The Impact of SMEs on the UK Economy

This assignment examines the vital role that Small and Medium-Sized Enterprises (SMEs) play within the UK economy. It analyzes their influence on job creation, economic growth, innovation, and government policies. The document emphasizes the importance of fostering an environment conducive to SME development to ensure a thriving and sustainable UK economy.

Entrepreneurship and
Small Business
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
P1 Introduction and types of entrepreneurship...........................................................................1
P2 Similarities and difference between different ventures.........................................................2
P3 Impact of small and medium business on Economy..............................................................4
P4 Importance of small businesses in economy..........................................................................6
PART 2............................................................................................................................................7
P4 Traits and skills of an successful entrepreneur......................................................................7
P6 Reflection of entrepreneurial personality on motivation and mindset...................................8
P7 The role of background and past experiences in fostering entrepreneurship.........................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Wikipedia defines entrepreneurship as a “activity of designing, establish and
running a new business.” Entrepreneurship can be defined as the establishment of an
economic activity with an adequate aimed at earning profits. The person who
undertakes such responsibility is known as entrepreneur. They perceive the business
opportunities in the environment an acts upon exploiting the same. An entrepreneur is
affected adversely by the risk, inadequate funding and market circumstances
(Blackburn, Hart and Wainwright, 2013). The focus on developing new products and
services which are required in the market and tries to achieve a certain level of
profitability. This assignment consist of two parts : part 1 focuses on understanding the
various types and scope of entrepreneurship. The part 2 tries to analyse the
characteristic, skills and traits of a successful entrepreneur.
PART 1
P1 Introduction and types of entrepreneurship
Entrepreneurship is defined as an economic activity based on the analysing the
opportunities in the market with a view to make financial gains out of it. It carries a
scope for growth in the entrepreneurial activities. The small size of business helps in
better management and achievement of results in a rapid manner. The reason being
smaller businesses have high productivity and efficiency. The scope of
entrepreneurship can be categorised into three broad sector i.e. Industrial sector,
agricultural sector and service sector.
The entrepreneurship venture are as follows:
Small Business firms: The small business enterprises are mostly owned
privately by individual for sustaining in the market and earning profits. They fulfil the
markets need by providing quality goods at effective prices (Bridge and O'Neill, 2012).
They focus on being dominant in the market due to existence of heavy competition.
Example: Restaurants, retail store and bakery.
Social Enterprise: these enterprise are dedicated for the betterment of the
society. All the activities are carried out with the view of helping people in need and
enhances their sustainability.
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Large enterprise: These are the large corporations having a specified of
structure and policies in the enterprise. The employees are directed towards a common
goal. The focus is on exploiting the market opportunities and earning high profits.
Scaleable enterprise: they are the enterprise focuses on covering a defined
market share. The enterprises either can create products and enter into markets or can
acquire an existing firm.
The above defined types of entrepreneurial ventures caters the needs of people
in their own way. Most of the ventures mentioned aimed to earn a specified set of profits
and market dominance (Carland, Carland and Stewart, 2015). The typology of the
mentioned entrepreneurial ventures are as follows:
Serial Entrepreneur: These are the entrepreneurs who are engaged in the serial
of business venture. The serial entrepreneur does not confine himself to one business
venture. They come up with the idea make it functional and profitable and then assign
the responsibility to an individual and moves forward with a new idea. Entrepreneur
does not make him part of one business venture. Sir Richard Branson is suitable
example for this type of entrepreneurship.
Social Entrepreneur: they are the entrepreneurs who works for social welfare in
the society. The y are not profit driven. The main aim of this type of entrepreneurship is
to improve the standard of living of people and help those who are in need. Provision of
sustainability to people is what they work for.
Female Entrepreneur: As the name suggests this typology of entrepreneurs is
owned and managed by women. They are one who drives for a change and enhance
the role and empowering the women in the society (Carland and Carland, 2015). Oprah
Winfrey is one of the best example of a female entrepreneur.
P2 Similarities and difference between different ventures
It is evident from the previous answer that there are different types of
entrepreneurial ventures in the market and they all have different role and functions.
The profit driven enterprises focus on gaining best possible sales volume and
profitability whereas the socially driven ventures focus on the development of people.
