Entrepreneurship and Small Business Management: Impact on the Economy and Entrepreneurial Mindset

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This report examines the significant impact of small businesses on the UK economy, analyzing their contribution to GDP, employment, and social well-being. It delves into the key aspects of an entrepreneurial mindset, exploring the characteristics, skills, and motivational drivers of successful entrepreneurs. The report uses real-world examples, such as Nom Foods, to illustrate how personal background and experience can influence entrepreneurial success.

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ENTREPRENEURSHIP AND SMALL
BUSINESS MANAGEMENT

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Table of Contents
Task 1
...............................................................................................................................................2
Task 2
...............................................................................................................................................3
Executive summary
......................................................................................................................... 3
Introduction
......................................................................................................................................4
LO2 Assess the impact of small businesses on the economy
..........................................................4
P3 Interpret and assess relevant data and statistics to illustrate how micro and small businesses

impact on the economy.
............................................................................................................... 4
P4 Explain the importance of small businesses and business start-ups to the growth of the

social economy.
...........................................................................................................................5
M2 Evaluate the differences small, medium and large businesses make to the economy,

applying relevant data and statistics.
....................................................................................... 6
D2 Critically examine how small businesses have an impact on different levels of the

economy (local, regional, national) and in an international context.
.......................................7
Conclusion
....................................................................................................................................... 8
Task 3
...............................................................................................................................................9
Introduction
......................................................................................................................................9
LO3 Determine and assess the key aspects of an entrepreneurial mindset
.....................................9
P5 Determine the characteristic traits and skills of successful entrepreneurs that differentiate

them from other business managers.
...........................................................................................9
P6 Assess how aspects of the entrepreneurial personality reflect entrepreneurial motivation

and mindset.
............................................................................................................................... 10
M3 Explore and examine different lines of argument relating to entrepreneurial

characteristics.
....................................................................................................................... 10
D3 Analyse the characteristic traits, skills and motivational drivers of successful

entrepreneurs, supported by specific examples.
....................................................................11
LO4 Examine the different environments that foster or hinder entrepreneurship
.........................12
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P7 Examine, using relevant examples, how background and experience can hinder or foster
entrepreneurship.
....................................................................................................................... 12
M4 Analyse the link between entrepreneurial characteristics and the influence of personal

background and experience to specific successful entrepreneurs.
.........................................12
D4 Critically evaluate how background and experience influences entrepreneurs, both

positively and negatively, by comparing and contrasting examples.
....................................13
Conclusion
..................................................................................................................................... 13
Reference
....................................................................................................................................... 14
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Task 1
REFER TO PPT

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Task 2
Executive summary

Small and micro businesses are witnessed to enhance the economic performances of a specific

country. Considering the United Kingdom, it is seen that the country has experienced numerous

growth of SMEs within the last few years. London has observed significant rise of SMEs and

thus, employment has risen enormously.

The small businesses are focused in providing quality services to their customers so that

customer loyalty is maintained on one hand, and revenue flow is maximized on the other hand.

Not only the UK, but also several EU countries have experienced the rise of SMEs to provide

numerous financial gains to the country. It is evident from this report that most of the markets are

occupied by the SMEs that generates high employment rate in the country.

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Introduction
Small businesses have a significant impact on the economic growth of the United Kingdom. The

report will outline the importance of micro and small businesses on the financial structure of the

country. Additionally, the significance of small entrepreneurs in the betterment of the society

mainly refers to the increased employment generated by them. The creative minds are setting up

their own business whether related to retailing or construction, but are providing numerous job

opportunities to the unemp0loymeed groups of the society. In order to show the impact of small

and micro business firms on the GDP of the United Kingdom, a comparison is drawn between

the between different regions of the UK to get a clear view about its importance.

LO2 Assess the impact of small businesses on the economy

P3 Interpret and assess relevant data and statistics to illustrate how micro and small

businesses impact on the economy.

Julien (2018)
revealed that small and micro businesses have a significant influence on the
financial status of the United Kingdom. The small businesses that have a potential impact on the

economy of the United Kingdom can be categorized into four major divisions. They are:

Non-innovating venture
Innovating venture
Non-exporting venture
Exporting venture
The figure explains the rapid evolution of small businesses in this globalization era. This has

uplifted the economy of the United Kingdom. The manufacturing industries are leading the graph

and
Flynn et al. (2015) estimated it to be around 33% of the total market share. This is followed
by scientific and professional sector that determines the preferences of the small business

organizations towards innovation. The total market occupied by these companies account for

about 15% of the total start-up organizations. Moreover,
Barkhatov et al. (2016) suggested that
rapid evolution of such business has led to enormous revenue for the country and held more than

98.9% of the total trade rate. This increases the GDP of the nation. Additionally, the coherent

turnover of micro and small businesses was estimated to be around £3 trillion for the year 2018,

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which can be denoted as over 53.2% of total private sector turnover. Furthermore, the turnover
rate for small businesses in the UK is calculated to be around 35.7% and is thus, considered to be

the highest employment sector in the global competitive market.

