Importance of Small Businesses and Start-ups in Economic Growth

Small businesses and start-ups play a crucial role in the growth of an economy. They create job opportunities, contribute to economic development, and improve the standard of living. This article discusses the importance of small businesses and start-ups in economic growth.

Entrepreneurship and
Small Business
Management

Table of Contents
INTRODUCTION ..........................................................................................................................3
Task1................................................................................................................................................3
P1) Explain various types of entrepreneurial ventures and typologies of entrepreneurship
related to the entrepreneurial venture..........................................................................................3
P2) Explore various similarities and differences among different type of entrepreneurial
ventures .......................................................................................................................................4
Task 2...............................................................................................................................................6
P3) Interpret data and statistics to analyse the impact of small and micro business on the
economy.......................................................................................................................................6
P4) Explain the importance of various small businesses and starts-ups in growth of an
economy ......................................................................................................................................8
Task 3...............................................................................................................................................9
P5) Determination of various characteristic, traits and skills of successful entrepreneurs that
make them different from business managers.............................................................................9
P6) Assessment of various aspects of the entrepreneurial aspects personality that reflect the
entrepreneurial motivation and mindset.....................................................................................10
Task 4.............................................................................................................................................11
P7) With the help of examples how background and experience can hinder or foster
entrepreneurship.........................................................................................................................11
Conclusion ....................................................................................................................................12
REFERENCES................................................................................................................................1
.........................................................................................................................................................1

INTRODUCTION
Entrepreneurs are those people who take initiative to convert new ideas into reality by
analysing the chances of its survival. They are considered to be the backbone of an economy
which helps them to various problems such as the problem of unemployment, more income in
the hand of the people etc. The organisations which are established by the entrepreneurs main
vary in size as they can be large organisation or a small and medium size business. In this report,
different types of entrepreneurial ventures and their typologies are discussed and in addition to
this that the similarities and differences between various entrepreneurial ventures taken into
consideration. Apart from this the importance and impact of such organisations on the economy
are included. At the end the report, various personality traits, characteristics, mind set of
successful entrepreneurs are identified and the influence of their background and experience are
analysed which can either hinder or foster the entrepreneurship.
Task1
P1) Explain various types of entrepreneurial ventures and typologies of entrepreneurship related
to the entrepreneurial venture
Entrepreneurs are the individuals that generate value in the economy with the help of
various products provided by them to the people in an economy. Various ventures are established
by the entrepreneurs with the aim of earning profits. They generally convert new idea into reality
with the help of which they provides employment opportunities to many people and this leads to
growth of the business and also contributes to the development (Schaper, 2016). Various types
of ventures are:
Different type of ventures
Small business: Small businesses are those businesses in which the employee capital size of
operations is limited to an extent which implies that their scope is narrow. For example,
Orion electrotech limited is a small business that provides various electronic items
Large company: Large companies are those companies who are operations instrument capital are
huge which enables them to get a large number of customers. Such companies can easily
move to other country as they have sufficient resources with them. For example, Tesco.
Sainsbury's etc. are large companies.

Social enterprises: This type of organisations established with the motive of serving the people
and the welfare of the society. The come up with new ideas that can help in making various
opportunities accessible to the society so that their standard of living can be improved. For
example: Save the children.
Typologies of entrepreneurship
On the basis of various types of ventures of entrepreneurship, their typologies are identified
with the help of page the business can be made more effective. Some of the typologies are given
below:
Growth firms: The companies which comes under this category aims to maximize their profits
and revenues. To achieve their profitability various innovative ideas are identified and
implemented with the help of which they satisfy the customers effectively.
Lifestyle enterprises: Such enterprises focus upon uplifting the standard of living of the society.
This can be done by way of providing various job opportunities as this will increase the
income in the hands of the people (Rey-Martí, Ribeiro-Soriano and Sánchez-García, 2016).
Entrepreneurial ventures and typologies are connected with each other as they help each
other in reducing various problems of economy which leads to their growth and development.
P2) Explore various similarities and differences among different type of entrepreneurial ventures
For developing an understanding of various similarities and differences in entrepreneurial
ventures following need to be considered :
Differences
Basis Small business Large company Social
entrepreneurship
Scale They are considered as
the small business as they
operate at small level in
context of the money.
In this the scale of the
organisation depends upon
the amount of the funds
invested, people which are
catered by the organisation
etc.
Such enterprises
operate at local level
with the help of
which they satisfy
the needs and wants
of the people in the
society.
Purpose The aim of this is to earn The purpose of the large The purpose of

