Impact of Small Business on UK Economy

This assignment delves into the significance of small businesses in the United Kingdom. It explores how these businesses have contributed to the country's economy, resulting in social and economic development. The analysis also touches upon the importance of motivation and discipline for entrepreneurs seeking success. Additionally, it highlights the impact of Brexit on UK firms' internationalization and the adoption of inter-organizational systems (IOS) over the Internet in small businesses. The assignment provides a comprehensive understanding of entrepreneurship and small business development, including case studies and empirical research.

:
Entrepreneurship and Small
Business Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Various types of entrepreneurial ventures and their relation to the typology of the
entrepreneurship.....................................................................................................................1
2. Similarities and difference between entrepreneurial ventures............................................3
3. Micro and small businesses impact on the economy..........................................................5
4. Small businesses and business start –ups will contribute to the growth of the social
economy after ‘Brexit’...........................................................................................................7
5. Specifying the characteristics, traits and skills of successful entrepreneurs. Discussing
entrepreneurial personality that reflects their motivation and mind-set.................................7
6. Examining background and experience that hinder or foster their entrepreneurship.......10
CONCLUSION..............................................................................................................................11
REFERENCES .............................................................................................................................13

INTRODUCTION
Entrepreneurship refers to an activity of setting up of a business and taking risk in order to
attain profits. An individual who design, plan and implement strategies to establish an enterprise
or organisation is known as entrepreneur. The present report is in context to various approaches
and concepts related to entrepreneurship. It will determine various types of entrepreneurial
ventures and their relation to the typology of the entrepreneurship. In addition to this, Similarities
and differences between entrepreneurial ventures will be classified. Furthermore, mini-research
will be conducted to determine the characteristics, traits and skills of two successful
entrepreneurs, which differentiate them from other business managers. Small businesses and
business start –ups will contribute to the growth of the social economy after ‘Brexit’ will also be
described in brief.
TASK 1
1. Various types of entrepreneurial ventures and their relation to the typology of the
entrepreneurship.
There are various types of entrepreneurial ventures such as micro, medium and small
which is discussed below:
Micro enterprises: A microenterprise is that small business where capital investment required is
low.
Entrepreneurship refers to an activity of setting up of a business and taking risk in order to
attain profits. An individual who design, plan and implement strategies to establish an enterprise
or organisation is known as entrepreneur. The present report is in context to various approaches
and concepts related to entrepreneurship. It will determine various types of entrepreneurial
ventures and their relation to the typology of the entrepreneurship. In addition to this, Similarities
and differences between entrepreneurial ventures will be classified. Furthermore, mini-research
will be conducted to determine the characteristics, traits and skills of two successful
entrepreneurs, which differentiate them from other business managers. Small businesses and
business start –ups will contribute to the growth of the social economy after ‘Brexit’ will also be
described in brief. they have less turnover from all the other firms. These enterprises do not
invest more than £26186.61 in buying of plant and machineries. Equipment purchase for the firm
are under maximum limit of £10,478.17. These firms’ employees nine people or fewer than that.
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This establishment are generally run by family members who attempt it for their living. Bakery
owners and small retailers are counted as micro firms.
Small Enterprises: This establishment have comparatively higher capital investment than micro
firms. Turnover of these firms does not exceed €10 million. Such enterprises have less than 50
employees working with them. Investment by these firms in plant and machinery is more than
£26186.61 but it is always less than £5,23,789.7 (Dugguh, 2017). Whereas, equipment purchase
is always of more than £10,478.17 but it does not exceed £2,09,515.88. Small scale enterprises
generally exist in every industry. Contractors and law firms are the best example of such
establishment.
Medium Enterprises: Those firms who employs less than 250 people and has a turnover of €50
million falls under the category of medium enterprises. These firms are big in comparison to
above two establishments. In these firm investment in plant and machinery is more than
£5,23,789.7 but does not exceed £10,47,463.97
Relation to the typology of the entrepreneurship.
Social entrepreneurship: These are those organisations which are established for the purpose of
social well-being. There main aim is to focus on social, financial and environmental aspects
related to their firm. Entrepreneur of such firms seek to give a part of their income back to the
society. These are highly active firms and investment in such business by public is more. Profits
is not their major aspect but revenue still plays an important role for the existence of venture
(Storey, 2017) Such enterprises can be highly profitable but they have a mission to donate and do
funding for benefit of society and environment.
