Importance of Small Businesses

This assignment delves into the significance of small businesses for national economies, emphasizing their contribution to employment generation. It examines the motivations behind entrepreneurship and analyzes key factors influencing business success. The document explores the importance of encouraging new entrepreneurs to foster continuous economic growth.

Entrepreneurship and small
business management

Table of Contents
INTRODUCTION...........................................................................................................................1
Part 1................................................................................................................................................1
P1 Types of entrepreneurial ventures and Typologies of entrepreneurship :........................1
P2 Differences and similarities between entrepreneurial ventures:.......................................2
P3 Impact of micro and small businesses on economy: ........................................................3
P4 Importance of small business and business start-ups in development of social economy:5
Part 2 ...............................................................................................................................................6
P5 Successful entrepreneurs:.................................................................................................6
P6 Effects of entrepreneurial personality over motivation and mindset:...............................7
P7 Background and past experiences hinder or foster entrepreneurship:...............................8
Conclusion ......................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Entrepreneurship means to implement of a idea and forming a new business and then
manage its functions and operations. This is all done by an individual that is called entrepreneur.
He starts-up a business and then takes risks and earn profits as well. For example 4com PLC
company was start up by its owner and then it grew its business as the time passed. Now this
company deals in business broadband and internet services. It started with an idea and then its
operations were managed by its owner in a very effective way and now it is a very well known
exmple of successful entrepreneurship. Small business management is the key source of growth
of economy. mind set of entrepreneurs, their backgrounds and cultural deviations etc. effect
entrepreneurship. Entrepreneurial ventures and importance of small businesses in development
of economy are discussed in the report.
Part 1
P1 Types of entrepreneurial ventures and Typologies of entrepreneurship :
Entrepreneurship deals with, to take a new idea of business after that take steps to start-up
the organisation and then effectively manage operations. It brings stability and growth in
economy by their effective operations and skills to increase profit of an organisation (Lee, L. and
et. al., 2011). These are personal ability and qualities of a person that is called entrepreneur to
manage a business from its origin to winding up.
These are following types of entrepreneurial ventures: lifestyle ventures: Those ventures which does not work for money or any monetary
rewards but they work for alteration in their lifestyles they want to make. They value life
style more that money. They starts a business to get their desired goals and not only for
profits. People who want freedom, who gives priority to their family, and want to live
wherever they desire starts up these ventures. Survival ventures: These ventures normally do not have a good premise to work and a
very few assets to operate business. This is not necessary that entity is registered
(Gorgievski, M.J., Ascalon, M.E. and Stephan, U., 2011). They operates on cash or
exchange basis. They have no banking relationships. Managed growth ventures: They have a good working infrastructure and they seek for a
stable growth in economy. Launch of new products and make a new entry in market are
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few situations where an organisation can develop itself. Main objective of these ventures
is to manage a stable growth in market. Aggressive growth: These ventures are funded through equity capital and they look for a
substantial growth as soon as possible (Carsrud, A. and Brännback, M., 2011). These are
technology based undertakings and the consist of great innovative ideas and risk
management potential. They increase profit of a business by operating its functions in
most appropriate manner. Small business entrepreneurship: It means persons who handle the business at their
own. They generally appoint local area employees and most of them barely make profits.
These business covers most of the part of economy (Lechner, C. and Gudmundsson, S.V.,
2014). For example consultants, hair dressers, electricians, travel agents and grocery
stores etc. scalable start-up: They are ventures who know their vision from day one of start-up that
it can change the whole world. Investors who are equally crazy makes investments in
such start-ups. They search for a business modal that is ascend able and repeatable. Large company entrepreneurship: New products and new innovations are to be
introduced in market and create its own space in mindset of customers is main component
of these entrepreneurship. Companies who already exists do this by acquiring or by
merger with other innovating company and make a product that is relevant and consists
of new technologies.
 Social entrepreneurship: The products that satisfies need of society are includes in it.
Their goal is to make society better and their focus is not only earning profits.
P2 Differences and similarities between entrepreneurial ventures:
Types of
ventures
Differences Similarities
Lifestyle
ventures
This type of venture focuses mainly on
personal lifestyle but all other ventures
focuses on profits and monetary
awards.
Entrepreneurial orientation of both
lifestyle and survival ventures is same
and that is low comparatively.
Survival This venture consists of scarcity of All of the ventures are handled by an
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ventures funds, premises and assets but not
others faces these problems.
entrepreneur. All are needed to be
functioned to increase growth and
attain the objectives.