But one thing which is common in all the entrepreneurs is that they wish to make
a difference in the market. They aim to bring changes in the mindset of people. There
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are a certain specified set of traits which are necessary to become a successful
entrepreneur. The similarities and differences in the social and lifestyle ventures
are as follows:
Lifestyle Venture Serial Venture
Similarities Experience plays a vital role
in running a lifestyle
venture.
This type of ventures are
also related to an
experienced individual.
The lifestyle when exploiting
the existing opportunity to
its optimum level moves on
to work on the upcoming
trend in the market.
Once the venture is
functional and profitable the
entrepreneur comes up with
a new idea and starts
working on that and
assignment of responsibility
to another competent
person.
Difference They focus on achieving a
certain level of profitability
by introduction of trends in
the market (Carraher and
Paridon, 2015).
The serial entrepreneur
involves number of ventures
under its name and every
venture may not be able to
achieve the expected level
of profitability.
The business runs on the
shoulders of the
entrepreneur itself. The
major decisions are taken
solely by him.
The responsibility of running
a business is assigned to a
competent individual
working for the same. He
formulates the decision and
policies for the venture.
The Difference between the Male and Female entrepreneurs is as follows:
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Male Entrepreneur Female Entrepreneur
Similarities There are a certain set of
skills which are required to
be an entrepreneur.
The leadership, innovative
thinking and management
skills are present in both the
sexes.
Entrepreneurial venture is
based on an innovative
idea.
Female entrepreneurs also
focus on understanding the
opportunities and fulfilling
them innovatively.
Differences The major difference
between the both is mainly
of gender. Men manage
such ventures
Women are responsible for
running these
entrepreneurial ventures.
The objectives however are different in private, public and social enterprises. The
ventures in the private sector no matter big or small works to expand their operations
and achieve a certain level of profitability. Whereas the public ventures are focused on
provision of public service to people residing in the country. Social enterprises works for
the social welfare (Fassin,Van Rossem and Buelens, 2011). It can be categorised into
micro, small and medium. The micro can be an association of people and micro is the
NGOs and medium are the charitable organisation such as Oxfam which works to
eradicate poverty from the society.
P3 Impact of small and medium business on Economy
The small and medium sized enterprises are a major contributor to the economy
of a country. The impact that these enterprises have made on the economy of United
Kingdom is worth considering. Everyone is familiar with the scarcity of jobs in economy
and in such times these business ventures act as job provide therefore raising the
standard of people in a country. According to The Forum of Private business, the SME's
have accounted for nearly 15.2 million jobs in the country which is 33% of the total
employment. The businesses carry a vast positive impact on the GDP of a country.
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SME”s were the one who helped the economy of UK after Brexit stay out of recession in
the market. The division of the SME by the government is as follows:
Category Employees Turnover
Micro Less than 250 Under 2 million
Small Less than 50 Under 10 million
Medium Less than 10 Under 50 million
The above classification is carried out on the basis of scope and size of
operations. The micro enterprise operate at a regional level therefore providing the jobs
to people and raising their standards and these businesses carry a marginal difference
in the GDP of the country (Hatten, 2012). There is a boom in the micro enterprises in
the country as they are at present 5 million in number. The regional business confines
to a particular region and it does have a significant impact on the economy. Which can
be in the form of providing employment to people and obtaining a certain level of
profitability. A report hinted to the fact that rate of self employment and 19% of the total
turnover of the country. The medium-size enterprises are the one which employ around
5Illustration 1: Role of SME's in UK

250 people and have a turnover of 50 million. These emerging enterprises are
considered to be the
(Source: Role of SME's in UK, 2016)
backbone of the country. The economy of United Kingdom accounts for 99% of the total
businesses in the country. Generating employment opportunities for maximum
population (Lautenschläger and Haase, 2011). But the other side to it is that they don't
last long more than 10 years. There is a need of government to use tax breaks and
financially sustainability for these enterprises to make a significant impact on the
economy of the country.
P4 Importance of small businesses in economy
The small and Medium business in the United Kingdom are currently flourishing.
The start-ups in the saw a boom in the year in 2014. The environment of the country is
positive and favours the start-up the best possible manner. The SME's constitute a
whopping 99.7% of the private business in the economy. The importance of the small
business environment is as follows:
Turnover
Turnover is defined to be the speed in which the company sells its products and
turn its account receivables. The turnover of the small medium combined was 1.6 trillion
euros. The turnover of these enterprise constitute to a total of 47% of the total private
turnover.