Scalable Start-up entrepreneurship: These establishments are established with the aim of
changing the world. These are risk takers those who focus on increasing its revenue without any
additional increment in the cost. For example, Facebook has started its business by making a
software where all capital invested was in development of the software and with time when
people started downloading the application, No additional costs has occurred and all investment
took off by the company. Venture capital of such firms knows that this organisation will come up
with higher growth in the future. Furthermore, it offers huge growth opportunities and higher
profit without adding any cost in the business. Software development are the best example of
scalable entrepreneurship.
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Large company Entrepreneurship: It is that process where new ideas and thoughts are
developed and implemented in an already existing firm. It helps in achieving growth and
improving competitive position of already existing firm (Dees, 2017). These step will increase
demand of consumers and helps in bringing innovative ideas in already existing firms. This will
make the enterprises large in future and it will lead to earn more in the future.
2. Similarities and difference between entrepreneurial ventures.
Below are the similarities and difference be between Micro, small and medium
enterprises:
Differences between Micro, small and medium enterprises:
Basis Micro enterprises Small Enterprises Medium enterprises
Meaning These are those
businesses which
require minimum
capital and minimal
employees for
working.
These are those firms
who does not have
higher sales and is
independently
operated in order to
earn sufficient
earnings.
These businesses need
high capital investment
and are established in
order to earn growth in
the future.
Aim Main aim of these
enterprises is to earn
living from their
business
These have focus on
becoming medium
enterprise and earning
higher income from
their business.
These business has
major focus on
becoming bigger
enterprise.
Capital Capital investment in
such firm is Low funds
make it easy to start
firms.
Higher capital is
required to be invested
in such firms in
comparison to micro
enterprises.
The Highest capital
should be invested in
this kind of
enterprises.
Labour supply Majorly all members
of family contributes
Local area people are
working under such
Here people from
different region are
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in working small businesses. also hired.
Raw material In micro firms,
material from local
areas is procured.
Here, Raw material is
majorly procured from
any area of the nation.
In this kind of
enterprises raw
material can be
imported from
different countries.
Technique Traditional technique
which involves use of
hands and labour.
Morden and labour
intensive technology
both are used for
working.
Majorly machineries
are used for the
purpose of
manufacturing.
Number of people
employed
These are those
business where not
more than nine
employees are
employed.
Here minimum ten
employees are
working but it does not
exceed 50 people in
number.
Under these
enterprises employees
does not exceed 250 in
number.
Investment in plant
and machinery
In micro firms
investment in plant
machinery does not
exceed £26186.61
More than 26186.61
but less than
£5,23,789.7 should be
invested in purchase of
plant and machinery.
Investment in plant
and machineries does
not exceed
£10,47,463.97
Similarities between Micro, small and medium enterprises
 All the firms have same objective that is to achieve growth in the future. Basic aim
behind setting up of such establishment is to earn incomes and success in their business.
 Losses under all the three kinds of firms cannot be set off easily because, all these
establishments are not so big that they can bear heavy losses.
 All these firms do not give competition to large multinational companies. These
enterprises produce majorly for local markets.
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 In these establishments not very higher technology is used for the purpose of operations
because they have limited resources (Guiliani and Torrès, 2018). This results in saving of
natural resources for future generation.
 All the three types of enterprises focus on optimum utilisation of resources. They have
fewer investment capacity so these firms utilise their resources in the best possible way.
 Capital raised in such firms is majorly through owner's fund or venture capital. Majorly
money is not raised from public by way of issuing shares in this kind of establishments.
3. Micro and small businesses impact on the economy.
Small businesses are the heart of economy of United Kingdom. These establishments
have contributed lot to the economy by way of giving employment opportunities, driving growth
or by wide-opening new markets. These firms have brought innovative ideas and new technology
in the nation which resulted in development of country. In addition to this, As per the data
collection of 2016, there were 5.5 million small businesses in United Kingdom. The main reason
behind such growth in number of firms is that government has granted loans and subsidies to
start-ups (Storey, 2017). In United Kingdom, majority of businesses employees less than 250
employees. Hence, they fall under the category of small businesses.
