Importance of Small Businesses in Social Economy

This article discusses the importance of small businesses and startups in the growth of social economy. It covers topics such as their contributions to employment, local improvement, autonomy, and changing lifestyles. It also examines the characteristic traits and skills that differentiate successful entrepreneurs from other business managers.

Coursework
Entrepreneurship and Small Business Management
Session: September 2019
INTRODUCTION...........................................................................................................................3
Different types of entrepreneurial ventures and explain how they relate to the typology of
entrepreneurship.....................................................................................................................3
Interpret and assess relevant data and statistics to illustrate how micro and small business
impact on the economy...........................................................................................................5
Explain the importance of small businesses and business starts-ups to the growth of social
economy.................................................................................................................................6
Characteristic traits and skills of successful entrepreneurs that differentiate them from other
business managers..................................................................................................................8

Department of Business Entrepreneurship and Small Business Management
Assessing aspects of the entrepreneurial aspects personality reflect entrepreneurial motivation
and mindset.............................................................................................................................9
How background and experience can hinder or foster entrepreneurship.............................10
Conclusion.....................................................................................................................................11
REFERENCES..............................................................................................................................12
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Department of Business Entrepreneurship and Small Business Management
INTRODUCTION
Entrepreneurship is the process of designing, launching and running a new business, which is
often initially a small business. The people who create these businesses are called entrepreneur.
Small business management is a process entrepreneurs use when running
their business operations. Small business management often requires entrepreneurs to have a
wide variety of knowledge or understanding relating to business topics. This report covers
questions such as types of entrepreneurs and link with typology, differentiation between
entrepreneurial ventures and small business, personality and motivational aspects of
entrepreneur, characteristics and their skills and how does a start up or small scale enterprise help
the economy.
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Department of Business Entrepreneurship and Small Business Management
Different types of entrepreneurial ventures and explain how they relate to the typology of
entrepreneurship.
Small business Entrepreneurship
In today’s market majority of businesses are operating as a small enterprise. In UK 80 per cent of
the companies are operating as a small enterprise with the power of employing 50 per cent of the
people who are workers from private sectors. Small business ventures are those enterprises in
which the number of employees which are appointed are from 0-5. Business of this nature
usually fails to gain the attention of venture capital and to initiate these kinds of business loan is
taken from friends, family or personal loan from banks. Electricians, carpenters, consultants,
plumbers, hairdressers etc. comes into these type of businesses. Managerial firms in its
traditional form is the practice of starting new organizations, most commonly new businesses.
Small business ventures are mainly funded by families and friends as the investment in these
sectors are low.
Scalable Start up Entrepreneurship
When an entrepreneur believes and has full confidence that his confidence can change the vision
then they initiate a business and that is known as scalable start up entrepreneurship. They collect
their funds with the help of venture capitalists and they recruit the best employees they can work
with. Finding this nature of business model is their ultimate goal. Then the next step is to allocate
the funds which was taken from venture capitalist. Due to the factor of risk and return of
outcomes these types of businesses are not much in the market. For instance Face book,
WhatsApp, Instagram or any other online platforms which are successful comes under this type
of business. This type of venture is also related to its same typology that is scalable typology
they look for a repeatable business. It takes away the share of huge companies by entering into a
large market.
Small and micro business helps the company contribute in the economy by increasing growth
and innovation in which they are serving. They also provide the opportunities for employment
which are not provided by the companies who operate on a large scale.
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Department of Business Entrepreneurship and Small Business Management
Medium size business is held with a team of people with 100 or more than 100 people. Apart
from this the turnover, balance sheet, assets that the company owns and an average of employees
working for them derives the difference between an organization which is small and medium.
Large Company Entrepreneurship
Companies such as Google, Microsoft, Samsung etc comes into this nature and type of business.
They focus on sustaining the innovation by launching new products and services into the market
with their core products. Companies do this by various ways they either buy a innovative
company or partner up with someone. In order to cope up with the needs and demand of market
companies come up with new products. These type of firms are aggressive growth firms as they
focus on what is the next goal and what after that. They use every resources to attain the goal.
Social Entrepreneurship
When an entrepreneur decides to take an action for helping someone or by making products and
services specially for them. They only think of making this world a better place and not to focus
on earning wealth. They can be hybrid or non profit. Typology of serial entrepreneurship is
related with these type of entrepreneurship as they have a strong discipline, stable and strong
traits of leadership and innovation and creativity and ability to set goals which are concrete.
The similarities and differences between entrepreneurial ventures
Business Structure Size Ownership
Similarities These organizations
may have similar
business structures
like hierarchical or
functional.
Businesses such as
Micro and small aim
of both the
organization is to
survive the market.
Both of the
organizations main
goal is to generate
more and more
profits.
