P3 Impact of micro and small business on UK economy

ENTREPRENEURSHIP AND SMALL
BUSINESS MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1Different type of entrepreneurial ventures and typology of entrepreneurship........................1
P2 Explore similarity and difference between entrepreneurial ventures....................................3
P3 Impact of micro and small business on UK economy...........................................................5
P4 Importance of small business and business start up for growth in context of social
economy......................................................................................................................................6
P5 Traits, skills and characteristics of that differentiate entrepreneurs from managers.............7
P6 Aspects of entrepreneurial personality and entrepreneur motivation as well as mindset....10
P7 Ways in which background and experience can hinder and foster entrepreneurship..........11
CONCLUSION..............................................................................................................................12
REFERENCE.................................................................................................................................13

INTRODUCTION
Entrepreneurship is one of the most buzzing word in 21st century. Entrepreneurs are known
for their risk-taking behaviour and innovations which they do in their products and business
operations. In current research study detail discussion is carried out on entrepreneurship in
multiple ways. In the report types of entrepreneurial ventures and its typology is discussed in
detail. Apart from this, impact of small and micro business on the UK economy is discussed
briefly. Managers and entrepreneurs are differentiated from each other in respect to skills, traits
and characteristics. At end of the report, relationship between aspects of entrepreneurial
personality and entrepreneur motivation as well as mindset is identified. Along with this, role of
business background and experience on individual to become entrepreneur is also evaluated. In
this way, entire research work is carried out.
TASK 1
P1Different type of entrepreneurial ventures and typology of entrepreneurship
Entrepreneurs are the entities that take risk and implement new business idea. They play
vital role in growth of nation. Wide variety of entrepreneurial ventures are observed across the
world. All these entrepreneurial ventures are different from each other which are discussed
below. Large size firms: Scope of large size entrepreneurial firms is high as they operate on
large scale and consistently innovate their existing product line in order to meet demand
of the customers. In past couple of years these type of entrepreneurial ventures grow at
rapid pace. With passage of time customers become more demanding and want products
that provide more comfort to them (Kirzner, 2015). Thus, relevant entrepreneurial
ventures are meeting demand of the people in proper manner which lead to sharp
elevation in their growth rate. In many nations now, a day’s special funding is done to
innovation projects which indicate that government is seriously promoting
entrepreneurial ventures and assist them a lot which lead to their consistent development
at fast pace. Medium size firms: Scope of medium size business firm is moderate as they offer limited
number of products to the customers. Over past few years medium size firms developed
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at rapid pace. Growth rate of medium size firms also increase in UK. Now only growth
rate many new medium size firms established in UK in recent years. This reflect that
congenial environment is provide to the business firms which lead to their business
expansion. Small size firms: Small size firms number in terms of innovation is small as huge amount
of investment is required in new business idea. Hence, small size firms in terms of
innovation and development are not growing at fast pace. Uncertain economic conditions
greatly affect small size firm’s business. Hence, they are not able to absorb shock.
Economic turmoil greatly affects development and growth of these business firms
(Venkataraman, 2019). Micro size firms: Micro size firms scope is narrow as they have only 20 to 30 employees.
Such kind of firms make available product at low price and innovation is at very low
level. Development and growth of these firms heavily dependent on economic condition
of the nation. If economy is not good then in that case spending from public also reduced
which heavily affect micro size firm’s profitability. Thus, their development and growth
rate heavily affected by nation economic condition.
Entrepreneurial typology Entrepreneurial: In this category those who individuals come that are high risk taker and
do innovation to satisfy needs and wants of the product end users. Intrapreneurship: It include those entrepreneurs who operate and manage their business
on large scale. These individuals are highly motivated by nature and always try
something new and different in their business. Such kind of people sometimes face
failure in their business but they do not stop implementing innovative ideas in their
business. Business firms in which such kind of entrepreneurship observed grow at rapid
pace.