Managed
growth
ventures
These are mainly focused on a stable
growth. But some of these ventures
have a high growth potential. They
need a substantial development in
economy.
Management style of both managed
growth and aggressive growth is
strategic. And exit approaches are also
sell and merger.
Aggressive
growth
ventures
These ventures need to be growth
oriented. They have adequate work
infrastructure and many investors and
mostly equity holders make
investment in these ventures. But in
others there are followed many other
ways of funding and all have their own
different objectives.
These ventures are similar to managed
growth ventures because both have
opportunities of growth by entering
into new markets and making new
products. Both needs to be developed
from time to time and adopt all changes
in trends and technologies.
 Private enterprises: Those entities which are owned and operated by an individual or a
group of individuals privately and is not in under government agencies are called private
enterprises. Their main motive is to earn profit and make organisation progressive.
 Public enterprise: Those entities which are handled by government authorities nor
agencies. Private investment is also allowed in some of undertakings (Cruz, C. and
Nordqvist, M., 2012). Their main objective is to provide commodities and services to
public at a reasonable rate.
 Social enterprise: These undertakings focus on maximising well being of society and
humans. Their main motive is to satisfy needs of people. They not only make profits but
also do their operations in such way that maximises economic welfare.
P3 Impact of micro and small businesses on economy:
It is a very big challenge to be an owner of small businesses. these are the businesses
which have less number of employees and is operated by few people or in most of cases by an
individual. These small industries leave a great impact on economy. They do not generate profits
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equal to large enterprises but they have covered a big portion of UK economy. According to
research 99.9 % of private sector businesses and 60% of private sector. Report from parliament
presents that these entities provides 32% of employment and turnover at 18% rate. There were
 Local impacts: These businesses effect local economies significantly because these
business provide work to local people and family which helps in increasing employment
rates. Many large corporations also depends on small businesses because most of their
small works are outsourced to these companies. These organisations quickly responds to
changes in trends and technologies to stay in market.
 Regional impacts: Impact of small enterprises can be different in differ regions because
of employment growth rates. If if region covers such kind of market where small
companies can survive more effectively than other region then it will do better there.
Where competition is very high then it is difficult for an entity to find its growth there.
Where availability of resources is easy then it is obvious that organisation will find its
place and it will have great impact there.
 National and international impacts: Small organisations provide may commodities
and services like grocery, hairdresser, plumber and electrician that definitely helps
society and fulfil their needs. These entities have a great role in GDP of the country. It
also helps in international marketing such as producing such commodities those are used
for export purposes. SMEs had contribution of £1.6 trillion in the starting of year 2014. in
mid of 2009 to 2013 there was 47 percent increment in number of small businesses.
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P4 Importance of small business and business start-ups in development of social economy:
 Provide employment: These organisations are very small in nature and they are
everywhere in UK economy. Major part of country is covered by these undertakings.
People residing there can take any small premise, collect resources and execute their
ideas regarding his business strategies. Those people are self employed and called as
entrepreneurs (Unger, J.M. and et. al., 2011). These individuals provide jobs to other
persons also who are living in nearby areas and to relatives, family members also.
Employment rates increasing because of these organisations and it proves relevancy and
value of SMEs and new start-ups in market.
 Increase GDP: Small businesses contribute a great percentage of gross domestic product
of a company. Because of these, economy becomes stronger and it helps in continuous
growth. It also promotes exports and decreases imports so that economic environment of
country becomes healthier.
 Develop personal relationships: Operations of small undertakings are not too much in
comparison to other large businesses and they are always aware of persons they are
dealing with. So they always have plenty of time to interact with consumers in person. By
doing this they can meet customers face to face and develop healthier relationships with
them.
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 Quick response to challenges and issues: Small industries are generally very flexible
and they do not have a large chain of command. They have simple working operations
and those can be changed easily. It is tough for a big enterprise to change their
operational system but this is not a big problem for SMEs and new start-ups. They can
respond fast to any challenges and issues they face or faced by their customers and
resolve their complaints regarding any product or services.
 Easy to innovate and invent new idea: It is very easy for these kind of undertakings to
make changes and alterations in any product or to invent new commodities. They do not
have so much risk in implementing new ideas in business (Gorgievski, M.J., Ascalon,
M.E. and Stephan, U., 2011). They can improve their services or goods by applying new
thoughts into existing products. Because of it customers will get better products and it
will help to maintain a sustainable market for business.
