The Role of Entrepreneurs and SMEs in Economic Growth

The report concludes that entrepreneurs are the creators of innovative products in the market, and SMEs contribute to the economy by offering new employment opportunities. The social entrepreneurial ventures serve society by providing solutions to social problems. Every successful business is led by an entrepreneur.

SMALL BUSINESS AND
ENTREPRENURSHIP

Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1. Examine different types of entrepreneurial ventures and explain how they relate to the
typology of entrepreneurship.......................................................................................................1
P2 Explore the similarities and differences between entrepreneurial ventures...........................2
LO 2.................................................................................................................................................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.............................................................................................................................6
LO 3.................................................................................................................................................8
P5 Determine the characteristic traits and skills of successful entrepreneurs that differentiate
them from other business managers. ...........................................................................................8
P6 Assess how aspects of the entrepreneurial personality reflect entrepreneurial motivation
and mindset................................................................................................................................10
LO 4...............................................................................................................................................11
P7 Examine, using relevant examples, how background and experience can hinder or foster
entrepreneurship.........................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
“Entrepreneurship is the process of designing, starting and managing a new business,
which at first is often a small business. It is the ability and desire to develop, regulate, and run a
business with all its risks to generate profits.” The Entrepreneurs introduced new technologies in
the market. Small business management refers to the efficient and tactful use of resources and
manpower in order to generate higher productivity in Micro and Small business enterprises. The
project report will outline the different types of entrepreneurial ventures and describe how they
relate with typology of the Entrepreneurship. It includes different types of ventures which help
the entrepreneur to grow the business worldwide and also access the current economic statistics
of UK which is rapidly changed due to the impact of SMEs business. The report will discuss the
characteristic traits and skills of the successful entrepreneurs that differs from the managers of
the other business enterprises. The report also shows the personality of entrepreneurs through
OCEAN model analysis. At last, it concluded with the background and experiences of successful
entrepreneurs which hinder and foster their entrepreneurship.
LO1
P1. Examine different types of entrepreneurial ventures and explain how they relate to the
typology of entrepreneurship.
Types of entrepreneurial Ventures are
Social entrepreneurs
Scalable start-ups
Small business
Large companies
Definition of typology:
Typology is technology based entrepreneurs tghat is based in the background of an
occupation , despite of increasing evidence so there is a use of typology in research of different
types of entrepreneurship. It is an attempt to differentiate the different types of entrepreneurs.
Small Entrepreneurs
Big employers in the US still have small businesses, 5.7 million businesses in the US are
small and employ 50% of non-government workers. Small businesses include grocery stores,
travel agents, electricity and more. They are people who run their own businesses and employ
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local staff. His intention was to feed his family so as not to build a business. This type of
business is usually funded by family and relatives.
Purpose: they plays an important role in the growth of economy as they ensure the equitable
distribution of national income and encourage the mobilisation ij the country.
Micro Entrepreneurs
Micro enterprises are generally considered as the small business that engage less than 9
people in the organisation or fewer than that and their balance sheet does not exceed the
particular value. They classify the business if the business engaged 1-9 employees than it is
being consider as the micro business. In fact the government of UK is porting the micro business
as they are contributing in the growth of the economy.
Purpose: it helps the economy in generating the immediate and large scale employment
opportunities from the low investment and also it eradicates the unemployment problem of the
country. This industry encourages the dispersal of industries in all over the countries that
includes small towns,villages and the region where economy is lagging. Example local tailor
shop in the locality.
Medium enterprises
this type of entrepreneurs are also called Small medium enterprise by the European
commission they are having less than 250 employees in the organisation and their capital and
voting rights of 25% or more is owned by one enterprise.
Purpose: they play the significant role in emerging the economies as they generate the major jobs
in these economy most of the people will find the job in this enterprise. They generate the
employment opportunities.
Large entrepreneur
Large company grow through the sustaining innovation .new product development, they
always take care about the changes of taste and preferences of the consumers, recent new
technology etc. sometimes they create the entire new product and sold it among the new
customers. They require huge capital and their business is very large in size and culture make
extremely difficult to execute. Example of large business are Walmart , Microsoft, Citigroup etc.