In today's economy of United Kingdom, during the time of financial crisis people lost
their trust in banks. At that point of time, small financial sector firms came with innovative ideas
and brought many opportunities for people in terms of investment. Furthermore, Small
businesses has provided many employment opportunities to people. In 2016, 15.7 million
employments was working with small firms In United Kingdom, firms who employee less than
10 people tends to give 33% employment to unemployed people. They are also liable for
contribution in turnover by the rate of 19%. As per the research conducted in 2009 by National
Endowment for science and the arts, it was concluded that 6% of the small businesses who has
the highest growth rate are accountable for half of the new jobs.
Small businesses have contributed in increase of GDP of the nation. In 2016, it was found
that in last 12 months GDP has increased at higher rate. Even small businesses have increased
revenue and which has exceeded to 46%. These firms have given employment to those who are
in need which resulted in raising of standard of living of people (Impact of small business on UK
economy, 2017). In addition to this, Small businesses always make optimum utilisation of
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resources because they have limited capital investment. These resulted in savings of resources of
nation and future generations. Due to the support from government and less capital investment
required every age people thought of establishing small business. It helped the economy in
changing lifestyle of people and also work to those who does not wants to do job. Micro
establishment are very beneficial for those who wants to do something on their own. Economy
also gets many benefits from the same.
In United Kingdom, small businesses are accountable for increasing overall business of
the nation by 45%. Business are of two types, One is where people are employed and another is
that who does not employ any member (Dugguh, 2017). Owner is the only person who manages
entire firm. Economy of United Kingdom has earned growth in non-employing businesses by
86%. 97000 firms got established last year who does not employ people but contributes in the
GDP of nation. 1.3 million employing businesses and 4.2 million non-employing establishments
has contributed in the growth of the nation.
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4. Small businesses and business start –ups will contribute to the growth of the social economy
after ‘Brexit’
Brexit is a word which is derived when United Kingdom was leaving European Union.
On 23rd June 2016 a voting has been conducted to decide whether UK should leave or remain
with European Union. As per the voting results, maximum People has voted in favour of leaving
European Union.
After Brexit, Small businesses has got major effect in every aspect. The small and micro
businesses have contributed 99% of all businesses in United Kingdom. To hold back the
economy UK has to consider all the three challenges which comes in its way. Small business is
the lifeblood of UK economy. GDP is falling and it has great impact on small establishment. It
results in struggle for such firms majorly if they import from another nation.
Whereas, Micro businesses does not have a direct impact of Brexit on them. In respect to
finance it is more tough for micro firms to raise money due to the higher interest rates after
Brexit. In addition to this, Contractors and freelancers will feel more demanding after Brexit, this
will be the positive side for micro firms. These businesses will contribute more to the economy
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Illustration 1: Impact of small business on UK economy
(Source:Impact of small business on UK economy,2017 )

at the time of uncertainty Such micro businesses have helped in social development by providing
all kind of products to the nation (Dees, 2017). Small businesses has given many benefits to the
society and economy of nation. Many products are manufactured by small businesses which
has contributed in the GDP of the nation.
Successful SMEs are defined by Sustainability and stability. Hunger for profits by small
businesses has also helped in contribution to overall economy. For their own development they
are looking forward for a trained staff who can contribute in developing business strategies. This
will help in earning growth of the establishment as well as of the economy.
After Brexit, small businesses came with many innovative ideas to expand their firms.
This has provided many benefits to the nation. Small establishment has contributed by way of
offering new products which has increased exports of the country.
5. Specifying the characteristics, traits and skills of successful entrepreneurs. Discussing
entrepreneurial personality that reflects their motivation and mind-set.
Below are the two people who are chosen to determine the characteristics, traits and skills of
successful people.
Bill gates: He is an American Business Magnate who has Launched Microsoft. He has made the
biggest company of PC which is named as Microsoft. Bill gates is a person who has
technological innovative mind. Who has used it in well manner to achieve success and became
the world's most successful business man.
Steve Jobs: He is the co-founder of Apple organisation which is one of the biggest mobile
company. Steve jobs has attended College in 1972 and has dropped out in the same year but has
achieved great success in his life (Guiliani and Torrès, 2018). He has always believed in
adopting risk and has come with many innovative ideas. This is the major reasons behind his
success.
