining their
market share and
position for longer
time.
 Lifestyle venture are
run by individual for
completing their
passion and make
money for their
livelihood.
 While, survival venture
goal is to sustain their

productivity process for
managing their sales
and revenue (Michael,
Storey and Thomas,
2017).
Venture Similarities Difference
Male and female entrepreneur  Both male and female
entrepreneur have
capabilities to run and
manage business for
generating profit.
 They have similarity in
psychological and
demographic tactics
which affect their
decision making and
functioning in firm
(Michael, Storey and
Thomas, 2017).
 Both are energetic and
ready for taking any
risk to run their
business or enterprise.
 Male are compulsive
and require to make
profit at higher level.
They have ability to
invest large amount and
take huge level of risks
and difficulties.
 While female are
sensitive and make
judgements after
having complete
knowledge about each
and every aspect to
business and topic.
 In Male enterprise,
male are the head to
run their business and
in Female enterprises,
female are the head to
operate their business
or company.

TASK 2
P3 Assess and interpret impact of micro and small business on economy
In United Kingdom, SME's plays essential role in economic growth and sustainability of
the nation. Small, micro and medium are three forms of firms which helps government to
develop conditions of country (Chittithaworn and et. al., 2011). These are enterprises which
differ from each other in respect to size of operations, amount of resources and objectives.
Enterprise Employees Turnover
Small Less than 50 Not more than 10 million
pound
Micro Not more than 10 Less than 2 million pound
Medium Less than 250 Not more than 43 million
pound
Impact of Micro and Small enterprises on economy:
Local Impact: Areas which have small and micro firms in large number is able to
enhance and develop conditions. These enterprises helps people to get variety of products and
services for fulfilling their demands and requirements.
(Source: Local impact, 2016)
Illustration 1: Local impact

Interpretation: As per above data, it can be concluded that small firms reduces
unemployment rate of UK. From 2009 to 2015, there is increase in jobs from 3,000,000 to
6,000,000 which is due to SME's growth in country.
National Impact: Small and micro firms are in good number which impact on countries
positively. Government of UK is able to increase GDP rate, as there are large number of job
chances for people. This helps individuals to generate money for maintaining their living
standards. Scalable start- ups and large entrepreneurial venture
(Source: Impact of SME's on economy of UK, 2017)
Interpretation: From the above graph, it has been interpreted that small firms
employment rate 48% which is more than medium (12%) and large (40%). This is due to
number of businesses which are small that is 99.3% and medium is only 0.8% and large is
0.15%. Besides this, turnover of small is 37% and medium is 15% which is lower than large that
is 49%.
Regional impact: Micro and small firms consists huge impact at regional level. These
are enterprises which require to sustain their position and image in market. Business person
manufacture and provide products and services in according to demands and needs of people.
Besides this, they set appropriate prices to attract large people to enhance sales volume and profit
(Chrisman and et. al., 2012). Thus, this benefits government to enhance state of economy as
public requirements are fulfilled.
P4 Small and start-ups contribution to growth of social economy after Brexit
Brexit is referred to as situation which define United Kingdom withdrawal from
European Union and become an independent nation. Their was a referendum which organised on
Illustration 2: Impact of SME's on UK's
economy

23rd June, 2016 in which majority Britishers voted in support of leaving EU. Government of UK
define about article 50 which state that every country have freedom to maintain connection with
particular law. Hence, they decided to segregate from EU after finishing negotiation activity.
Threats of Brexit on United Kingdom: Due to Brexit, economic growth and trade of UK
was affected. This tactic have negative implications on country that is export were growing at
slower rate. Besides this, as EU economic confidence was declining which primarily affect on
conditions of developing nation. Thus, jobs and investment of people reduced which determine
that employment opportunities are not enough which impact on income of individuals.
Difference between small and start- ups:
Basis Small Start- ups
Definition Small firms are incorporated
by individual to generate
money for their living
standards. For this, products
and services are delivered in
according to fulfil demands of
people.
An entrepreneur set up new
business for implementation of
new and innovative ideas in
according to market
conditions.
Rate of growth Small firms have low growth
rate which is due to large
number of rivals. Besides this,
business person doesn't make
changes in system which
define that they are not able to
enhance brand value easily.
Start- ups growth rate is higher
than small, as operations are
executed in creative and
unique manner which helps
entrepreneur to attract large
number of people to enhance
sales and profitability.
Way of financed These firm get funds from
internal tools that are family,
bank loan and friends. These
are sources which are less
risky and aid business person
to enlarge firm easily. Along
These venture gain money
from external sources that are
angel investor, venture
capitalists and other which are
risky and need to get timely
return. This helps entrepreneur