Differences Public limited
company can sell its
shares whereas a
private limited
company cannot
Businesses which
comes in medium
range has aim for
expansion whereas
large organizations
Public companies use
their income for
building something
for society whereas
private companies
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Department of Business Entrepreneurship and Small Business Management
Main goal of both
the type of
organization is to
maximize their profit
whereas the main
goal of social
organization is to
serve for the
betterment of
society.
Scope of the
companies for start
up is high
have no concerns
about this and how
will they survive in
the market they are
way past that
because they have a
major share and
control in the
market.
Size of the startup is
small.
only works for
themselves.
Ownership of these
type of startup is
between 1 or 2
members.
Public sector: These sectors are generally owned and managed by government. They mainly
work for betterment and providing various advantage to public.
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Corporate sector: corporate sector is the part of the economy made up by companies. It is a
subset of the domestic economy, excluding the economic activities of general government, of
private households, and of non-profit organizations serving individuals.
Development and growth of entrepreneurial venture
The highest of them are in personal care products and services such as consulting, financial
services or beauty and wellness. These type of companies of UK have a relationship which is
mutually beneficial for the overall economy of the country. Contributions made by them are vital
to the health related factors of economy and the state of the economy of UK affects the growth of
businesses which are small.
Interpret and assess relevant data and statistics to illustrate how micro and small business impact
on the economy.
An increase in inflation of consumer goods and on the other side decrease in the income of
household will result in low spending of money by the consumers. It affects mostly the small
businesses whereas for the businesses whose nature is to export the goods and services it is also
difficult for them as a drop in the value of money means they will be getting more product. The
UK economy is under performing compared to the European competitors and the state
recognizes that to grow the economy, it needs to support small business growth. Small business
are important for the economy of UK.
To measure it turnover of the companies can be checked that how it is helping the economy of
UK. It is one of the most important metric for measuring the contribution in the economy. It was
recorded in 2018 that the contribution made by small and medium enterprises was around 2
trillion Euros and it was 52 per cent of the overall turnover of private sector. They also help in
creating jobs even though they are not basically leaders. These type of enterprises has employed
around 16.3 million people in UK which is 60 per cent of all the employment that was made by
private sector. It shows that
the business of small and medium enterprises is growing and the owners of the businesses are
confident as employment by them was high and 50 percent of them are saying that they will start
expanding their operations as their outcomes will be positive they are sure of that. Enterprises
such as these accounts for most of the businesses in every sector. Above all of this government
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of UK is funding 725 million Euros in the R&D department so that they can help and support
these type of enterprises to grow. Government there has also announced that those businesses
will be rewarded who will encourage and explore the possibilities of development of artificial
intelligence and bringing innovation into the market. The focus which they are going to put on
technological factors and data will help small and medium companies to make decisions with
more information and concentrate on bringing the strategies which are unattainable to life.
Explain the importance of small businesses and business starts-ups to the growth of social
economy
Businesses who operate on a small scale provides facilities and opportunities for young and new
entrepreneurs and provides facilities for communities and their neighbours. Although on the
other side it takes a lot of risk to run a small enterprise and inclusive of that they offer
opportunities for young entrepreneurs which put them at more risk.
Creating Employment
It was observed that most of the jobs in private sector is created by small enterprises. Even at the
time of recession these type of enterprises look out for young and new people and not only they
are concerned with providing new jobs but they are also concerned with providing them jobs that
makes them feel satisfied. They don’t put any kind of pressure on the candidates. As employees
will have a pride of their own when they work according to their preference and they will
contribute more for the organization.
Local Improvement-
Small businesses conducts their operations in local areas or local economies and also help to
make the ways for financial interdependence and prosperity. It is a easy circulation to understand
that when anyone spends money at a store which is privately owned then that money spent by
anyone goes to a worker to pay him who then again will circulate the money by spending at
another business. More the small business help each other greater will be their capacity to create
their own community of business. This support is mostly needed in hard and crucial times. If and
when a business in local area is struggling to cope up and meet with the demands of others then
the members of community will help the business which is struggling to get back on its feet
through the measures of word of mouth or taking out campaigns for funding and when it comes
to large organizations no one has never seen a support like this from them for the other firms.
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Autonomy and Independence-
Local and small businesses have the power to feature the speciality of neighbourhood as big
companies focus only on the new trends and think about satisfying their goals. Small businesses
are working in a traditional and longstanding way to earn a living so that as compared to large
companies who follow the trends for earning more and more bucks. Be it any kind of
independent business such as a restaurant or a pharmacy. They need to follow the same services
and protocol whether they are located in a different location or a different city.
Changing lifestyle-
Small enterprises provide jobs to young and new entrepreneurs and that helps them to change
and improve their lifestyle. As earning more money enhance and improve the standard of living
which overall helps all the other people to earn more money.