In order to identify the above entrepreneurs who are successful in expanding their
entrepreneurship few characteristics and traits are described below:
 Motivation and Passion: The entrepreneur Bill Gates who works with passion and
delinquency became successful in market (Do and Smallbone, 2017). As he is highly
motivated towards their working in business which supports in becoming more successful
as compared to other businessman such as Steve Jobs. In addition to this, the
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entrepreneurs are calm and satisfied in their working terms which results in higher
performance of company. Further, this motivation and passion impact positively on Bill
Gates in firm that maximizes profitability and productivity. Lastly, determination and
passionate work builds new ideas that develops business more effectively and make the
entrepreneurs successful.
 Communication- Bill Gates is a good communicator. He can easily motivate anyone
with his words. A great entrepreneur should be an effective speaker. It is a vital life skill.
According to him when you speak it should be clear, articulate and concise. Leader
should establish a steady flow of communication between themselves and team members.
They have to make themselves available at any time to solve issues and discuss with
employees.
 Leadership- Bill Gates is a good leader. He can properly manage his team and get
appropriate results. A leader carries positive attitude in any condition (Kuzmina, 2017).
Leaders encourage their employees towards job and make them responsible in increasing
the productivity of business.
 Motivator- Bill Gate is a good motivator as he encourages people with his experience
and skill. Further, he provides right and correct advice to an individual who fails to reach
their target in business. According to him an individual can achieve their life goals
through an innovative idea. Good motivator inspires other with his/her personality or
thoughts.
 Flexible and Adaptable: Being dedicated and motivated is necessary but if the
entrepreneurs are not flexible then they are unsuccessful in market. Moreover, the other
characteristics is to be flexible and adapted which leads Steve Jobs in making his
business successful (Bridge, and O'Neill, 2017). As he is successful entrepreneur in this
term as compared to Bill Gates always welcome all the new suggestions and ideas that
helps in enhancing their market needs.
 Planning skill: Planning is the first function of management. After commencement of
business planning is required to be done. A proper planning and its execution results in a
successful enterprise. So one should have good planning skill to attain goals and
objectives of business. Without proper planning no one can earn growth in business or in
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any other filed. Steve jobs has great thinking skills, even after dropping out college he
has made proper planning of business and has executed to become the world's biggest
business man.
 Time management skills: Time should always be managed properly in order to
accomplish a task on time. These skills should always be in blood of an entrepreneur.
This will help person in becoming successful. Even if planning is done properly but it is
not executed on time than this may lead to waste of entire management skill. Time is
something that should be managed according to the work. Bill gates possess the skill of
time management because he has achieved everything in life because of his proper
management skills.
 Effective communication skills: To become a leader or manager one should be good at
communicating ideas and messages. Effective communication helps in motivating
individuals for the work assigned to them. It helps in making their subordinates
understand about the work which has to be performed effectively (Woods and et.al.,
2017). Both the entrepreneur which are chosen above has effective communication skills
and they have motivated many people in life. All employees under them are highly
impressed and works more effectively due to effective communication skills of their
owners.
Entrepreneurial personality that reflects their motivation and mind-set:
 Optimism: This refers to the personality of entrepreneur who haves the motive of
achieving goal in the business. As the Bill Gates is goal - oriented and this personality
reflects his mindset in order to make the company more successful and enhanced.
 Creativity: One of the main characteristics is being creative such as Steve Jobs who has
this personality in him and which reflects on his mindset positively. Further, it helps in
performing various managerial activities with effective techniques in business.
 Risk takers: There are also entrepreneur like Steve who is a risk taker and also accepts it
positively. The personality of accepting risks affects their mindset which makes them
more challenging in business.
6. Examining background and experience that hinder or foster their entrepreneurship.
In order to become successful entrepreneur Steve and Bill has faced some advanced
situations which helped him to achieve success. Further, the country's culture, education, skills,
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family background, economic factors and many more played an important and vital role in
growing Bill Gates and Steve Jobs career.
Background and experience that fosters entrepreneurship:
The adolescent Bill stands out at school and has developed a special propensity in subject
of maths which helped and changed him towards the rising future and further leads in fostering
entrepreneurship. Further, he also gained knowledge in science and computer programming
which make him more successful. In addition to this, Bill Gates and Steve upbringing was
adequate and good which helped in motivating them to become a self-employed individual.