 Managerial: These are entrepreneurs that work at management level in any business
firms. Such kind of entrepreneur’s restructure hierarchy, working styles and
communication etc across workplace and identify new ways in which innovation can be
done in business operations (Parker, 2018). Relevant type of entrepreneurs motivates
employees to work hard and give new suggestions. All these things ultimately lead to
achievement of target in the business.
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P2 Explore similarity and difference between entrepreneurial ventures
Basis Large size firm Medium size
firm
Small size firm Micro size firm
Goals and
objectives
Large size firms
have vision,
mission, goals
and objectives.
Time to time
with change in
business
conditions new
objectives are
prepared which
management try
to achieve by
preparing
specific plans
(Chell and et.al.,
2016.
Medium size
firm’s main
objectives are to
keep cost in
control and
expand business
in regions. They
most of time
prefer to
innovate in
existing product
lines. Means that
they like large
size firms does
not prefer to add
multiple new
products in their
existing product
lines.
Small size firms
main goal is to
control cost in
the business.
Their size of
operations is
quite small and
in order to
further expand
business it is
important to earn
substantial
amount of profit.
This can be done
only by control
expenditures in
the business.
Main objective
of micro size
firm is to acquire
more and more
customers so that
business growth
rate can be
maintained.
Risks Risk in case of
large size
entrepreneur
firms is high
because in order
to innovate they
make heavy
expenditure in
their research
In case of
medium size
firms risk is
moderate as they
mainly focused
on innovating
their business
operations and
adoption of new
Small size firms
face currency
risk as profit in
business is not so
high. Due to
exchange rate
sometimes cost
of raw material
increased at
Micro size firms
face risk of low
retention rate of
customers. For
micro size firms
it is hard to
create and retain
customers. Thus,
it is one major
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and development
projects. Many
times these
research and
development
projects failed
which lead to
block of heavy
amount in these
projects. Thus, it
can be said that
risk is high for
large size firms
(Ramadani and
et.al., 2015).
technology in the
business.
rapid pace which
lead to low profit
and decline in
market share.
risk micro size
firms faced in
their business.
Employees Large size firm’s
employee size is
vast as they have
thousand of
employees that
work within
nation or across
globe.
In case of
medium size
firm’s employee
size is near to
250.
In case of small
size firm
employee size is
near to 50
In case of micro
size firms
employee size
remain in range
of 10 to 20.
Similarity in entrepreneurial venture
One of similarity between these sorts of entrepreneurial ventures is that they consistently
do innovation in their business but in different areas. It is the innovation which lead to fast
business growth. It can be said that more is the innovation of products and operations more
business will observe success.
Entrepreneurship in public and corporate sector
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 Public sector: In public sector firms entrepreneurship usually observed at very low level.
This is because government firms are largely dependent on Government to carry out their
research and development operations. Usually, government firms main motive is social
welfare not profit motive and due to this reason, less number of government firms carry
out innovation on large scale. However, these firms consistently innovate their supply
chain and other business manufacturing activities which lead to cost control and increase
in business profit (Roig-Tierno, Alcazar and Ribeiro-Navarrete, 2015).
 Corporate sector: These firms have huge resources and connections across globe and due
to this reason successfully carry out large size research and development projects. Firms
like GSK operate multiple R&D projects in single time. Some of them also failed but
because of availability of vast resources they easily absorb jerks and perform better
consistently in the market.
P3 Impact of micro and small business on UK economy
Small and micro size firms have huge impact on the nation economy. This is because small
size firms in terms of number are very high in UK then medium and large size firms. Large size
of population employed in small and micro size firms which indicate that these small size firms
have huge impact on economy. In case downturn comes in nation economy it is small size firms
which adversely affect relative to medium and large size firms as they are not able to absorb
shock caused by economic turmoil. Low profitability in business lead to curtail of workforce
which ultimately lead to increase in unemployment rate in the nation. This indicate that micro
and small size business have huge impact on nation economy. Further, ways in which small and
micro size firms contribute to growth of UK economy are discussed below. Turnover: Small size firms cover 52% of total turnover gained by the private sector firms
in UK. This reflect that that in overall profitability of private sector firms small size
companies have huge share. If small size firms will start performing poor then in that
case employment of nearly half of working population of private sector firm may get
affected (Karimi and Walter, 2016). Unemployment rate elevation directly affect people
spending capacity and less spend means that sign of recession in the economy. Thus,
small size perform better economy will be on track or vice versa. Thus, it can be said that
small size firms are backbone of UK.