the profits which are
sufficient for them to
carry out their livelihood.
company is to make
money with the help of
implementation of various
new innovative and
creative ideas.
social
entrepreneurship is
to improve the
standard of living of
the people and
welfare of the
society.
Characteristics The interference of the
government in small
businesses is low and the
requirement of the
resources by them is also
very low (Ratten, 2016).
The requirement of the
funds, human capital,
machineries etc. is more as
they operate at large scale.
Apart from this the
government imposes
various regulations on
them in order to monitor
and regulate their
performances.
The resources which
are required by them
are even provided by
the government with
the help of which
they can provide
various services to
the people.
Similarities
Basis Small business Large business Social enterprise
Meeting the need and
social upliftment
Such organisations are
established with the
aim of satisfying the
need and wants of the
customers. Also they
aims of create job
opportunities for the
people.
Large businesses also
aim to provide various
services with the help
of which they can
satisfy the
requirements of the
targeted people on a
large scale. The
product and the
services so offered by
them are innovative
They also aim to
satisfy the demands of
the people which will
help them in satisfying
the needs and wants of
the people. It adds
values and quality of
the life of the people
so that their standards
can be boosted and
uplifted.

which helps them in
improving the standard
of living of the people.
Task 2
P3) Interpret data and statistics to analyse the impact of small and micro business on the
economy
In development of the economy business organisation plays a crucial role. The contribute
in the economy in different ways such as they provide various employment opportunities to the
people, better living standard with the help of various innovative product and services etc. All
this leads to overall development of an economy it helps them to build infrastructure, develop
schools hospitals etc. There can be three types of businesses in an economy such as:
Small: They are the type of organisation in which more than 50 employees are working with the
ain to achieve the goals whose revenue is not more than £5 million. They contribute to the
economic development by providing employment opportunity and revenue but at a lower
scale (McKeown, 2017).
Medium: Medium enterprises are those in which more than 50 but less than 250 employees are
working and the revenue of such enterprises does not exceed £22 million but is more than £5
million. They contribute to the economic development significantly as they generate
comparatively more and better employment opportunities and satisfy the customer
effectively which leads to more profits to the organisation.
Large: Large organisations are those in which more than 250 employees are working and have
revenue of more than £22 million. The impact of organisation is most on the economic
development as they are the one who contributed the most whether in terms of employment
generation or in terms of contributing to the overall GDP of the economy.

(Source: The Role of Start-ups and Small Businesses in Today’s Economy, 2018)
Impact of Small and Medium Entreprises on the economy
Local impact: Small and medium enterprises has impact on the development of the economy as
enterprises provides various goods and services to the local people which satisfy their need
and wants. With the help of such analysis, the purchasing power of the people can be
identified by the businesses on the basis of which they can provide the goods and services.
Apart from this various opportunities are generated by them which increases the income in
the hand of the people and thus improves the living standard of the people in the economy.
Regional impact: Small and medium enterprises are promoted by the government in the
backward region with the aim of regional balance. With the help of these enterprises the
living standard of the people gets improved as they get various job opportunities. They
contribute to the economic development as they bring regional development and make the
people competent and capable to work effectively (Julien, 2018).
National impact: Small and medium enterprises contributes to the economy at national level as
they help in eradicating the common issues face per the country. Also they bring new
Illustration 1: Role of Start-ups and Small Businesses