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Purpose : their purpose is to influence the social or political policy. They have investigate the
effects of bigness upon labour, consumer and investors.
Social Entrepreneurship
They are the innovators whose focus is to create the products and service to fulfil the
social needs, they are responsible towards society and their aim is to make the world a better
place. Their goal is not to take the market share or make the business more profitable. This type
of entrepreneurs are might be profitable ,non profitable or both. Their goal is to serve the society.
Example of this types of entrepreneurs are Gravity Light, speak set etc
Scalable business
As start-ups are growing very fast in recent years , they can be any kind of company that
has the potential to grow and can have a stake in large market. This type of business is having the
ability to handle when the market demand increase,they will increase the sales volume and from
this they improve profit margins. Their main characteristics are Low cost in customer
acquisition, low investment and low incremental costs, Economy of scales applies toproduct
development, requires few people for the operation. Examples of scalable start-ups are Silicon
valley, shanghai etc.
Entrepreneurial ventures relate to the typology of entrepreneurship.
Entrepreneurial typology are basically related to the human behaviour. Typologies are
developed by the researchers as they are used for behaviour of the group as they have been
developed from different methodology and samples. Typologies were used to understand the
nature of a relationship between the type and its subject and also useful to identify the
competencies required for the professional application. For the entrepreneurs and small business
they will dictate about the activities they have to perform to make the business more efficient.
P2 Explore the similarities and differences between entrepreneurial ventures.
The similarities between the entrepreneurial ventures are
As all the business are operating in the scale of economy so they must have some similarities as
all the ventures have to take the risk to make the business more profitable.
Some of the similarities are:
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Financial Goals
Most of the business are looking to achieve the financial independence by making their
business profitable and can generate the regular income. All the entrepreneurs wants to make
their business to run long and can pass it to the next generation. The aim of all the entrepreneurs
is to make the wealth creation so the business will become more strong. Small and micro
business are having the goal to do the growth as it was their main focus. Large and medium
business are more specific towards the financial growth.
Leaderships
one of the most common similarity among the entrepreneur is that they all are visionaries,
the way they can see their business in a future no one can imagine. Entrepreneurs knows how to
keep employees motivated and make them accountable for their work. In small and micro
business they are having the one leader and every one listen to them but in the case of large and
medium enterprises they adopt the leadership style for the particular situation.
Management Strategy
All the entrepreneurs are being misunderstood that they take the risk without any
plan,some says that they are the veterans but in reality they wants to develop the innovative
ideas, service or product with the minimal loss and waste . Every business is having the strategy
but for the micro and small business they do not have to adopt the partyicular strategy to amnage
the business but for the large organisation like Walmart they apply the management strategy to
manage the organisation on daily basis.
Code of ethics
Every entrepreneur will work under the code of ethics. As every business has the mission
and values towards the business and they must know what is wrong and right and all type of
venture must know to follow the ethical principles and code of conduct they should not perform
beyond the code of ethics. In organisation like walmart and
Difference between the entrepreneurial ventures are
Small Large Social Scalable
Size They have not They more than The size of the They also dont
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more than 10
employees
500 employees employee
depends on the
nature of business
have large
number of
employees
Risk Low risk High risk Moderate risk Low risk
Legal formality Less legal
formality
They have to
fulfil various
legal formality
and compliances
according to the
nature of business
process They have not
any define
process
They have a
define workflow
process
They also have
the process
They are not
having any
defined process
they will develop
the process and
than do work on it
LO 2
P3 Interpret and assess relevant data and statistics to illustrate how micro and small businesses
impact on the economy
Small businesses are important in various types of aspects such as job creation,
community support and entrepreneurship. The following aspects shows the positive impact on
economy and society.
11 Economic Growth: Not all small businesses remain small for e.g. Wal-Mart, Burt's Bees
etc. started as small but later they created a major impact on economic growth both in
national and international market.11 Mapping the Future: Innovation and growth are the essential keys of small businesses and
contribute to local economies by their entrepreneurial spirit by attracting individuals who
invent new products or ideas or improve the old products.