Figure
1: Evolution of SMES in the United Kingdom
(Source- Merchant Savvy, 2019)

P4 Explain the importance of small businesses and business start-ups to the growth of the

social economy.

The start-up ventures and small businesses play an important role in enhancing the social

economy of the United Kingdom.
Reynolds (2016) suggested that micro and small businesses are
mainly focused to gain competitive advantages in the market that can be brought through the

introduction of innovation in the business operations. The organizational performances can be

enhanced when the customers are satisfied by responding to their principle needs. This will be in

favor of the organizational success when the customers are benefitted from the company’s

customer-centric actions.

In comparison to this,
Hogan et al. (2017) stated that the micro and small businesses in the UK
have a major benefaction related to generating scope for employment. It is evident from the

graph that more than 16.8 million employment scopes have been generated by micro and small

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businesses in United Kingdom that accounts for more than 50% of the total private sector hiring.
According to the graph, the micro or small business has contributed to stabilize more than 28,000

employment scopes in Birmingham as the growth rate began from 2008. The value added of

SMEs is significantly high, as their establishment in the era of globalization has provided

numerous employment opportunities to the unemployed youth of the country.

Figure
2: SME performance in the United Kingdom
(Source- Binnenmarkt, Industrie, Unternehmertum und KMU - European Commission, 2019)

M2 Evaluate the differences small, medium and large businesses make to the economy,

applying relevant data and statistics.

Although there lay significant differences among the micro and macro businesses, the most

important one is the job opportunities provided to the unemployed sectors of the community. It is

evident that more than 80,000 new job opportunities are provided in the year 2014 in London as

the expansion rate of small businesses exceeded 43%. Moreover,
Mitra (2015) suggested that
additional job opportunities accounting about 27,000 would rise by 2021 providing excellent job

openings in London, Leeds, Birmingham and many others. This will help to contribute more than

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£1.5 billion to the United Kingdom economy. It is also observed that micro businesses take
significant corporate steps so that organizational success is achieved in an efficient manner.

Some organizations also provide basic literacy help to the economically backward people so that

they can earn reputation in the market as a social entrepreneur. The existence of micro

enterprises in the UK is more than the large-scale industries that dominate the revenue stream of

the country. The contribution of job opportunities is more than 96% in almost every sector of the

country and thus, the profit obtained is enormous. Beside the hike in employment rate, the

relationship with the supplier chain is maintained by the micro businesses in an efficient manner.

The impact of Brexit on small businesses has intensified over the past few years. It is evident

from the small-scale business firms of England and Wales, Brexit has a significant impact on

their business activities (
Guerrero et al., 2015). The ramifications are considerably wide-ranging
and detrimental with respect to export plans and future investments.

In context of the UK retail sector, suggested that small-scale business retailers have the

competency to penetrate the international market in an efficient manner. However, the only

concern is related to the expansion of the business with accurate strategy. It is recommended that

the UK retail sector must adopt government-exporting schemes so that managers of the micro-

businesses gain adequate knowledge to maintain the business operations.

The construction industry in the United Kingdom accounts for more than 20% of the total SMEs.

London is mostly over-populated with housing constructions that accounts more than 54,000

SMEs. This is followed by South East regions of the UK that contributes more than 15.2%

(244,655) of the SMEs in the UK, whereas the North West region is home to 11% (189,745) of

the overall SMEs in the UK (
Storey, 2016). The least number of construction SMEs exist in
Northern Ireland, North East regions and Wales. The dominating SMEs in the UK include motor

vehicles repairing, wholesale of retail trade, education, food services and accommodation.

More than 24 million SMEs in the EU represent more than 98% of the businesses and they are

the crucial factor for driving innovation, economic growth and social integration (
Rodríguez-
Pose and Hardy, 2015)
. Belgium and Finland are showing extreme growth in setting up micro
businesses and thus providing huge job opportunities to the people.

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The European Commission has a mission to promote successful entrepreneurship events and
enhance the business environment for SMEs. This allows the business owners to recognize their

competencies to maintain a new business in the global competitive market.

