SMEs and Entrepreneurship: Economic Impact and Policies

This assignment delves into the importance of Small and Medium-sized Enterprises (SMEs) and entrepreneurship in the UK economy. It discusses the economic impact of SMEs, including their contribution to employment, population, and turnover. The assignment also explores various legal forms of businesses and the share of SMEs by industrial sector. Furthermore, it touches on the significance of small businesses in the UK economy and their potential impact after Brexit. The content draws from academic sources and online resources, providing a comprehensive overview of SMEs and entrepreneurship in the UK context.

Entrepreneurship and Small Business Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
a) Scope, development and growth of entrepreneurial ventures............................................1
b) Impact and Importance of small business on the economy and its growth........................3
TASK 2............................................................................................................................................7
I) Characteristics traits, skills and motivational drivers of successful entrepreneurs.............7
II) Background and experience influence both positively and negatively.............................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Entrepreneur is the person who undertakes business with some profits potential and
including considerable amount of risk. Entrepreneurship is procedures of designing and running
new business (Schaper and et.al., 2014). In order to that, running a business takes abundant
amounts of time and efforts which is known as small business. These businesses owners utilise
management skills, expertise and knowledge to achieve objectives of their firm. This report will
examine scope, development and growth of entrepreneurial ventures. It will analyse impact and
importance of small business on economy as well as growth of social economy.
TASK 1
a) Scope, development and growth of entrepreneurial ventures
Entrepreneurial ventures target high returns with an equally large level of uncertainty.
The entrepreneur is willing to risk their financial security and career, spending time and capital
on uncertain venture. There are different entrepreneurial ventures such as:
Small business Entrepreneurial venture:
Small businesses are groceries, consultant, travel agent, plumbers, electricians and so on.
An individual run their own business is called as small business. They raise funds through
friends, family for their enterprise (Burns and Dewhurst, eds., 2016). For example, Wiser, which
is a creative and recruitment company which provide an environment where creative meets
recruitment to build and transform employer brands. In order to that, there are fewer 250
employees are working in the small business.
Large business Entrepreneurial venture:
Large businesses grow through sustaining innovation, offering new goods that are
variables around their core products. There are many factors such as changes in customer tastes,
new technologies, regulations, new challengers, etc. can make pressure for innovation in the
company. Therefore, large organizations require creating wholly fresh commodities sold into
new consumers in new markets. For example: TESCO. It is British multinational groceries and
general merchandise retailer. There are around 6553 shops in different locations across the UK.
It is public organization in UK.
Typology of entrepreneur
Scalable Start-up Entrepreneurship:
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Start-up entrepreneurs begin firm knowing from day one that their vision can change the
world. They attract investment from equally crazy financial investors-venture capitalist. The
focus of Scalable entrepreneurship needs more venture capital to fuel fast growth.
Social Entrepreneurship:
Social enterprise are originator who direct on making goods and services that resolve
social needs and difficulties. The goal is to create the world better place not to take market share
and to create wealth for the founders (Mariotti and Glackin, 2015). For example, British Heart
foundation (BHF). It is the social enterprise or charitable organization in the UK. It funds study
to beat heartbreak from heart diseases and their risk factors. There are over 950 BHF health care
professionals caring for patients across the UK.
Difference between Public and Private Entrepreneurship
Private Entrepreneurship:
It is the business unit established, owned and operated by individual for profits rather that
any government and its agencies which is basis of free market capitalist system. For example:
River Island. It is high street fashion brand in UK. Company has over 350 stores in the UK, Asia,
Europe alongside 6 online websites which ships to over 100 nations in the world.
Public Entrepreneurship:
Public sector entrepreneurship has been determined as the statement of innovative public
policy initiatives that generate larger economic conditions by transforming a status-quo
economic atmosphere (Sahut and Peris-Ortiz, 2014). For example: HSBC which is the British
multinational banking and financial services holding organization. Company has 3900 offices in
67 nations.
Criteria Private Sector Entrepreneurship Public Sector Entrepreneurship
Meaning It is owned and controlled privately. It is controlled by public and
government.
Objectives The aim of private enterprise is to earn
more profits.
The objectives of public
entrepreneurship are to serve
citizens of nation.
Example River Island is private company in the
UK (Mariotti and Glackin, 2015).