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11 Giving Back: The small businesses pay their taxes to support the community. This tax
helps school, government officers, police and fire department.
Micro and small businesses are those which have employees fewer than 500 and
exceeding it will make difficult for any business. The impact of small business on the national
economy are incredibly difficult. As mentioned in 2018, there were 5.7 million companies in the
UK, an increase of 5.5 million in the previous year. This number has increased every year since
2000 and will certainly continue to do so. As stated, 99.9% of UK private companies are SMEs
and it's just that, only 0.1% of British companies employ more than 250 people and they don't
have a medium surplus company. According to government statistics, only 0.6% of UK
businesses are classified as intermediate. This means that 99.3% of businesses in the UK are
small companies with fewer than 50 employees. But we still have to look at other categories of
companies. In a small business niche, they have a micro company (0-9 employees) representing
96% of all private companies in the UK. True, 96% of businesses in the UK have fewer than 10
people.
Conclusion:
This graph depicts that it shows that small business and micro business contributes highest in the
economy as it increases the rate of employment and also it eradicates the poverty from the
country and at the same it increases the standard of living in the society.
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Illustration: Growth in UK businesses impact on economy
Source: UK SME Data, Stats & Charts, 2018.

In 2016, the total turnover of SMEs in the United Kingdom reached £1.9 trillion,
representing 51% of private sector turnover in the year under review. The average SME with
sales of less than £25 million in the UK will get £8,000 per year from 2016 onwards, according
to a survey of 18,000 SMEs of this size. However, there is a clear correlation between company
size and average annual profit. Because of the large volume of retailers and micro businesses in
the UK, even non-employee companies remain very close to an average of £8,000. Companies
with 1 to 9 employees generate nearly double profits from non-employees, and profit margins for
small businesses with 10 to 49 employees are almost four times higher. As expected, SMEs with
50 to 249 employees achieve the highest profit of almost 200,000 GBP per year. These statistics
illustrate how important it is to grow your business from time to time if you want to significantly
increase your profit margins. It is very difficult for companies to maintain their size and increase
productivity significantly.
7
Illustration: Average profit of SMEs
Source: UK SME Data, Stats & Charts, 2018.

As in the economy both the business that is small and large both plays the critical role in
the economy. Infact the large business are 1000 times more than the large business and
contributing the major part in the growth of the economy. As small business are the backbone of
the country as they drive the forces on creating the job. Moprever the firms are having 1 to 4
employees that creates the more opportunity in business. Entrepreneurs of micro and small
business has created the positive scenario and impact positive in the development of facing the
challenges that is limited skills, logistics and having the acess in finance and market.
P4 Explain the importance of small businesses and business start-ups to the growth of the social
economy.
“Social economy is generally seen as the third sector of mixed capitalist economies that are not
private and public.”
Economists concluded that small businesses and start-ups are some of the important influencers
for the growth of economy, as big business may come and listed in the stock market but the
small industry contributes in the growth of the economy and keep the economy growing . Small
business create the job opportunities in the economy.
The importance of small business and start-ups in the growth of economy are
National Economy
Small business creates the competition in the near sales areas and make the market
competitive. For example a farmer may offer the product at cheaper rates as the do not have
much amount to spend on shipping. A start up who is moving quickly may be able to innovate
the new technology and make the prices more competitive and force changes and the behaviour
in thinking. It helps to foster the national economy.
For small business this term is not sounds bad as many start ups and small businesses
eventually fail in the initial phase. But the turnover gives the chance to community to learn
which business is beneficial in long run and driving new growth. small businesses and start-ups
keeps the economic growing and make the economy strong. Anyone can think to start the
business as there is no perfect time, you have to take the initiative at some time. As this type of
entrepreneurs keep the market alive.
Social Economy
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Small business also creates the opportunity to local people, as they operate locally so they
hire the near by people. The small businesses are more powerful than large business as they don't
create the job opportunity because large business generally move to the territory if the grows
large.
Regional economy
Small business are more flexible and can be started by anyone. It makes them more
diverse in function, culture and have a potential than a larger corporation. Greater the
diversification makes the economy more stronger. Small business help regional economy in
balancing the development of the people of those areas.
