Impact of Small and Medium-Sized Businesses on Economy

The assignment discusses the importance of Small and Medium-Sized Enterprises (SMEs) in the United Kingdom's economy. It covers three types of SMEs: micro, small, and medium businesses, and how they contribute to different levels of the economy (local, regional, national, and international). The report also touches on the characteristics, traits, and skills required for entrepreneurs, and concludes that SMEs provide development opportunities such as enhanced job opportunities, infrastructure development, and economic growth.

Entrepreneurship and
Small Business
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1: Examine different types of entrepreneurial ventures and their relation with typology of
entrepreneurship.....................................................................................................................3
P2: Explore the similarities and differences between entrepreneurial ventures.....................4
P3 The impact of micro and small business on the economy.................................................5
P4 The importance of small businesses and business start-ups to the growth of the social
economy.................................................................................................................................6
TASK 2............................................................................................................................................7
Covered in ppt........................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Entrepreneurs are the people who uses their skills and creativity for launching their own
businesses in order to make some money. These entrepreneurs plays an essential role in the
growth and development of a business and an economy. Entrepreneurship is a key aspect for
brining new businesses in an economy. This report will discuss the various types of
entrepreneurial ventures and their relation to the typology of entrepreneurship along with the
similarities and differences between entrepreneurial ventures. This report will also cover the
impact of micro and small businesses on the economy along with the importance of start-ups in
the growth of social economy. Further, characteristic traits and skills of successful entrepreneurs
and assessment of the key aspects of an entrepreneurial mind-set will be discussed in this report.
In the end, Examination of the different environments that foster or hinder entrepreneurship will
be done in this report.
TASK 1
P1: Examine different types of entrepreneurial ventures and their relation with typology of
entrepreneurship
An entrepreneur is the individual who runs or owns a business by using their new and
innovative ideas and has the capability to implement them. These business are formed for the
purpose of earning profit. These have the plans and strategies to take effective decisions for
accomplishing the desired growth and success (Barringer, 2015). The business or organisation
started by these entrepreneurs are known as entrepreneurial ventures. These are the business of
different size and scope whose purpose varies with each other. The entrepreneurial ventures are
of different types which are discussed below:
Small business entrepreneurship: These businesses are small and limited in size and
operates independently for earning their livelihood. The revenue of such firms depends upon the
sector or industry in which they operates. Some examples are Grocery stores, travel agents,
electricians etc.
Large company entrepreneurship : This business ventures operates at a large level due
to which these needs huge amount of resources in running and executing business functions.
These business considers the dynamically natured needs and requirements of the customers in

order to provide the products and services accordingly. Also these firms modifies their products
according to the demand of customers and market.
Social entrepreneurship: These kinds of business are formed for providing new and
innovative products and services in the market which can met the needs and requirements of the
customers. These business are formed for development and growth of the country in which they
perform their business functions. These generally works for the welfare of people rather then to
earn money. Examples of social entrepreneurship are micro-finance institutions, educational
programs, banking services provider etc.
Typology of entrepreneurship
These above discussed entrepreneurial ventures are linked with the typologies of
entrepreneurship which are described as under:
Lifestyle Enterprise:
It is business entity which is owned and operated by some individuals who mainly
concentrates on more enhancing standard of living of people of society along with having
objective of generating revenues. These kind of individuals are more passionate towards
maintaining its lifestyle and standard of living.
Growth firms:
These type of organisations whose business generates significant positive cash flows or
earning increases faster than overall economy. In these firms, no hard and fast rules of defining
growth increases annual revenues by more than industry average over a sustainable period. These
firms are already achieving growth, for providing the scope, growth and development of the
Redbridge businesses, these kind of firms offering website to develop villages, town and
business of others. The growth of these firms help in the development social economy. They
generate employment so there care high scope to develop their business.
P2: Explore the similarities and differences between entrepreneurial ventures.
The entrepreneurial ventures has some differences and similarities which are given
below:
Differences
Basis Small business Large company Social
entrepreneurship