creative and innovative ideas which ensure their profitability and survival. This increases the
overall income of the economy thus leading to the overall economic development.
P4) Explain the importance of various small businesses and starts-ups in growth of an economy
Small businesses and start-up are crucial for every economy as they contribute in the
economic development video by way of providing various job opportunities and increase the
overall income in the economy. With the help of this the standard of living of the people
improves as they provide various innovative product and services to them. In UK, various small
businesses and start-ups are operating that has positive impact on an economy as they create a
sense of competitiveness and motivate others to initiate for businesses (Wang and Liu, 2016).
Importance of such small businesses and start-ups on the growth of the economy can be
understood from the following:
Job creation: Both such businesses create various job opportunities for people in an economy as
such businesses are more dependent on labour than machineries. They make use of the
efficiency, capability and competence of the local people by giving them employment. Also
such innovative ideas and businesses motivate others to take initiatives for their own
business ventures. Further it facilitates the economy to deal with the issue of unemployment
effectively.
Economic growth: For the economic growth both the small business and start-ups are crucial as
they are based upon various innovative and creative ideas which motivate others to take
initiative for their own ventures. More and more of such businesses will lead to overall
economic growth. Such innovative opportunities help utilise the resources held the country
in the economic development.
Improves the standard of living: Both these businesses contributes in uplifting the standard of
living of the people by providing them product services of better quality. This is because
these businesses consider the need, wants and demands of the people which help them to
satisfy easily thus it leads to the improvement their standard of living.
On the basis of these points it is analyse that the small scale businesses and start-ups
business contributes in economic development to a greater extent which can be in terms of
improving the standard of living of the people, in generating the opportunities to earn etc. which
leads to overall development of the economy (Fayolle and Gailly, 2015).

Task 3
P5) Determination of various characteristic, traits and skills of successful entrepreneurs that
make them different from business managers
A successful entrepreneur possesses various characteristics, skills and traits that make them
different from the business managers. With such characteristics and traits they identify and
generate various ideas. The entrepreneurs which are considered in this report are Elizabeth
Gooch and Tom Mercer. The characteristics, skills and traits of these entrepreneurs are discussed
below:
Characteristics
Passion: This is one of the most important characteristics of an entrepreneur which help them to
be consistent toward the target which team wants to achieve. Both the entrepreneurs are
passionate about what you want to achieve for which they regularly work. This makes them
different from the business managers they may lose hope in adverse situation which may
lead to inappropriate decision making.
Hard work and self confidence: To have faith in yourself and to work hard for it is an important
characteristic of an entrepreneur. Self confidence motivates both the entrepreneurs taken in
the report. This help them to take the decision analysing various aspects and by analysing its
impact. It makes them different from the business manager as they consistently do hard
work for whatever they want to achieve.
Skills
Leadership: This is an important skills in an entrepreneur which help them to influence and
motivate others towards the desired objectives and goals. Elizabeth Gooch have the skill
which help her to guide, support, motivation and influence the people in their organisation to
accomplish their targets. Also Tom Mercer posses the same which help in making their
employees and followers satisfied.
Innovative thinking: With the help of this skill an entrepreneur identify the solution to various
problems in an innovative manner. This skill makes both the entrepreneurs capable enough
to handle various adverse situations in their organisation goals (Burns, 2016).
Traits
Discipline: With the help of this trait the entrepreneur's maintain a balance in their personal and
professional life. This keep them focused towards the goal which they want to achieve.

Elizabeth Gooch and Tom Mercer possess this trait that kept them centered towards their
objectives.
Confidence: This trait is must in an entrepreneur as this helps them to take their decisions as they
take such decision after analysing various aspects and factors. Both the entrepreneurs were
confident for what they wanted to achieve by taking various necessary steps. This helped
them to generate positive output and to establish brand image in the market.
P6) Assessment of various aspects of the entrepreneurial aspects personality that reflect the
entrepreneurial motivation and mindset
Entrepreneurs possess various skills, traits, characteristics that create differentiation
among entrepreneurs and the business managers. Such factors reflect the mindset and the level of
motivation of the entrepreneurs. With the help of OCEAN model various aspects can be analysed
that reflect the mindset of the entrepreneur. Such aspects are:
Openness: It is related with emotions, ideas and adventure. On the basis of this the
creativity in an entrepreneur can be analysed in context of decision making and accepting new
things as well as handling the challenges.
Conscientiousness: This focusses upon the reliability and the flexibility that reflects how
focused an entrepreneur is towards its goal instead of engaging themselves in any unproductive
activity.
Extroversion: According to this aspect an entrepreneur must be energetic, talkative,
assertive and social. This helps them to build healthy relations with the employee. Also it helps
to influence the people to be consistent towards their vision, goals and objectives (Welter and
Gartner, 2016).
Agreeableness: These aspect states that has to be trustworthy, cooperative and supportive
which will help them to co-ordinate with the staff members and the other stakeholders
effectively. Apart from these it will help them to build trust among the stakeholders which will
improve their relations. Also with the help of this aspect, entrepreneur welcomes the suggestions,
opinions and ideas from the employees in relation to the improvement at the workplace.
Neuroticism: This aspect is related with frustration, anxiety, jealousy which leads to the
negative behaviour of an entrepreneur. Such behaviour has to be avoided by the entrepreneur as
it may adversely affect the working environment which will have influence on the performance