Small business and start-ups helps the economy to become more strong and contribute in the
economy by bringing growth and innovation in the economy in which the business operates.
Small business helps in to stimulate the economic growth by creating the job opportunity as well
it also increase the standard of society. It creates the employment opportunities as many people
don't deployed in the larger organisation can easily employed in the small business.
LO 3
P5 Determine the characteristic traits and skills of successful entrepreneurs that differentiate
them from other business managers.
The characteristics of successful entrepreneurs that differentiate them from business managers
are :
Risk taking ability
Entrepreneurs never waste their time in failure and they never look back. Risk taking
skill present in every entrepreneur as it make the business more successful. Decision to take the
risk is sensible decision taken by entrepreneurs even they know it is disgraceful on surface but it
is as much as important to succeed. As they are the owners so they have to bear the financial risk
and all other kind of risk associated with it. In contrast of entrepreneurs the managers are held
liable only for salary they just have to do work hard and manage the day to day routine of office.
For example, Cesar Salazar, 27, founded first company as a scholar in Sweden. Cesar's current
project, VC Mexico, focuses on financing and support from Mexican startup companies.
Visionaries
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Entrepreneurs are visionaries of an organisation and the way they see the organisation no
one can even imagine. They are the visionaries who converts the idea into a business. On the
other hand as manager are the employee of the company so he don't need to make any visions of
the company,he works for the salary so he don't have to bear any risk.
Expansion of business
As entrepreneurs are the owners of the company they always have to work for the
expansion of business. In contrast of entrepreneurs managers only focus on the smooth
functioning of the organisation and the approach of working towards organisation is always very
different.
The traits of successful entrepreneurs that differentiate them from business managers
are :
Strong Leadership quality
As leaders are those someone those who values the goals and work hard to achieve them,
leaders are just more than sticking to one thing. Leaders has the ability to mass a team of people
and make them to achieve a common goal. Leaders earns the trust and respect of his team by his
positive work qualities. Key motivation for entrepreneurs is to accomplish the achievement but
the motivation of manager comes from the power that is being come with their position.
For example, Luke Johnson, the famous "serial entrepreneur" who runs British restaurants,
including Pizza Express, Strada, and Patisserie Valerie (Are entrepreneurs born or can they be
taught, 2019).
Strong sense of basic ethics and integrity
Entrepreneurs always wants their business to be perpetual succession and goes in a long
run. As business is sustainable because they understood the code of ethics. As the business is
operating in the society so the have to follow the proper code of ethics and maintain the dignity.
while the managers don't have too look over the code of ethics they just take proper care that
every one is following or not and liable for the work assigned to him.
Skills of successful entrepreneurs that differentiate them from other business managers.
Identification of opportunities
Entrepreneurs are the person who identifies the opportunity and evaluate the opportunity
This is one of the most difficult task. Entrepreneurs does not starts with the creative concept of
new product and services. It often begins with the identification of the opportunity at the right
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time. While managers only identifies the opportunity within the organisation as their vision is not
as vast as entrepreneurs.
For example, there are fewer opportunities in traditional professions, and needs are the mother of
discovery, "said Musa, a former Goldman Sachs banker, who also advised former British Prime
Minister Gordon Brown.
Efficient decision making
Major decision of an organisation is being done by the entrepreneurs they have to analyse
the project that which project will be feasible for the growth of an organisation. All the financial
decisions being taken by the entrepreneurs itself . while managers only have to take the decisions
of working of the employees not as a whole.
P6 Assess how aspects of the entrepreneurial personality reflect entrepreneurial motivation and
mindset.
The Big Five personality traits for an entrepreneur personality which is also
known as Five Factor Model (FFM), and this traits are found after empirical and data-driven
research. Goldberg initiated it to the higher level of organization and known as OCEAN. This are
five domains which defines entrepreneurial personality like Richard Branson and Peter Jones and
account for individual differences.