Conclusion

It is evident from the report that SMEs have increased over the last few years because of

globalization. The United Kingdom has provided numerous opportunities to creative minds to

start their independent business and gain the fame of an established entrepreneur. The retailers as

well as construction industry have witnessed immense rise of SMEs to take the business forward

to international markets. London is observed to be the hub of SMEs and thus, provides multiple

job opportunities to the unemployed section of the community. In comparison this, EU countries

such as Belgium and Finland are getting immense support from the European government so that

they can recruit massive workforce for the SME’s betterment.

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Task 3
Introduction

The entrepreneurial mindset holds numerous qualities of both leaders as well as managers. Their

entrepreneurial personality traits decide what competencies they hold for a successful business

operation. Croft-Simon is a successful entrepreneur who has generated Nom Foods, which is the

first organic food in the UK market. She faced many hurdles while developing such an

innovative product, but her personal experience and family background have helped her to

succeed in it. Thus, the essay highlights the importance of innovative mindset that can provide

numerous business options for an entrepreneur.

LO3 Determine and assess the key aspects of an entrepreneurial mindset

P5 Determine the characteristic traits and skills of successful entrepreneurs that

differentiate them from other business managers.

A manager holds certain qualities of the leaders to maintain an efficient working environment.

The managers are given special responsibilities to oversee the work of the staffs within a

particular department so that efficient qualities of the employees are identified (
Yashkova et al.,
2016)
. They assign unique responsibilities to their employees, set deadline for their activities and
troubleshoot any problem the employees face. Although the managers are given special task to

help the juniors but they are also answerable to different problems to their higher authorities.

On the other hand,
Bikse et al. (2015) opined that entrepreneurs are individuals who are capable
to identify the problems of their followers so that efficient solutions are provided to the public.

The entrepreneurs have the capability to create an innovative idea, generate advanced products

that are consumer-friendly, formulate their sales, marketing strategies, and many others so that

effective solution is provided to the customers. Although several risks are associated with a start-

up, the entrepreneurs are inclined to set up their business in a competitive environment.

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P6 Assess how aspects of the entrepreneurial personality reflect entrepreneurial motivation
and mindset.

The Big-5 Model is used to analyze the personality traits of the entrepreneurs (
Azucar et al.,
2018)
. The five factors responsible to evaluate the personality of the businessperson aim to
provide a clear view of their success story. The five factorials related to the personality traits are

Openness
Conscientiousness
Extraversion
Agreeableness
Neuroticism
The business success of Nom Popcorn was possible because of the hard work Steph Croft-

Simon. Thus, it can be said that she possess enough
openness or rather deep insight for
developing a particular product (
Nomnomsworldfood.com, 2019). It is said that the person
having this trait have a wide range of imaginative power and they are eager to learn new things.

Croft-Simon suffered from high allergic reactions, so she started to experiment with foods to

mitigate this problem. Thus, it can be said that she has a wide range of goal-directed behavior

and she can be related to the second aspect of the model, which is
conscientiousness. Croft-
Simon was an
extrovert person so she interacted with numerous people who possess cooking
interests so that she can develop efficient solution for the allergic responses (
Nom Foods, 2019).
She is cooperative and thus responded to multiple advices of unknown persons regarding her

experiment. Thus, her personality aligns with the fourth trait of the model, which is

agreeableness
. Moreover, she also possess neuroticism trait that defines her to be emotional and
moody. Croft-Simon was tired of her allergic reactions so she became emotional and desperate to

overcome it.

M3 Explore and examine different lines of argument relating to entrepreneurial

characteristics.

Maslow’s Hierarchy of Needs
classifies five aspects of entrepreneur behavior. These include
self-actualization, esteem, belonging, safety and physiological needs
. It is evident that small
and micro business adopts
Maslow’s Pyramid so that they can monitor every aspect of the
business operations to gain organizational success (
Lee and Hanna, 2015). The entrepreneurs are
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often confused to choose between the different factors of the business so that they can excel in
the competitive market with their start-up plan. Therefore, they try to adopt Maslow’s Pyramid

by considering self-actualization as the last resort for his business by responding to physiological

changes at the basal level. The entrepreneurs choose this structure to build an efficient

organization that favors all the aspect of a successful business. In context of physiological factor,

the entrepreneurs pay their employees adequate resources to retain in the company. Moreover,

security is associated with the long running of the business. The formation of new team every

time the company is going to work on different project is a necessity task for the entrepreneurs.