Employment
Employment is a situation in which someone gets paid for the work he has done.
Providing adequate job opportunities is one of the major task of the government. The
micro and small enterprises individually have a very low contribute as maximum
enterprises employ less than 10 people (Martin, McNally and Kay, 2013). But when
calculated on the aggregate basis SME's provide job to nearly 24.3 million people which
is 60% of the total employment in the private sector.
Growth
Growth is defined to be a situation which enhances the size or maturity of the
business enterprise. SME's growth largely involves innovation. The innovation in the
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growth refrain markets from going stagnant. A study conducted on the SME's stated that
37% of the businesses involve themselves in the innovation activity. The innovation in
the small business helped the economy to a stable and favourable level.
Industry
The small business enterprises depend upon the industries for the business.
46% of the revenue of the small enterprises comes from industrial sector be it retail,
motor services and manufacturing sector.
Considering the above factors it is obvious that these small enterprises play an
essential role in the economy of the country. The environment is pretty favourable which
contributes to the growth and development of these enterprises. The SME help in
maintaining a stable economy even after the country's exit from the European Union
which could not be possible otherwise (Olusegun, 2012).
PART 2
P4 Traits and skills of an successful entrepreneur
Every entrepreneur is identified with a certain set of skills which are essentials in
making a business successful.
Oprah Gail Winfrey is one of the best example of an successful entrepreneur. A
multitalented woman who is an host, producer, media proprietor and a philanthropist.
Came from a humble background became the first ever black female news anchor.
When removed from the position of news anchor she worked as low profile at several
media stations. At present the net worth of her is about 3.1 billion USD.
Mark Zuckerberg is an Harvard graduate who with his idea revolutionised the
platform of the social media with 'Facebook'. How ever there were some people who got
into legal disputes with entrepreneur claiming rights over his invention.
Characteristic of entrepreneur are:
Driven: the similarities between the two is that they are driven. Both the
entrepreneur came from a humble background and aimed to make a mark on the
society and they certainly did.
Risk takers: It is true that higher the risk, higher the gain. Playing safe was not a
way to achieve something which is worth remembering. Being successful or
unsuccessful comes later first step is to get into that and perform with full potential.
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Planning: Planning plays a crucial role no matter what field or discipline it is.
Planning focuses on how to achieve a certain position in life which is desired by the
entrepreneur. Effective planning is crucial while achieving objectives with limited
resources.
Creativity: Creativity defines accomplishing a task in an unprecedented manner.
There were other social platforms when Facebook was invented but it was how
creatively Zuckerberg created so that it took the world with storm.
Traits of Successful entrepreneur are:
 Confidence is one the trait that is mostly found in entrepreneur. Whatever task
they choose they are confident that it will yield successful results.
 They are passionate in what they do. The task chosen by them is in their interest
and put heart and soul to it (Schaper and et. al., 2014).
 The successful entrepreneurs are very good managers. They are capable of
managing the time, resources and opportunities in a competent manner.
 The entrepreneur are fearless if they believe in something they will go after it no
matter what!.
It is no more a secret that entrepreneurs can be made an individual just need to
find his/her areas of interest and with the right balance of confidence and creativity a
person can succeed. The rise of entrepreneurs in the country can be observed and it is
only possible by making them aware of the opportunities that lies in the market.
P6 Reflection of entrepreneurial personality on motivation and mindset
There is no denying in the fact that both the above mentioned personalities have
a vast impact of entrepreneurial mindset and motivation. Oprah Winfrey and Mark
Zuckerberg became some worldwide recognisable personalities. This is only because of
the hard work, determination and their passion to achieve something. They provide
motivation to budding entrepreneurs who wish to make a mark on this world. An
individual driven by various factors and each factor play a vital role in the decision that
he person he is. The influential factors are:
 Family upbringing play a vital role in developing a mind set of the person. Both
the personalities came from a humble background. Their parents have tried to
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shape them in the manner that they are able to fulfil their desires. Family values,
belief and upbringing helps in shaping of an individual.
 Lifestyle is vital in developing the mindset and motivation. Oprah came from a
poor family therefore a struggle was there to make ends meet. This motivates a
person to work hard and to succeed in life and to fulfil their dreams.
 Culture is defined as a set of values and beliefs which are necessary in shaping
up an individual.