HSBC is public limited organization
in the UK.
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Scope Company has over 350 stores in
different nations such as UK, Asia,
Europe and so on.
Bank has 3900 offices in 67 nations
across the UK.
Development The firm turnover rises 4% reaching
£970.5 Million at the family-
controlled company.
The growth of bank is to 4.81% in
the UK.
Similarities of Public and Private Entrepreneurship:
Sometime, public and private enterprises are similar with each other. Public companies
have followed methods and practices of private enterprises. In order to that, private companies
concerned are also capable to many legal constraints (Storey, 2017). Government is workout
more control over companies by taxation and licensing policies. Profit making is acceptable as
worthy objectives for public sector. Leadership in both companies can stimulate significant level
of execution when strategies are aligned with organization cultures and goals as companies are
evolved, grow and mature.
b) Impact and Importance of small business on the economy and its growth
Impact of Small Businesses on UK Economy
Small businesses are keystone of UK economic growth and development. There were 5.6
Million small business at the beginning of 2018. The private sector business population fell by
0.5% whilst reversed employment in this sector increased by 2% as compared to past year. The
number of smaller non-employing businesses falling by 1% but the numeric of larger employing
enterprises increasing by 2%.
Small and Medium enterprises in UK:
Small businesses reported for 99.3% of all private sector enterprises at the beginning of
2018 and 99.9% were SMEs (Contribution of SMEs in employment, population and turnover,
2018). Total employment in small businesses was 16.3 million and employment in private sector
around 60% in the UK.
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Composition of business population:
There were 1.4 million employing and 4.3 million non-employing businesses in the 2018.
The overall business population involves important legal forms: there were 3.4 million, sole
proprietors’ companies were 1.9 million and 405000 ordinary partnerships (Legal Forms of
Businesses, 2018).
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I
llustration 1: Contribution of SMEs in employment, population and turnover
Source: (Contribution of SMEs in employment, population and turnover, 2018)
Illustration 2: Legal Forms of Businesses
Source: (Legal Forms of Businesses, 2018)

Locations and industries:
Small-medium sized enterprises account for at least 99.5% of the enterprises in every
main industry sector. Nearly, a fifth of all small businesses operate in construction, compared
with less than 1% in Mining, Quarrying and Utilities sector (Share of SMEs by industrial sector,
2018). There were 34000 small-medium sized enterprises in Mining, Quarrying and Utilities.
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Illustration 3: Share of SMEs by industrial sector
Source: (Share of SMEs by industrial sector, 2018)

In addition to that, impact of small business from GDP (Gross Domestic Product) is
broad ranging because they are force of the UK economy. The large impact on small businesses
by failing GDP in relation to overall activity of businesses and customers buying their goods and
services. The 0.5% growth was primarily in services that grew 0.8%, lifting declines in
constructions and manufacturing (UK economy growth and the impact on small businesses after
Brexit, 2016). Also, small businesses are more sensitized to impacts since they generally have
lower field of operations. Small enterprises struggle to easily call on larger investment or bank
loans to bound up any poorer main markets as compared to smaller companies.
Importance of Small Business in UK Economy
Small enterprises are mainstay, because of their contribution is wide in terms of driving
growth, opening new markets and making jobs. They promote competition and bring new
thoughts that challenges status quo, for invention. Thus, small enterprises are great for UK Plc of
which they present 99.9% of businesses. According the recent finding, 55% of SMEs do not
survive more than five years (The importance of small businesses in the UK economy, 2015). On
the far side survival, small enterprises also face appreciable challenges in accomplishing
development with 63% of owner of businesses declaring that it is effort to develop their
companies and 61% of businessman lacking confidence in their ability to accomplish three-year
continued development.
Small enterprises have the significant ability to fuel economic growth, because they make
various job chances, drive trend of invention and expand tax base. They also raise competition
between people and heat up the market premise. Small-medium enterprises are large balance of
all businesses in the nation (Guerrero, Cunningham and Urbano, 2015). They play wide role in
being services providers to the primary industry as well as sharing highly to growth of different
sectors like manufacturing, agriculture and ICT services. SMEs are made collaboratively be
experts and draw together best practices and knowledge from across industry, authority, testing
and certification to academia, customer groups, trade unions and enterprises. Due to Brexit, the
new trade barriers that cause UK economy to be 0.75% smaller than currently forecast. It is
predicated that UK will experience a loss of at least £4.5 billion a year.
