Importance of SME in Developing UK Economy

Added on - 21 Feb 2021

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Entrepreneurship and smallbusiness management
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 2............................................................................................................................................1Concept of SME & their financial & growth contribution to the UK economy along withpolitical and economic factors that impact on the development of country................................1Role of SMEs and their contribution to the national economy...................................................3CONCLUSION................................................................................................................................4References........................................................................................................................................6
INTRODUCTIONSmall business management can be defined as a procedure which entrepreneur use whilerunning their business. This study is going to cover and show importance of small and mediumsize organizations in developing UK economy. These businesses perform several functionswhich have financial & growth contribution to the UK economy. It also helps the country byhaving financial and growth contribution and by bringing up innovation. It will also describepositive and negative impacts of political and economic on SMEs performance and growth leveland development of the country as well. Lastly it will show contribution of small and mediumsize enterprises on national economy, two regions of UK and on two different industriesbusinesses such as retail and construction (Van Reenen, 2016).TASK 2Concept of SME & their financial & growth contribution to the UK economy along with politicaland economic factors that impact on the development of countryConcept of SMEsSmall and medium size enterprises refers all those companies whose employees numberfall below certain and decided criteria. Criteria of small and medium size enterprises dependsupon the country as who is defining. Its all depends on the size of the company, number ofemployees, annual sales etc. According to the UK government, Small business includes thosebusinesses who have less than 50 employees and turnover under £10 million. Medium sizeenterprises are those who consists of less than 250 employees and turnover falls under £50million. Micro businesses includes less than 10 employees & turnover has under £2 million(Concept of SMEs,2018).Financial and growth contributionIn the context of financial and growth contribution SME play a significant role. Start upand small businesses positively contribute to the growth of innovation. Uber and AirBnB aremain examples of digital innovation. By 2025 it is estimated SMEs to contribute £241bn to theeconomy as it is an increment of 19% from the £202bn contributed in 2016 (Financialcontribution of SMEs in UK, 2018). SMEs are called a major source of entrepreneurial skills,employment and innovation. On the other hand these companies and their processes get affected1
due to globalization. It helps the UK economy by opening of new markets, creating jobs topeople by bringing fresh and innovation. It is estimated 5.2 billion businesses of the UK are99.9% are SMEs in the year of 2014. It is also accounted that 60% of all private sector jobs & 47% of revenue is generated by small and medium size enterprises of the UK. It is also stated thatin the UK there are about 5.47m SMEs and all are accounted over 99% of private sectororganizations & 60 percent of total UK private sector employment.2Illustration1: SMEs contributionSources: (Financial contribution of SMEs in UK, 2018)
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