 Satisfy customer needs: Entities of small nature can easily assess demands and
necessities of consumers and then take reasonable steps to fulfil needs of them. by doing
this they provide societal satisfaction and help economy to grow.
Part 2
P5 Successful entrepreneurs:
To be a successful entrepreneurs following skills should be possessed by any person:
 Determined: The person should possess ability to set goals and then attain them. It is
very important for a person to be determined about work what he is going to do (Lechner,
C. and Gudmundsson, S.V., 2014). He should be full of determination that sales should
be increased and new employees should be hired.
 Ability of taking risk: Person should consist of risk taking abilities because more the
risk is taken more the profit grows. If a person is not afraid of implementing new
strategies and technologies in his business than he will groom himself and his
organisation faster.
 Confident: It is very important for a entrepreneur to be positive and believe in himself
that nothing is impossible for him. It can help his to do his work even in the most
stressful situations.
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 Accept failures: He should be consist of ability to accept challenges and failures. He
should never give up on his job. These situations help a person to take experiences from
defeats and then convert them into achievements.
 Passionate: He should be truly crazy about his work because if he does not enjoy his
work then after some time situations will be out of control. Stress will be increased and it
will be very hard for him to operate his functions in such working conditions.
Mark Zukerburg bill gates can be taken as an example of successful entrepreneurs who dealt
with many situations at their workplace and proved them (Chittithaworn, C. and et. al., 2011).
Bill Gates is owner of the well known organisation Microsoft and Mark is owner, founder and
CEO of a well known social networking site that is Facebook.
Skills and characteristics of these entrepreneurs:
 They always did what they found enjoyable. They never selected a work what gave them
stress and instead of them they opted for a work profile what they enjoy.
 They always managed their operation and funds wisely.
 They paid attentions to needs of their customers and demand in market and accordingly
planned their businesses and became most successful entrepreneurs. They are today most
famous businessmen.
 They took risks in their businesses and adapted many innovative steps for growth of their
enterprises. Zukerberg has made many changes from time to time in his website.
 They were never afraid of situations such as increasing competition in market but they
presented their services more groomed and improved to retain their users.
Some entrepreneurs are born with characteristics but some learns with time. It will be
wrong to say that all are born or all are made over a period of time. It is important to have
entrepreneurial mind set and it can not be from birth (Carsrud, A. and Brännback, M., 2011).
Opinions of many experts are different from each other.
P6 Effects of entrepreneurial personality over motivation and mindset:
 Family upbringing: If family background is related to entrepreneurship then it also
brings up in mind of a person to be in a same field. Domestic environment has a great
impact on mind set of any individual that he wants to start-up a business or wants to go in
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any other sector. Some are born with genes of an entrepreneur, and some make
themselves compatible according to situations.
 Lifestyle: A lifestyle of any person definitely motivates a person to be a successful
businessman. If an individual believes in risk taking and if a person learns from failures
then it can be used as a motivational tool on mindset of a business owner. Person who
treats themselves as an asset are those who always look at growth of their entity and do
anything to achieve goals. They utilise all their efforts and then develop their businesses.
 Cultural differences: There are so may different cultures and all the entrepreneurs has
came from different one. This is one of the important factor that motivates an idea of
entrepreneurship.
Personality is an effective motivational tool that leaves impact on mindsets of people to
be a entrepreneur or not. Some businessperson are born with characteristics of an enterpriser but
some are there who learns and apply qualities in themselves and then prove to be a successful
businessman (Fassin, Y., Van Rossem, A., and Buelens, M., 2011). As examples taken above
Mark Zukerberg was taught by a tutor appointed by his father about computer software and
programme developing. He was always interested in in information technologies from time of his
schooling. But on another hand Bill Gates he was always fascinated by machinaries and was not
interested in any other subjects like maths. Their different personalities lead them to be
successful entrepreneurs. There are always some diversities with every person and their personal
behaviour is one thing that leads them to take an idea and implement it and starting up an
business, Managing risks and then achieve goals and objectives of undertaking. if person is able
to manage money, he is capable of bringing up new ideas, possesses confidence and eager to
learn from mistakes then these personal qualities will lead him to a very successful enterpriser.