In order to that, it is wide that companies have needed knowledge to be more efficient in
their business to ensure that customer satisfactions, improve employee involvement and to allow
access to new markets (Schaper, ed., 2016). Effective management systems aid enterprises to
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direct on deliver goods and services, their businesses procedures and way to manage entire firm.
They are also directed on standards that achieve to potential and existing consumers in markets.
This gives consumers with support that firm is performing as effectively and efficiently and also
committed to quality.
TASK 2
I) Characteristics traits, skills and motivational drivers of successful entrepreneurs
Covered in PPT
II) Background and experience influence both positively and negatively
Covered in PPT
CONCLUSION
This report has summarised that different kind of entrepreneurial ventures such as small,
scalable, large and social and its growth, scope and development. It has included that difference
between public and private entrepreneurship on the basis of growth and scope. It can be
concluded that small business has impacted in relation to employment, turnover and business,
industrial sector in the UK economy. It has also involved importance of small business on
economy of UK in terms of creating jobs, increase income etc.
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REFERENCES
Books and Journals
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan
International Higher Education.
Caliendo, M., Fossen, F. and Kritikos, A. S., 2014. Personality characteristics and the decisions
to become and stay self-employed. Small Business Economics. 42(4). pp.787-814.
Cardon, M. S. and Kirk, C. P., 2015. Entrepreneurial Passion as Mediator of the Self–Efficacy to
Persistence Relationship. Entrepreneurship theory and practice. 39(5). pp.1027-1050.
Guerrero, M., Cunningham, J. A. and Urbano, D., 2015. Economic impact of entrepreneurial
universities’ activities: An exploratory study of the United Kingdom. Research
Policy 44(3). pp.748-764.
Hopp, C. and Sonderegger, R., 2015. Understanding the dynamics of nascent entrepreneurship—
prestart‐up experience, intentions, and entrepreneurial success. Journal of Small Business
Management. 53(4). pp.1076-1096.
Mariotti, S. and Glackin, C., 2015. Entrepreneurship & small business management. Pearson.
Mohammed, U. D. and Obeleagu-Nzelibe, C. G., 2014, January. Entrepreneurial skills and
profitability of Small and Medium Enterprises (SMEs): Resource acquisition strategies
for new ventures in Nigeria. In Proceedings of 25th International Business Research
Conference (Vol. 64, No. 16, pp. 1-21).
Omorede, A., 2014. Exploration of motivational drivers towards social entrepreneurship. Social
Enterprise Journal. 10(3). pp.239-267.
Sahut, J. M. and Peris-Ortiz, M., 2014. Small business, innovation, and entrepreneurship. Small
Business Economics. 42(4). pp.663-668.
Schaper, M. ed., 2016. Making ecopreneurs: developing sustainable entrepreneurship. CRC
Press.Goss, D., 2015. Small Business and Society (Routledge Revivals). Routledge.
Schaper, M. T. and et.al., 2014. Entrepreneurship and small business.
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.
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Online
Contribution of SMEs in employment, population and turnover. 2018. [ONLINE]. Available
through : <file:///home/user/Desktop/OFFICIAL_SENSITIVE_-_BPE_2018_-
_statistical_release_FINAL_FINAL.pdf>.
Legal Forms of Businesses. 2018. [ONLINE]. Available through :
<file:///home/user/Desktop/OFFICIAL_SENSITIVE_-_BPE_2018_-
_statistical_release_FINAL_FINAL.pdf>.
Share of SMEs by industrial sector. 2018. [ONLINE]. Available through :
<file:///home/user/Desktop/OFFICIAL_SENSITIVE_-_BPE_2018_-
_statistical_release_FINAL_FINAL.pdf>.
The importance of small businesses in the UK economy. 2015. [ONLINE]. Available through. :
<https://smallbusiness.co.uk/the-importance-of-small-businesses-in-the-uk-economy-
2492626/>.
UK economy growth and the impact on small businesses after Brexit. 2016. [ONLINE].
Available through. : <https://smallbusiness.co.uk/uk-economy-growth-impact-small-
businesses-brexit-2534910/>.
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