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 Employment: In UK 16.3 million people employed in small size firms and relevant
population is half of total number of individuals employed in private sector. This indicate
that most of firms in UK are of small size and play a great role in growth of UK
economy. Number of people they employed is sufficient to reflect the decisive role they
play in increasing growth rate of UK GDP.
Considering all these facts UK government is making expenditure of 725 million pounds on
small size business. Mentioned amount will be used to assist small scale firms to update their
existing technology base and to boost their growth rate. Use of artificial intelligence automated
technology will accelerate growth rate of small size firms in long term which ultimately will lead
to fast growth of nation economy (Burrows, 2015). Apart from this, UK government is looking
for building trading partnership with nations of the world so that opportunity can be provided to
small scale firms to export their products in foreign nation so that maximum profit can be gained
in the business. Thus, it can be said that small size firms play a vital role in growth of UK
economy and to further increase its contribution in growth rate financial assistance is provide by
local government so that business operations innovation activity can not be hampered. It is
expected that in the upcoming time period also lot of steps will be taken by the UK government
to provide more and more assistance to the small size firms so that their growth can be ensured in
upcoming time period. By taking all these steps UK government is motivating youngsters to
open more and more business so that economic growth rate can be increased to maximum
possible extent.
P4 Importance of small business and business start up for growth in context of social economy
The main importances of small business is that it provides more opportunity to business
to increase their business at high scale and also reduces various factors so that they manage the
economy in country in better perspective. It includes various factors such as:
Innovation: Small business usually adapts this methods to enlarge their business through
attracting the local customer regarding preferring their products and service. Thus, innovation
can be done by motivating the employees of the company regarding bringing some new ideas
and thoughts to bring new designing in product. In context of social economy, this is raised by
providing such products which is eco friendly or hygienic and also it is different from other
company products (Santos-Olmo and et.al., 2016). In such perspective they can retain the interest
of employees towards their products for longer time period. Through the concept of innovation
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in existing products or bringing new products in market, it result in sustaining the smaller
business and beat the concept of larger business in country. Now a days people are more
attracting towards the services which resulting in getting reuse of products. Thus, small business
can adapt this innovation techniques to enhances the interest of people and they can charge less
cost by managing in right way. This innovation resulting in reaching to large customer base and
also helps company to increase their goodwill in local market.
Reducing poverty in country: By getting more employment opportunities, it resulting in
reducing the poverty in country through grabbing the best methods to increase employment ratio.
As it is examined that there is more growth of small scale business in market and also their
retention of employees is also improved. In that case employees are in need of jobs and this can
be done through stipulating the high wages to them, so that they accomplish the task in better
way. As poverty can be reduces if the business are growing with larger scale and also they are
initiating with innovative ideas and thoughts to pertain the interest of employees for longer time
period (Gilman, Raby and Pyman, 2015). If country itself getting the high quality products and
also fulfilling the needs and demand of the customer in better way. They get more economy in
country through promoting their own country products in market. This result in increasing the
employment in country and also lot of employees get changes to manage their livelihood in
better manner.
Local improvement: In context of small business, the local improvement is resulting to setting
the goal in company in respect of targeting the particular customer through which there are more
chances of increasing the local customer interest. This results in improving the local condition of
the country as instead of targeting the global market they are targeting the local market. The
local improvement can be done on the bases of using the quality products which beat the
competitors strategy at better level (Kherbach and Mocan, 2016). One important aspect is also
relating to sharpen the skills relating to marketing the products. This is to be undertaken in
respective of improving the condition of the market through using the innovative marketing
skills.