 Social interaction is important in entrepreneurial motivation. The tool of
persuasion can be effectively analysed. The tool of communication is another
way to influence the entrepreneurial mindset. These successful entrepreneurs
conduct seminars and interact with emerging entrepreneur and guide and
support them financially.
 Personal motivation is believed to be the most crucial component for developing
entrepreneurial mind set and motivation. If the person wishes to achieve
something and passionate about it then he will be able to do so. The success of
these entrepreneur acts as a motivator to achieve something in life than a 9 to 5
job.
P7 The role of background and past experiences in fostering entrepreneurship
The background and past experiences are vital when influencing or hindering the
fostering entrepreneurship. An encounter with the bad past experience will hinder the
entrepreneurial growth. For instance a business started by an individual did not go as
planned and ended up incurring huge losses than that individual will not take risk any
more because this venture have left him in debt (The importance of small businesses in
the economy, 2016). Where an a positive encounter will help the budding entrepreneur
use that experience to create something more of value. The positive encounter equips
an individual with self confidence and way or process to carry out things. Background is
another crucial component which is an amalgamation of all the social and cultural
factors.
The two mentioned have a totally different background and still they are at the
same platform. Born of a slave Oprah did not have access to quality education where as
Mark had a quality education as he graduated to Harvard. It is their confidence and
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passion to achieve something that helped in becoming successful entrepreneurs.
However the amount of struggle of both was not the same but it was there in its own
manner. Oprah struggled as a radio anchor and Mark struggled with legal suit filed
against him. But at the end their dedication to achieve something of value in life helped
them along the way. The economic circumstance have a significant role in fostering the
entrepreneurial mindset in an individual. The rewards in starting a business should be
considerable along with the risks so that more and more people tend to become job
providers rather than job seekers.
CONCLUSION
The above assignment proves that entrepreneurship is another critical
component for the economy. Entrepreneurs are the person who is responsible and
designing and managing an economic activity. Entrepreneur will their creative thinking
innovates the product to create something of value. The small business and
entrepreneurship help constitute 99% of the privately owned economy of the country.
How ever there is difference between entrepreneurs and managers. Entrepreneurs are
the one who help in supporting the enterprise in fulfilling the objectives and role of
manager is confined to getting the work done out of employees. The government
policies are favourable so that more and more people come forward with their ideas of
doing business. There should be enough entrepreneurs so that everyone is employed
and rise in the economy of UK.
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REFERENCES
Books and Journal
Blackburn, R. A., Hart, M. and Wainwright, T., 2013. Small business performance:
business, strategy and owner-manager characteristics. Journal of small
business and enterprise development. 20(1), pp.8-27.
Bridge, S. and O'Neill, K., 2012. Understanding enterprise: entrepreneurship and small
business. Palgrave Macmillan.
Carland, J. C., Carland, J. W. and Stewart, W. H., 2015. Seeing what's not there: The
enigma of entrepreneurship. Journal of small business strategy. 7(1), pp.1-20.
Carland, J. W. and Carland, J. C., 2015. A model of potential entrepreneurship: Profiles
and educational implications. Journal of Small Business Strategy. 8(1), pp.1-14.
Carraher, S. M. and Paridon, T. J., 2015. Entrepreneurship journal rankings across the
discipline. Journal of Small Business Strategy. 19(2), pp.89-98.
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.
Hatten, T. S., 2012. Small business management: Entrepreneurship and beyond.
Cengage Learning.
Lautenschläger, A. and Haase, H., 2011. The myth of entrepreneurship education:
seven arguments against teaching business creation at universities. Journal of
Entrepreneurship Education. 14, p.147.
Martin, B. C., McNally, J. J. and Kay, M. J., 2013. Examining the formation of human
capital in entrepreneurship: A meta-analysis of entrepreneurship education
outcomes. Journal of Business Venturing. 28(2), pp.211-224.
Olusegun, A.I., 2012. Is small and medium enterprises (SMEs) an entrepreneurship?.
International Journal of Academic Research in Business and Social Sciences.
2(1), p.487.
Schaper, M.T. And et. al., 2014.Entrepreneurship and small business.
Online
The importance of small businesses in the economy. 2016 [Online]. Available through:
<https://www.makeitcheaper.com/blog/the-role-of-small-businesses-in-the-uk-
economy.aspx>. [Accessed on: 17th October, 2017].
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