Increases Production-
These industries produce goods and services of over 4 million Euros and it is increasing
every year by 10 per cent. They are responsible for the growth of industries in the country.
Increases export- They are exporting more products than the large scale industries. Even the
companies who are in to trading exports their goods to foreign countries.
Increase in opportunities-
These type of companies receive help from the government in many forms that is
reduction in tax which increases the opportunities to invest in wider areas. In comparison with
the large scale industries they have easy access to the raw materials and they easily get the
labour.
Difference between small, medium and large
Basis Small Medium Large
Number of employees The number of
employees in these
enterprises are up to
3-5.
In this type of
company maximum
50-100 workers are
being employed
In this up to 1000
workers re being
employed
Mode of entry They can directly
enter the market.
They can enter the
market by
collaboration.
These can enter
market through joint
venture or franchising
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Department of Business Entrepreneurship and Small Business Management
Critically examine the contribution of small enterprises to the economy
In the UK, the vast majority of businesses employ fewer than 10 people, accounting for 33% of
employment and 19% of turnover, according to a briefing paper in the House of Commons
library published in May 2015.
Characteristic traits and skills of successful entrepreneurs that differentiate them from other
business managers
.
Traits of entrepreneurs and differentiation from Business Managers
Richard Branson is also a motivator for people. He believes that everything is not achieved for
the first time and that doesn't affect the entrepreneurs in losing his hope. He or she will get
another chance. Entrepreneurs believe business is like a giant game of chess you have to think
before making every move and learn quickly from your mistakes as an entrepreneur who wants
to be successful he or she must not fear from failure as they must learn from it and move on.
Business manager motivates people in the internal organization. His interests and intentions
doesn't reach out to large audience so they cannot influence or motivate people who are not part
of the organization.
Skills of entrepreneurs and differentiation from Business Managers-
Skills of entrepreneurs are that which helps them in achieving goals. Vision of them is goal
oriented. An entrepreneur is active towards ideas and business managers follow the ideas which
is derived by the entrepreneurs. For instance, many of them take their real life as a part in
bringing innovation and implementing in creating something new. J.K. Rowling was delayed on
a journey from train in London. From there she had the idea of beginning a new story and her
new book Harry Potter. It took her 6 years to publish the first series of Harry Potter because she
didn't stop taking ideas anything new which came to her mind she took it as a action.
Key Drivers for Motivation-
Clear Goals-
Entrepreneurs have goals in mind and they are clear so that they can reach them
according to their vision. They know what is expected from them that is why they use those
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strategies which help them to fulfill the expectations of the people. For instance J.K. Rowling
had clear goals to finish what she started and that is to finish the series of Harry Potter with a end
according to the expectations of the people. Business managers don't have the ability to do that.
Development Paths-
Entrepreneurs develop the path for their executives so that they can reach the goals for
the company. They develop it with the years of experience they have. Most of the individuals
don't avoid this chance. Business managers don't follow this path they only follow the guidelines
which are given by the entrepreneurs.
Most of the successful entrepreneurs think that in this rapidly changing environment the highest
risk for anyone is taking no risk and compared to business managers they don't have the power to
take risk as they follow the orders given by them. If they don't and goes out of the way and take a
decision they will be held responsible. Entrepreneurs take calculated risks which is according to
the needs and wants of market and which will be beneficial for them and improve the
profitability of the company whereas business managers have the idea of only the internal
aspects of organization.
For instance, J.K. Rowling used to write a book when she was jobless and when she had a job
she started writing in her spare time whereas vision and skill of business managers is limited to
an organization as they don't think or focus on attaining goals for himself. They think of it as a
whole organization.
Assessing aspects of the entrepreneurial aspects personality reflect entrepreneurial motivation
and mindset
Motivation and mindset of an entrepreneur can be understood by the big 5 trait model
Openness-
This features highlights the qualities such as imagination, insight and prediction. Entrepreneurs
who have these qualities and traits are bound to be successful. As they have a curiosity about
knowing things about various things and how they work, how they change the lifestyle of people.
For instance, J.K. Rowling had a idea of Harry Potter just from missing a train in London. By
learning and experiencing new things they bring a change to simplify things. Entrepreneurs who
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are high in this trait they are tend to be more creative and they believe in trying out new things
and if they are low on this trait they may face difficulties in imagination new things.
Conscientiousness-
Entrepreneurs who have habits such as good and impulsive control, decent behavior and
behaviors which are directed towards goals. Richard Branson who is the owner of Virgin Group
never stopped thinking. He always thought of the next step to achieve or counter this measure.
These type of entrepreneurs are stressed about the deadlines for completion of task as the
company must never miss a deadline. It affects the reputation of the company.