P5 Traits, skills and characteristics of that differentiate entrepreneurs from managers
Basis Entrepreneurs Managers
Focus Entrepreneurs main focus is one
trying something new in the
Managers main focus is on
managing business operations
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business so that it can grow at
rapid pace. Innovation can be
done in respect to technology,
business operations and
development of new products.
For example, entrepreneur
engaged in improving entire
business operations.
as they on daily basis evaluate
company performance and, on
that basis, determine area where
they need to work. Thus, focus
area for work is completely
different in case of
entrepreneurs and managers.
For example, manager main
focus is on improving its
department operations.
Risk taking Entrepreneurs are high risk
taker as they always proposed
unique solution to the problem
and try to launch new product
that satisfy needs of the
customers. They make heavy
expenditure on research and
development project or make
efforts to make business idea
reality (Hobbs, 2015).
Managers have less risk-taking
propensity and they mainly
innovate only company
business operations. Thus, it
can be said that they take less
risk relative to entrepreneurs.
However, there are few
managers that take risk in
research and development
project. Number of such kind of
managers is very low.
Decision making Entrepreneurs take core
business decisions. They have
facts which they analysed to
make decisions. Apart from
this, on basis of past experience
and intuitions they make big
business decisions.
Managers do not make big
business decisions. They do not
have power to make such kind
of decisions. However,
managers take decisions in
respect to their departments.
Hence, it can be said that
entrepreneur make more tough
decisions in comparison to
manager and scope of their
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decision making is also very
different.
Skills difference between entrepreneur and manager is given below.
Basis Entrepreneurs Managers
Communication skills On of the most important skill
that entrepreneur have is that
they have good
communication skill either it
is written or verbal.
Entrepreneurs know ways in
which they must communicate
anything even to their
opponents. This skill plays a
vital role in their business
success (Richter and et.al.,
2017).
Manager have good
communication skill but
relative to entrepreneur they
legged behind. It can be
observed that managers face a
lot of problems on floor but
they are not able to able to
solve all these. This is because
due to lack of proper
communication skills they are
unable to understand front
person view point which
ultimately lead to elevation in
conflict between management
and employees.
Group solidarity Entrepreneurs have strong
group solidarity skills as they
maintain unity among
employees and if any issue
arise then at initial level solve
it.
Managers does not have group
solidarity skills because they
are influenced by personal
relationships. Managers do
partiality in their group and
this create hurdle in
unification of the group
members. All these things
negatively affect business
firm.
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Trait difference between manager and entrepreneur are as follows.
Basis Entrepreneur Manager
Passion One of common trait found
among entrepreneurs is that
they have passion about
something like music and
technology etc. It is their
passion which motivate them
to work hard towards
achievement of their target
which is related to passion.
Manager also have passion but
it is not to that level which
motivate them to build
anything new or innovate
anything. It is the job
responsibility which motivate
them to work hard for
innovation of business
operations.
Self-belief Entrepreneurs have belief on
them that they can do
whatever they want to do.
Such kind of high confidence
motivate them to do
innovations in business. For
example, Ratan Tata get loss
making factory when he enters
in to Tata group. It was high
belief which convert loss
making factory in to profit
making firm (Sadler-Smith,
2016).
Managers have less belief or
self confidence about their
capability. They in few cases
undertake any big task from
their own side. Thus, self-
belief is more observed in case
of entrepreneurs then
managers.
P6 Aspects of entrepreneurial personality and entrepreneur motivation as well as mindset
Personality refers to the belief, like dislike or value system and attitude that individual have
about anything in the life. It means that personality reflect a lot about an individual. Some of
aspects of entrepreneurial personality are given below which reflect their motivation and
mindset.