Moreover, the lifestyle and background of both the entrepreneurs was influenced positively by
nation's culture which helped them in becoming more successful in market (Pansiri and Yalala,
2017). The success of both entrepreneurs was fostered by national culture which plays an
important role in their career. Furthermore, they also believes in working independently and in
advanced manner. In 1981, at the age of 26 only Bill Gates became a self-made millionaire with
the adequate advantage of his Microsoft. Later, it was identified that he was the youngest
billionaire ever at initial time in country. As per their background, their values and ethics also
fostered their entrepreneurship which makes them more successful. In circumstances to this, they
both were motivated through their innovative skills and ideas which encouraged them in
achieving and attaining goals of company. They also have few skills from their birth such as
motivation, optimistic, creativity which reveals Steve and Gates capabilities of becoming the
successful as an entrepreneur. Bill Gates became successful because of his positive attitude or
creative nature. His family background and country culture encourage him to take efforts and
achieve pre-set targets (Gudmundsson, 2018). According to their lifestyle and personality they
believe in single occupations and this is the explanation that Bill and Steve wanted to become
self-employed and independent in their personality.
Background and experience that hinders entrepreneurship:
Bill Gates entered the Harvard university in the year 1973, and further he drops out for
two years which hinder their entrepreneurship. Further, the country was diverse in terms of
culture which impacted negatively on their business and further there was lack of nation's
support. As the nation has distinct customs and traditions which also hinders their
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entrepreneurship in market. In addition to this, it also hinders and lack in development of
country's growth (Abor, 2017). Their culture of country was not developed and created negative
thoughts in them from childhood which also contributes in hindrance of their entrepreneurship.
Their family was not strong in terms of finance which also demotivated them in developing their
business enterprise. There were issues of caste and religion which was faced by Steve and Bill
Gates during their initial time of business and also they struggle in expanding their business.
CONCLUSION
The above report concluded that entrepreneurship is critical concept that is used by a
person in order to start or establish a business and take risk for earning profit. It is determined
from the report that there are various types of entrepreneurial ventures having different nature,
scope and size. The report also summarized various typology used by a distinct entrepreneur to
earn growth and income. In addition to this, it has been determined that to attain success in life a
person needs to be motivated towards their goals and be disciplined for the same. Furthermore,
small businesses have contributed towards the economy of United Kingdom up to large extent
which has resulted in social and economic development of the country.
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REFERENCES
Books and Journal
Abor, J.Y., 2017. Public Sector Interventions and Small Businesses. In Entrepreneurial Finance
for MSMEs (pp. 153-167). Palgrave Macmillan, Cham.
Bridge, S. and O'Neill, K., 2017. Understanding Enterprise: Entrepreneurs and Small Business.
Macmillan International Higher Education.
Dees, J.G., 2017. 1 The Meaning of Social Entrepreneurship. In Case Studies in Social
Entrepreneurship and Sustainability(pp. 34-42). Routledge.
Do, H. and Smallbone, D., 2017. The impact of Brexit on UK firms’ internationalisation: a
comparative study between Born Globals vs traditional SMEs.
Dugguh, S.I., 2017. Entrepreneurship and small business: Strategic approach to alleviating
poverty and corruption in Nigeria. GSTF Journal on Business Review (GBR), 3(1).
Gudmundsson, S.V., 2018. Uncertainty perspective and the adoption of inter-organizational
systems (IOS) over the Internet in small businesses.
Guiliani, F. and Torrès, O., 2018. Entrepreneurship: an insomniac discipline? An empirical study
on SME owners/directors. International Journal of Entrepreneurship and Small
Business, 35(1), pp.81-101.
Kuzmina, I., 2017. Entrepreneurship and small business development in Latvia. In Small Firms
and Economic Development in Developed and Transition Economies: A Reader (pp. 165-
176). Routledge.
Pansiri, J. and Yalala, A.T., 2017. The Evolution of Entrepreneurship and Small-to-Medium
Business Development in Botswana. Botswana Journal of Business,10(1), pp.53-82.
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Storey, D., 2017. Six steps to heaven: Evaluating the impact of public policies to support small
businesses in developed economies. The Blackwell handbook of entrepreneurship,
pp.176-193.
Woods, J.A. and et,al., 2017. The Influence of Industry Association Involvement on Technology
Decision-Making in Small Businesses. Journal of enterprising culture, 25(03), pp.317-
337.
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