P7 Background and past experiences hinder or foster entrepreneurship:
It depends on education of a person that such individual can go for entrepreneurship or
not because if a person has knowledge of business management and can execute his functions as
an owner of entity then they can easily handle to be a businessman. But it is not necessary
because in case of Mark Zukerberg he was always interested in computer programming and
software development. He was always provided support of his family. Althought his father was a
dentist, completely different background but still he always supported Mark. There are
possibilities that people from other educational background than business management or
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marketing can also be an entrepreneur. It also depends on mind set of a person and his
characteristics. If he is born with characteristics of a leader or an enterpriser then he would find
his ways to be a businessman and start his own business (Wheelen, T. L. and Hunger, J. D.,
2011).
Their character traits as well as their economic situations of a person also play a vital role
in being an business owner. if a person is having skills like management of risks, innovative
ideas, punctuality, confidence, determination as well as clear understanding of what he is doing
and what he has to do to achieve goals of an enterprise then he would surely foster
entrepreneurship. Mark Zukerberg always possessed characteristics of a successful entrepreneur.
In his college time he had a book named as Face book in which he collected details such as
pictures and their details and then he developed a website named Facebook consisting people all
over the world. On other hand if working situations are stressful for him and he is afraid to bring
new ideas and inventions in his undertaking then he can not groom himself as a businessperson.
It also depends that whether government of nation supports these enterprises or not
(Chittithaworn, C. and et. al., 2011). Mark's economic conditions were always in his favour. He
barely faced any economical problems to implement his ways. If They provide subsidies and
grants for infrastructure than business can grow and if government policies are against business
idea then it will definitely hinder growth of an organisation.
Risks and rewards to start a business: A person ha to face many problems to start a new
enterprise. There is always a risk regarding product design that company is going to sell. There
are already too many competitors in market and it is always not necessary that a new business
find its place in such economic conditions (Schaper, M. T and et. al., 2014). Some of
undertakings are shut down before leaving any impact on customers. it is necessary always to
fulfil needs of society and make them available a useful product.
There are many non financial rewards to an entrepreneur in new start-ups like such as making a
product that is going to satisfy needs of customers and contributing in GDP of nation.
Conclusion
Entrepreneurship is mainly related to a person who has some characteristics to be a
successful businessman and handle an undertaking on his own. He takes risks operate his
functions and achieve its objectives. It is not necessary for an entrepreneur to have all qualities
from birth but he can understand and develop skills with time. Small businesses and new
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enterprises are always a very important part of any nation because they provide employment to
most of the population of any country. It is very necessary to encourage new entrepreneurs so
that economy can be developed continuously.
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REFERENCES
Books and Journals
Schaper, M. T and et. al., 2014. Entrepreneurship and small business.
Goss, D., 2015. Small Business and Society (Routledge Revivals). Routledge.
Wheelen, T. L. and Hunger, J. D., 2011. Concepts in strategic management and business policy.
Pearson Education India.
Fassin, Y., Van Rossem, A., and Buelens, M., 2011. Small-business owner-managers’
perceptions of business ethics and CSR-related concepts. Journal of Business ethics.
98(3). pp.425-453.
Carsrud, A. and Brännback, M., 2011. Entrepreneurial motivations: what do we still need to
know?. Journal of Small Business Management. 49(1). pp.9-26.
Gorgievski, M.J., Ascalon, M.E. and Stephan, U., 2011. Small business owners' success criteria,
a values approach to personal differences. Journal of Small Business Management.
49(2). pp.207-232.
Unger, J.M. and et. al., 2011. Human capital and entrepreneurial success: A meta-analytical
review. Journal of business venturing. 26(3). pp.341-358.
Chittithaworn, C. and et. al., 2011. Factors affecting business success of small & medium
enterprises (SMEs) in Thailand. Asian Social Science. 7(5). p.180.
Cruz, C. and Nordqvist, M., 2012. Entrepreneurial orientation in family firms: A generational
perspective. Small Business Economics. 38(1). pp.33-49.
Lechner, C. and Gudmundsson, S.V., 2014. Entrepreneurial orientation, firm strategy and small
firm performance. International Small Business Journal. 32(1). pp.36-60.
Lee, L. and et. al., 2011. Entrepreneurial intentions: The influence of organizational and
individual factors. Journal of business venturing. 26(1). pp.124-136.
Online
Entrepreneurship and Small Business Management 2014. [Online]. Available
through:<http://www.ou.ac.lk/home/index.php/ousl/faculties-institutes/2013-11-05-03-
39-22/management-studies/programmes/421-entrepreneurship-and-small-business-
management>. [Accessed on 21st July 2017].
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