Definition These are the small
business as they operates
at small scale and needed
low investment.
These business are formed
for providing new
products and services to
consumers based on their
demand.
These are formed
with new ideas in
order to fulfil the
needs and
requirements of
society.
Objectives The objective of such
firm is to earn their
livelihood by providing
their products and
services to the people.
The objective of such
firms is to provide the
products according to the
needs to customers for
ensuring their satisfaction.
The objective of
such firms is to raise
the social level and
life of people in the
country in which
they are operating.
Similarities
The business ventures are formed for meeting the customers needs and preferences.
These ventures also tries to bring new and innovative products in the market for satisfying the
customers. Business ventures are formed by the entrepreneurs with an innovative idea and focus
of such business is to establish a successful business in less period of time.
M1: Investigate a diverse range of entrepreneurial ventures to demonstrate an understanding of
entrepreneurship in both the public and corporate sector.
Entrepreneurial venture is defined as the venture in which there exist a entrepreneur who
possess the ability to take risk so as to earn maximum profitability ratio. Therefore there exist
diverse range of entrepreneurial venture which which includes small entrepreneur, large
entrepreneur and social entrepreneur. Apart from this entrepreneur in corporate sector used to
develop new venture, products, process or services so as to create value and generate revenue
growth. Whereas public sector entrepreneur helps in generating greater economic prosperity by
transforming the economic environment to economic units.
D1: Critically examine the scope, development and growth of entrepreneurial ventures.
Scope, development and growth of entrepreneur is term to be quite vast as all the
entrepreneur have the opportunity in selling services rather than manufacturing a products and
thus, entrepreneur can achieve better result only in case if the size of the business is small. Apart

from this entrepreneurial venture also posses the willingness to do anything and respond
positively to the challenges of venture whenever arises.
P3 The impact of micro and small business on the economy
Micro and small business are the business in which the number of employees are less
than ten and fifty with an annual turnover of less than £ 2 million. These businesses needs capital
of less than £ 1.5 million for launching. Most of the businesses in UK falls under the category of
micro and small business. These small and micro business plays a essential role in the
development of United Kingdom. When any new business is started in a country, then it provides
the employment to the local people which is helpful for raising their living standard. Also the
SME's provides tax to the government which increases the national income. This increased
national income can be utilised by the government of that particular nation for the growth and
development of infrastructure and economy. These SME's are also important for the economy in
raising the awareness regarding the innovation which can be used for new and improved product
development. Through the improved and innovative products, the needs of the customers can be
fulfilled by the company which assist them in getting the satisfaction from the products. The
impact of small business on the economy of UK is discussed below:
Employment generation: Small business are helpful in generating a huge number of job
opportunities for the people who are not hired by large organisation. The problem of
unemployment can be resolved with the help from these small businesses (Bridge and O'Neill,
2012). High employment rate is helpful for the economy in growing faster which also assist the
country in increasing the national income because problem of unemployment can be resolved.
High flow of cash: Small and micro business are also helpful in enhancing the cash of
flow as due to the development of new business, monetary resources also increases in the
country. This cash can be used by the government for the development of the economy.
Infrastructure development: Small and micro business are helpful in development of a
state as they contributes huge amount of money in the national income. It is helpful for the legal
authorities too as this amount can be further used in the infrastructure development of schools,
roads and bridges.

The impact of small and micro business can be understood easily with the help of above
shown chart:
From the above chart it can be concluded that the SME's are helpful for increasing the
employment rate the UK. These are also helpful for the growth and development of the
economy. Also the contribution of SME's in UK's job employment is 40% which is a positive
impact on the economy of these businesses.
P4 The importance of small businesses and business start-ups to the growth of the social
economy
Social economy includes business firms, organisations, associations, etc. which
contributes their efforts and tax for the development of the country in which they are operating.
These businesses pays their tax, generate more employment opportunities etc. which is beneficial
for the government in developing the economy and life of people. These small firms help the
local people in raising their life standard as well as to learn new things which can develop their
future career. Small business or start-ups is very important for the growth and development of