This motivates the employees to work happily for the organization. Self-esteem and self-

actualization is needed to excel in the competitive market. Thus, it can be said that entrepreneurs

adopt Maslow’s Hierarchy Principle to establish their new business in the existing competitive

market sphere.

D3 Analyse the characteristic traits, skills and motivational drivers of successful

entrepreneurs, supported by specific examples.

According to
Fallatah and Syed (2018), numerous factors hinder the entrepreneurial success,
which are as follows:

Lack of education
- In many cases, it is seen that SMEs employ less qualified employees to start
their business in a hurry. To expand their business within a short time, they do not pay attention

to the qualifications and skill of the workforce.

Lack of financial status
- The entrepreneurs often face difficulties related to economic resources.
It is observed that to establish their business for the long run, the entrepreneurs invest huge

capital that is not under immediate demand (
Tarling et al., 2016). Thus, they are likely to face
tremendous economic crisis and the business activities are hampered.

Lack of demographic factors
- The demographic factors such as gender, marital status, religion,
occupation, etc. posse several risks for the entrepreneurs to expand their business (
Devece et al.,
2016)
. Thus, it is recommended that they must choose appropriate location for their business
where the organization can perform in an effective manner without any obstacles.

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Lack of resources- The entrepreneurs face difficulties in obtaining adequate resources for their
business operations. Thus, they must develop efficient strategies so that they can obtain

sufficient resources for their business expansion.

Croft-Simon faced financial problems when setting up her business, as it was difficult for her to

find a manufacture that create organic foods that have no allergic reactions. Thus, lack of finance

and lack of resources are the two obstacles faced by the Croft-Simon in setting up her first

organic food business.

LO4 Examine the different environments that foster or hinder entrepreneurship

P7 Examine, using relevant examples, how background and experience can hinder or foster

entrepreneurship.

Croft-Simon belonged to a Greek Cypriot family and thus, she has always favored food and

cooking to be an important part of her life (
Stephan et al., 2015). Therefore, the experience she
as gained from practicing cooking in her home has helped her to gain fame as an entrepreneur.

Moreover, she used to experiment with different organic foods so that she can generate an

innovative product to cure her allergic reactions. She got immense support from her family and

friends and thus she generated Nom Foods that are free from any allergic reactions as well as

purely organic.

M4 Analyse the link between entrepreneurial characteristics and the influence of personal

background and experience to specific successful entrepreneurs.

Croft-Simon launched her own food product in 2015 and named as Nom Popcorn. This first

organic popcorn brand was established in the United Kingdom (
Decoration, 2019). She
developed organic popcorn that was free from any artificial flavors as well as refined sugars. She

stated it to be a difficult process as it included numerous strategies to generate an innovative

product. She got the idea of generating organic food as she suffered from severe allergic

reactions and therefore, started an ethical mission to change the food habits. She spent adequate

time in Whole Foods searching for products that can cure the sensitive reactions caused by

artificial flavors and preservative used in the food. Nom food has its own website and thus,

motivates Croft-Simon to generate new recipes every week. Several people followed her blogs

and shared their personal experiences with her regarding their food habits and this was her

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greatest achievement. She has advertised in trade shows, visited numerous food channels and
worked in collaboration with multiple foodies so that her brand got recognition.

D4 Critically evaluate how background and experience influences entrepreneurs, both

positively and negatively, by comparing and contrasting examples.

Croft-Simon has a food expertise background and thus helped her to gain fame as a foodie

entrepreneur. This positive aspect of her family is responsible for her success in the competitive

world (
Liu and Almor, 2016). She got immense support from her family and thus, started to
experiment to generate a new food product. However, identification of organic food products

suppliers as well as organic food manufacturers became difficult. Additionally, the economic

condition weakened due to enormous investment in the experimental procedures

(
Supportyours.org., 2019). Thus, both the negative as well as the positive factors must be kept in
mind to generate a product in the competitive market that has sustainable values.

Conclusion

The essay outlines importance of small businesses in generating enormous revenue for the

country. Croft-Simon who is the owner of Nom Foods has faced numerous troubles in

developing an organic product that have multiple health values. The analysis of Big-5 model

suggests that all the five qualities are present in Croft-Simon and thus, she could develop an

innovative product for the benefits of the people. Moreover, it is suggested that entrepreneurs

must follow Maslow’s Hierarchy Principle to outshine in the competitive market. Croft-Simon

got support from her family and friends and thus, could have generated an amazing produvt for

the community.

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Reference
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