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 Passion: Entrepreneurs always have passion towards anything and because of it they
prefer to refine specific thing. Means that it is the passion which motivate them to work
hard to do something. If someone have passion to take risk and celebrate success then in
that case it will time to time will take risky decisions (Acs and et.al., 2016). Thus, it can
be said that in entrepreneur motivation and passion are corelated to each other. Optimism: Entrepreneurs are always optimistic by nature as they never lose their hope
and make effort to achieve their target. It is the optimism which consistently motivate
them to work hard even they face huge setback. Such kind of personality aspect indicate
that entrepreneurs always have positive mindset which show them light of hope even
condition is so serious. Some of leaders like Jack Ma are one of best example of
optimism who fact lot of failures in their personal life but because of optimism they were
able to cope with that failures and now become one of world successful leaders. Creativity: It is one of the most important elements of personality of entrepreneurs. They
believe in smart work relative to hard work. This does not mean that they do not like to
do hard work. They prefer to do hard work but act smartly which is main reason behind
their business success. It is the creativity because of which Steve jobs was able to do
innovations and launch many new products (Julien, 2018. Creative mindset always
motivates Steve to do something new even he failed to do whatever was intention. This
reflect that creativity and positive mindset are closely related to each other.
 Risk takers: Entrepreneurs are risk taker by nature because of their creative mind and
optimistic behaviour. Means that it is creative mind and optimism which motivate
entrepreneur to work hard towards achievement of target. Hence, it can be said that
aspects of entrepreneurial personality affect motivation and mindset of individual.
P7 Ways in which background and experience can hinder and foster entrepreneurship
Background and experience play a vital role in hinder and foster of entrepreneurship. This
is because if one of have business background then in that case more easily start and operate
business in comparison to those who have no experience of business. On other hand, if one has
experience of managing business then in that case it can think to start business relative to that
person who does not have prior experience of doing business. Thus, it can be said that
background and experience hinder and foster entrepreneurship. It is observed that one who born
in the family that have business then in that case from infant age one start viewing business
11

conditions and environment and accordingly mind start developed and focused towards business.
It is common fact that environment in which individual live its mind accordingly start work
(Schaltegger, Lüdeke-Freund. and Hansen, 2016). Thus, if one will live in family which operate
business automatically individual will start think about business and its mind will work in
relevant direction. On other hand, just suppose any individual born in family where all do jobs
then in that case one will mostly have mindset to do job not business because from childhood
individual view that its family members are doing job. Experience of childhood to adult age form
perception and brain working process as well as preference of individual. Thus, background
definitely can hinder and foster entrepreneurship.
In many cases it is observed that individual does not have background in business or
family does not have background in business but individual have experience of business
management for long years. Such kind of business experience motivate one to become
entrepreneur. If one does not have any management experience then in that case it can not think
about starting business on small scale. Thus, experience can hinder and foster entrepreneurship.
Not only experience business background also affects one’s intention to become entrepreneur
(Ferreira, Ratten and Dana, 2017). However, in all cases this discussion not apply for example
Jack Ma today is one of well known entrepreneur it did not have any business background not
any experience of business before it start Alibaba. On other hand, Kumar Mangalam Birla one of
Indian entrepreneur already had business background which assist him to become successful
entrepreneur. Thus, no doubt experience and background foster and hinder entrepreneurship but
in many cases even one does not have background and experience but inner entrepreneurial
characteristics like optimism and confidence which assist and motivate one to become
entrepreneur.
CONCLUSION
On basis of above discussion, it is concluded that entrepreneurs are known for their risk-
taking behaviour and innovations. Some of traits entrepreneurs have from their birth like
optimistic and confidence etc. These qualities make one able to become entrepreneur. Small size
firms are playing vital role in growth of UK and its health significantly affect mentioned nation
economy. It is also concluded that there is huge difference between managers and entrepreneurs
in terms of skills they possess and way in which they work. It is deduced that experience and
background make one as entrepreneur. However, it is not necessary that only those can become
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entrepreneur who have business background and experience. One if have entrepreneurial traits
can become entrepreneur.
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