social economy. Small firms These businesses provides their maximum contribution in the
development in terms of employment opportunities, innovations, social status and sustainability.
The importance has been discussed below:
Employment opportunity: Small businesses are the backbone of the UK economy
which provides the employment to a large number of people of United Kingdom. These start-ups
or small businesses are creating more employment opportunities for the people in UK every year.
Through these employment opportunities, a large number of people are working in such firms in
order to earn money and to accomplish the organisational goals in an effective manner.
Innovation: It is considered by every business firms or start-ups of the UK. Through the
innovation, the small firms of the UK can provides a large number of innovative products and
services to the people for enhancing their satisfaction and experience. With the help of
innovation, business can improve their efficiency and productivity for smoothly running the
business operations (Carsrud and Brännback, 2011). Through the innovations, the people get the
improved products and services which will help the firm in improving the brand image and
profitability of the firm.
Social status: Micro and small business are the leaders of the key industries in UK and
several of the small businesses has achieved a good image among the customers. These small
business determines the social status of their customers and provides the products accordingly
for enhancing their customer base and profit.
Sustainability: Sustainable business practice also plays an essential role in improving the
social economy. The firms which uses the principles of sustainable business practices becomes
successful in a less period of time and also sustains for a longer period of time in the market.
The management of the organisations needs to use the sustainable business practice in
conducting the business operations for maintaining a friendly and healthy working environment
at the workplace.
M2: Evaluate the differences small, medium and large businesses make to the economy,
applying relevant data and statistics.
Small business are the one in which equity is held by the family/founder and the decision
making responsibility lies in the hand of owner. Large business are the one in which decision
making is being distributed by organizational hierarchy and render multiple career development
programs. Whereas medium business are the one where personnel development limited to key

employees and are mostly privately held. As the contribution of SME's in UK's job employment
is 40% which is a positive impact on the economy of these businesses.
D2: Critically examine how small businesses have an impact on different levels of the economy
(local, regional, national) and in an international context.
Small businesses are the backbone of the UK economy which provides the employment
to a large number of people of United Kingdom. In addition to this they render positive impact
on the different level of economy too by bringing up innovation and growth to the community as
well as provide employment opportunities to the individuals who are not be able to employable
by large corporation. Thus, it helps in reducing the poverty level of economy which result in
overall development of economy.
TASK 2
Covered in ppt
CONCLUSION
It has been concluded from the above report that Small and medium sized business are
very helpful for the government of UK as they provides a large number of development
opportunities to the economy such as enhanced job opportunities, infrastructure development,
economic development etc. These SME's are of three types and their purpose differs from each
other. The entrepreneurs needs to have some characteristic, traits and skills which differs them
from the other managers.

REFERENCES
Books and Journals
Barringer, B. R., 2015. Entrepreneurship: Successfully launching new ventures. Pearson
Education India.
Bhachu, P. ed., 2017. Immigration and entrepreneurship: culture, capital, and ethnic networks.
Routledge.
Bridge, S. and O'Neill, K., 2012. Understanding enterprise: entrepreneurship and small business.
Palgrave Macmillan.
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.
Dees, J. G., 2017. 1 The Meaning of Social Entrepreneurship. In Case Studies in Social
Entrepreneurship and Sustainability(pp. 34-42). Routledge.
Kelley, D. J., Singer, S. and Herrington, M., 2012. Global entrepreneurship monitor 2011 global
report. Global Entrepreneurship Research Association, London Business School.
Light, P. C., 2011. The search for social entrepreneurship. Strategic Direction. 27(6).
Naudé, W., 2014. Entrepreneurship and economic development. International Development.
Ideas, Experiences and Prospects.
Sarasvathy, S. D. and Venkataraman, S., 2011. Entrepreneurship as method: Open questions for
an entrepreneurial future. Entrepreneurship theory and practice. 35(1). pp.113-135.
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The Big Five Personality Traits. 2019. [Available
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