Extraversion
It is also known as extroversion. Attributes such as being a philanthropist or is excited, talkative,
and who expresses their emotions this type of trait when found in an entrepreneur he or she is
termed to be as extraversion. For instance, J.K. Rowling was a billionaire but she donated huge
amount of funds to charity which made her loose her wealth a lot and made her a millionaire.
She expressed her emotions about her past life when she opened up about her husband and
financial issues.
Agreeableness
Entrepreneurs who have this trait and agrees to someone's point of view and their vision comes
under this trait. J.K. Rowling listened to her subordinates while writing the last part of Harry
Potter and the cursed child and when Richard Branson was young he met a lot of experienced
entrepreneurs from which he learned how to complete a mission and vision of the organization.
Neuroticism
This trait tells about the entrepreneur that he or she is sad, or a bit moody and have issues like
instability of emotions. People high on this trait suffers from this type of quality and people who
are low on this trait are emotionally stable and don't face these issues. J.K. Rowling was low on
this issue she controlled herself when she was facing issues with her husband and to add the
financial problems she was facing it was difficult for her to live that phase but she overcome that
with time and efforts and now she is a successful entrepreneur.
Characteristics of entrepreneurs and differentiation from Business Managers
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Business is run by taking risks and people who are lucky and have the courage to do something
big they take risk. Branson believes that everyone creates their own luck according to the risk
they take in their life to make the changes in their daily pattern of working which will help them
progress and achieve success
How background and experience can hinder or foster entrepreneurship.
Richard Branson
Background: Richard Charles Nicholas Branson is a British born author, investor and
philanthropist. Virgin company was founded by him in 1970 and through that he has shares in
more than 400 companies in many different fields. To start his first business billionaire Richard
Branson started his first business at the age of 16 and he dropped out of school at the same age to
start that. In 1970, he started a business of mail order record business and then he opened a chain
of record stores by the name Virgin stores and later changed it to Virgin mega stores after
growing up the business in 1980 he started the business of airlines by Virgin Atlantic airline and
expanded the business of music record business. In 2004 he started a business for space tourism
by the name Virgin Galactic, he introduced it with a space port and space ship.
Personal experience: Along the way Branson met with many leading entrepreneurs and with the
help of them and his own brilliance he has studied and overseen many companies. By doing this
analysis and gaining the knowledge he got to know no two entrepreneurs are same everyone uses
different approach and that is what makes them successful. Branson has successful companies
such as Virgin Airways, Virgin Mobiles and many stores under his name. He was even awarded
with the honor of knight at Buckingham Palace for his work as an entrepreneur and in 2016 he
was listed as a billionaire by Forbes.
J.K. Rowling
Background: She is an author, producer, philanthropist, screen writer, television producer. Her
best work was Harry Potter series. For which she has also won multiple awards and that series
has a record of selling more than 500 million copies and that helped them to become the
bestselling book of history. On the basis of this she has also written script for the movie series
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and some of them are even produced by her. She has faced a crucial phase in her life of seven
years when she her mother passed away, her husband divorced her and she has to face poverty
with a child to take care of until she released her first novel.
Personal experience: She was the first author to become a billionaire and she lost that status by
giving a part of her earnings in donating to charities. Still her estimated net worth is around £600
million and that makes her 197th richest person in UK. She is also the president of Gingerbread
charity. She is also known for her role in politics and she has donated up to £1 million dollars
for the labor party.
The background of both the entrepreneurs was not rich they didn't have the facilities to reach
where they are today all they had was will in their mind and according to that they worked hard
for it. Both of them knew that they will achieve success someday and there work will be
recognized. There background was the reason they faced the struggle and from that they have
gained the motivation to never see that time again.
It has been analyzed from the life experiences of both entrepreneurs that in spite of family not
supporting and unfavorable environment one must not leave their patience and must be engaged
in working hard for their goals and objectives.
Conclusion
From the above studies it has been concluded that this report gives a differentiation between
entrepreneurial ventures and types of entrepreneurs. Typology linked with types of entrepreneurs
has been explained. Background and experience of Richard Branson and J.K. Rowling has been
covered up in this report. Their personality, aspects and how they influence and motivates
people.
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REFERENCES
Books and Journal
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Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan
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Burns, P., 2016. Entrepreneurship and small business. Palgrave Macmillan Limited.
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Cole, R.A., 2018. Bank credit, trade credit or no credit: Evidence from the Surveys of Small
Business Finances. Trade Credit or No Credit: Evidence from the Surveys of Small
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Mugler, J., 2017. The climate for entrepreneurship in European countries in transition. The
blackwell handbook of entrepreneurship, pp.150-175.
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Ramadani, V., Dana, L.P., Ratten, V. and Tahiri, S., 2015. The context of Islamic
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