this, they are also able to gain
funds at faster rate.
to grow and expand business in
different places for enhancing
market and customer base.
Small and start-ups aid government of UK to enhance and develop state of nation. These
are contribution that small and start-ups have on growth of economy are stated below: Reduction in poverty: Both small and start-ups are in large number which helps
authorities to raise employment opportunities for people. People have job chances to
make money for maintaining standards of their livelihood. Besides this, they are even
able to purchase products and services for fulfilling their requirements and needs. Hence,
poverty level of UK reduce which helps government to develop nation. Wealth distribution: Small and start-ups aids government of UK to equally disperse
money among population (Dennis Jr, 2011). These are venture which help people to
make money either by working in firm or running a new venture. Thus, wealth of nation
is distributed and public have money to maintain their living standards.
 Provision infrastructure: Small and start- ups helps government of UK to have
sufficient money for developing and enhancing infrastructure. These are firms which are
in good number that define that authorities are able to get tax through which road, school
and other facilities are improved.
Small business help in the development of the economy of the country such as they create
employment for the local people and society. Small business over 24.3 million people in the UK
which accounts for 60% of all private sector employment and 15.2 million jobs are create by
these small businesses in the UK. These small enterprises play an important role in the
development of the economy of the country by creating employment for the people. There are
99.3% small businesses accounted of all private sector businesses and the annual turn over is £2
trillion which is 52% of private sector turnover.

TASK 3
P5 Characteristics and traits of successful entrepreneurs and difference with business manager
Entrepreneur is person who start a new venture for implementing innovative and creative
business ideas, thereby make profit. An individual require to have skills to manage resources
efficiently and conduct activities effectively. It is necessary that they have attributes for directing
and coordinating staff members to work in team. Alan Sugar and Peter Jones are two successful
entrepreneurs which have these traits which are described below: Hard working and dedicated: This is essential attribute which helps an individual to
conduct activities and timely attain goals. Alan Sugar and Peter Jones are hard working
and work with full dedication which aid them in making business successful (Drucker,
2014). Both give proper time in assessing market opportunities for making innovation in
business. Flexible: This is another trait which an entrepreneur require to manage firm to sustain its
position in market. It is necessary that they have courage to helps accept unexpected
situations which occur due to existence of enterprise into a dynamic environment. Alan
Sugar and Peter Jones are flexible entrepreneur because make changes in system and
implement innovation. Thus, being flexible aid them to have opportunity to be
competitive in market place.
 Passionate: Passion plays a vital part for an entrepreneur. It leads to achievement of
desired goals and objectives despite of hurdles. Alan Sugar and Peter Jones became
successful entrepreneur just because they follow their passion. It provides them strengths
to excel all challenges and acts as motivational factor for making their venture more
prosperous.
Thus, these are traits which helps entrepreneur to make business successful are stated beneath:
Difference between an entrepreneur and business manager:
Basis Entrepreneur Business manager
Definition An entrepreneur is person
which have innovative
business idea which they
implement in set up of new
Business manager is individual
whose responsibility is person
whose duty is to frame plan
and give direction to staff to

firm. Capital, land and labour
are various factors which are
used by them to make income
for their living standards.
make them function
effectively. Apart from this,
they also monitor subordinates
work which help them to take
corrective action for achieving
business objectives.
Risk taking Entrepreneur require to handle
high risks which are related
with failure of business and
financial loss, if sufficient
profit is not incurred from
firm.
Manager have less risk than an
entrepreneur, as their duty is to
coordinate subordinates
activities for completing goals
within defined time.
Status An entrepreneur is owner of
firm which incorporate venture
to make money from business.
Thus, they are person which
can make decisions and
changes in system
independently.
Business manager is given
authority by top personnel to
manage team to function
effectively. They assists
seniors in execution of
operations and delivery of
quality products and services
to buyers.
P6 Assess entrepreneurial personality reflect their motivation and mindset
An entrepreneur need to have capability to implement innovative and new business ideas
for enhancing performance of firm. Individual mindset and motivation depends on their
personality which affect their work and decisions. Along this, it is also affects their direction and
coordination of team members. Alan Sugar and Peter Jones are two entrepreneurs which have
made their business successful. This define that they are able to enhance their personality from
their experience and learning which reflect from their motivation and mindset. For depiction of
this, big five personality traits is model which is described below:

Openness to experience: Entrepreneurs with this personality trait are innovative and
ready to conduct make changes in system (Michael, Storey and Thomas, 2017). Those who are
high with this trait have more interest & curiosity about learning things every time and always
focused on handling challenges. Businesspersons who are low with this trait don't like changes
and are not creative.
Conscience Scalable start- ups and large entrepreneurial venturousness: Entrepreneurs
with this personality trait are goal achievement oriented. High Conscientious businesspersons are
complete their all tasks on time, spend time on preparing plans & policies, always pay attention
to important things and enjoy working in a particular manner. Entrepreneurs who are low with
this fail to complete planned tasks and do not like to work in a scheduled structure.
Extroversion: This factor measures how much extrovert or introvert is an entrepreneurs.
Businesspersons who are high with this factor are extrovert means they are social, talkative and
expressive to the world. They always like to initiate conversation and fully energetic all the time.
Those who are low with this are introverts, always think before they speak, don't like to be center
of attraction.
Agreeableness: This personality trait define an individual power to make employees to
work in team. Selflessness, trust, sentiments etc are various attribute which helps an individual to
maintain friendly relations with others. Entrepreneurs high with this trait are agreeable and
collective towards their work. They appreciate hard work of others, always helpful to others.
Businesspersons low with this factor do not like to help others, highly competitive &
manipulative and do not care about feeling of others.
Neuroticism: This is related to emotional uncertainty of person which impact on their
decisions and actions (Turró, Urbano and Peris-Ortiz, 2014). Entrepreneurs who are high with
this factor always have stress, always panic for many things, experience mood swings etc.
Businesspersons low in this trait deal with stress in a good manner, have emotional stability and
always feel relaxed about their decisions and work. With the help of this traits theory, the
entrepreneur
According this model both entrepreneur are take decision according their own mind set
such as Peter Jones have extroversion factor and social. He founded Peter Jones Enterprise
Academy and he also risk taker and after failure of its business he never stop and start up many
businesses such as Wines4business.com an retailer specializing and others. Alan Sugar comes

under in openness in experience, they belong from a poor family and face many problems. They
lean from their experiences and founded a company Amsterdam in the age of 21. Both are risk
taker and have good decision making power because without these traits any entrepreneur can
not start any business and not reach it at growthful level. Both have self motivation because in
their business various time they face failure but they are not feeling demotivate. They face face
problem and ware risk and reach their dream and business at their growth.
TASK 4
P7 Background a Scalable start- ups and large entrepreneurial ventured experience hinder or
foster entrepreneurship
Entrepreneurship is process which is conducted by an individual to start a new venture
for making profit. This activity helps an individual to generate money in good amount by taking
high risk. Besides this, an entrepreneur require to work for longer time than workers which is
demerit. Alan Sugar and Peter Jones are two entrepreneur which have made their firm successful.
An individual background and experience are two tactics which affect on their functioning and
decisions. These are attributes which either foster or hinder entrepreneur's work is stated below: Family background: This is tactic which define that an individual that have family
business have good knowledge and insight into management skills. But, this can also
affect an entrepreneur and hinder them as they will not make innovation in business.
Alan Sugar was born in a Jewish family on 24 March 1947 in the east end of London,
Hackney and lived in a council house. His father, Nathan Sugar, was a tailor in the
garment industry of the East end and mother was Fay Sugar. And Peter Jones was born in
18 March 1966 in in Berkshire, England in a business family and as a teenager he earned
money from his two passions, tennis and business. They started venture for completing
their passion and make money (Autio and Fu, 2015). This factor only have one hindrance
which was related with availability of funds that were limited in beginning. Thus, they
have less market coverage and resources for conducting business.
 Education: It is another tactic which state that person take degrees in management for
learning skills and concepts to conduct business properly. Alan Sugar attended
Northwold Primary school and then Brooke House Secondary School in Upper Clapton,

Hackney. After leaving school at the age of sixteen, he worked for the civil services as a
statistician at the Ministry of Education. When he was 21 years old, he founded the
company Amstrad which initially deals in consumer electronics. But now he is known as
British businessman in the world world is the founder of the highly successful electronics
company.
Peter Jones grew up in Maidenhead and attended Desborough School and The Windsor Boy's
School. At his childhood, he have a dream to operate business and in 2004 he founded
Wines4business.com an retailer specialising in the scale of wine and a specialist recruitment
business. In 2009, he founded the Peter Jones Enterprise Academy. Alan Sugar and Peter Jones
have done education in business administration. This help them to frame effective business plan
and strategies for making activities conduct systematically. Along this, they are also able to
utilise resources efficiently. Education foster entrepreneurship as it aid entrepreneur to utilise
market opportunities properly.
 Gender: Male and female both have differ with each other in respect to opinion, nature
and thoughts. Along this, they consists distinct image in mindset of other people which
affect their relations and business (Raffiee and Feng, 2014). Alan Sugar and Peter Jones
are male entrepreneur which helps them to gain trust of investors to get funds for their
business. Along this, they were also able to maintain employees and suppliers for
execution of activities effectively.
CONCLUSION
As per above report, it can be concluded that entrepreneurship consists important part in
making economic growth of country. Small, social, scalable- start-up and large are different
entrepreneurial venture which differ with each other in respect to goal and size of operations. In
UK, there are large number of small and micro firms which helps government to increase
employment opportunities, distribute wealth equally and improve infrastructure. An entrepreneur
require to be hard-working, flexible and passionate for making business successful. Openness to
experience, conscientiousness, extraversion, agreeableness, neuroticism are various personality
traits which affect on entrepreneur personality and mindset. Education is prime factor which
helps an individual to foster entrepreneurship and make their business successful. Apart from
this, United Kingdom's business environment has helped entrepreneurs in doing business with an
ease. Along with this, Brexit has been one of a crucial aspect which mainly impacted upon

entrepreneur's strategies of doing business. Therefore, while starting up it is required for business
person to analyse the market and look for policies as well to create favourable conditions.

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