of the employees. So by avoiding such aspects healthy and better relations can easily be
maintained by the entrepreneur.
Task 4
P7) With the help of examples how background and experience can hinder or foster
entrepreneurship
Entrepreneurs get motivation to execute their ideas and to turn them into reality from the
experiences that they hold and the background to which they belong to. The either motivate them
or restrain them from achieving the goals (Blackburn, 2016). The experience and background of
both and entrepreneurs are discussed below which helped them to be different from others.
Elizabeth Gooch
Background: She started her career from a Bank job and later on gathered funds from the family
members and close friends for starting her company. While providing the consultancy and
training services, she realized that she lack in skills of gathering required information and
providing services. For which she changed those services with software. Further she
attracted a lot of investors to invest in her company.
Experience: While she started the business she fad to face various issues such as lack of support,
lack of resources etc. which she handled on her own. Once she met Rodney Baker-Bates, he
provided her the idea to provide software rather than consultancy services that her company
was providing which she accepted. But later on she faced huge losses which took years to
recover but she could manage company on track.
Tom Mercer
Background: He graduated from the Cambridge University and also had an experience of job.
When he was working with the companies he decided to start his own business. Due to
which, while going to his office, he analysed that people do not have breakfast option
available. For which he decided to provide blended juice to the people.
Experience: Tom has an experience of working which makes him aware about the struggle that
a person make. For this he decided to start his business of providing breakfast and to get

success in it he sold fruits on the railway station to determine the demand and the
requirements of the customers.
With the help of the experiences and the background the entrepreneur get motivation which
helps them to be successful and to be consistent towards their goals and objectives.
Conclusion
It is concluded from this report that an entrepreneur is the one who take all the necessary
steps converting the idea into reality. This helps them to satisfy the customers and contribute to
the economic development. In entrepreneurship different ventures are to be considered in
relation with various typologies of entrepreneurship. The small and start-up businesses facilitate
an economy in providing various jobs, improving the standard of living of the people and in
overall development of the economy. It is also concluded that with various skills, characteristics
and traits an entrepreneur become successful.

REFERENCES
Books and Journals
Blackburn, R.A., 2016. Government, SMEs and entrepreneurship development: Policy, practice
and challenges. Routledge.
Burns, P., 2016. Entrepreneurship and small business. Palgrave Macmillan Limited.
Fayolle, A. and Gailly, B., 2015. The impact of entrepreneurship education on entrepreneurial
attitudes and intention: Hysteresis and persistence. Journal of small business
management. 53(1). pp.75-93.
Julien, P.A., 2018. The state of the art in small business and entrepreneurship. Routledge.
McKeown, T., 2017. From entrepreneurship to small-to-medium enterprises: Exploring the
challenge and the opportunities. Journal of Management & Organization. 23(2).
pp.165-166.
Ratten, V., 2016. Female entrepreneurship and the role of customer knowledge development,
innovation outcome expectations and culture on intentions to start informal business
ventures. International Journal of Entrepreneurship and Small Business. 27(2-3).
pp.262-272.
Rey-Martí, A., Ribeiro-Soriano, D. and Sánchez-García, J.L., 2016. Giving back to society: Job
creation through social entrepreneurship. Journal of Business Research. 69(6).
pp.2067-2072.
Schaper, M. ed., 2016. Making ecopreneurs: Developing sustainable entrepreneurship. CRC
Press.
Wang, H. and Liu, Y. eds., 2016. Entrepreneurship and talent management from a global
perspective: Global returnees. Edward Elgar Publishing.
Welter, F. and Gartner, W.B. eds., 2016. A research agenda for entrepreneurship and context.
Edward Elgar Publishing.
Online
The Role of Start-ups and Small Businesses in Today’s Economy. 2018. [Online]. Available
through:<https://www.market-inspector.co.uk/blog/2017/05/facts-about-small-medium-
businesses-in-the-uk>.
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