11 Openness : Entrepreneurial mindset can be indicated by this trait as it tells us about how
open minded and authority challenging a person. Most of the entrepreneur have this
quality which helps them to feel motivated towards their goals. Richard Branson and
Peter Jones both have this quality as they have clear thoughts and open to everyone. The
both have ability to think and delegate. For example, when Richard Branson started its
Virgin Airlines had faced many challenges, but he never gave up and at last it became the
successful business (Sadeghi and Biancone, 2018).11 Conscientiousness: Self-disciplined and organized qualities of entrepreneur is indicated
through this trait. As it shows the enthusiasm towards their work and reflect their
motivation and mindset towards the code of ethics and values they follow within their
organization. Branson and Jones both were organized towards their work and follow their
ethics and values. For Example, Peter started the TV production company called Peter
Jones TV and follow the work with proper discipline in order to grow its business.
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11 Extraversion: This is the biggest trait that affect entrepreneurial personality as it tells us
about how out-going and social a person. By being an good extrovert it helps them to
make a good relationship with their teams and customers. For example, Branson and
Jones were both social, they love to interact with the society and attract them towards
their work. They have the quality of affection which maintain their relationship with
everyone. For example, Richard Branson always treated the social media with respect
even when the business called Virgin cola got failed and maintains the relationship with
the people.11 Agreeableness: It indicates how warn, friendly a person. Entrepreneur must have this
quality to build relationship with their employees and customers.
For example, Richard Branson and Peter Jones both had a friendly relationship with their
employees and always keeps employees before customer. They were both humble and patient
with their employees and customer.11 Neuroticism: It indicates person's ability to remain stable and calm. With this
entrepreneur can handle the failure or any situation with calmness and stableness without
demotivating the team.
For example, Branson and Jones both had failure in their business like Virgin cola and
computer business but they learnt from it and moved ahead keeping their mind stable and
calm. They both had self-belief which led them more successful in their future growth.
They don't think that worst thing will happen and always try to stay positive in every
situation even when it worse or negative.
LO 4
P7 Examine, using relevant examples, how background and experience can hinder or foster
entrepreneurship.
Some successful entrepreneurs came from low family background and have seen high
and lows in their entrepreneurship which is the most common factor in entrepreneurial life. The
best examples of entrepreneurship are Richard Branson and Peter Jones as they are both in the
list of successful entrepreneur. Richard Branson has experienced ups and downs in his
entrepreneurial phase, but success cannot be achieved without failure. One of the biggest
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obstacles faced by Richard Branson in the early stages of his life, who struggled with dyslexia,
had a much lower interest in this study, and had difficulty with educational institutions.
For example, Richard Branson's family was financially weak and faced financial
problems and quit education and started its own magazine called Student. This experience
changed its life dramatically, even without training, the magazine trembled and made him an
entrepreneur and began selling it to local businesses. If student magazines don't make enough
money, cash flow is a problem, and then they choose to be more flexible and spinning, get a
degree in a successful field called music and become the billionth and that is known as "Virgin
Records."
For example, Branson launched Atlantic Airlines, but the first flight failed due to engine
failure because the flight was canceled and the company did not have enough money to repair it
without a certificate. Instead of panicking and giving up Branson, he remained optimistic and
collected money from various companies and raised money to fix it immediately. Then the new
flight is called the Jungfrau takeoff flight and it will work.
Peter Jones also faced problems from the start because financial problems and the
experience got during the trip made Peter fall after losing its initial business. Peter started the
computer business in the early 1920s and was successful but the business had to face the worst
times and possibilities. Since then, Peter opened a cocktail bar and started computer maintenance
at the same time, which failed even in twenties and had no money, no cars or even homes.
For example, the worst was three years ago, Peter had pneumonia and had difficulty
breathing and living with antibiotics. In fact, Peter gained attachments and underwent training
for that. Peter's next venture after leaving the company was creating Phone International Group,
which offers cellular and cellular solutions, a successful business and made $ 21 million in first-
year income. Companies in Europe, and in 2006 had a turnover of more than 220 million US
dollars.
Both the entrepreneurs had the same family background and experiences which positively
influenced them to successful entrepreneur. They both came from the poor family background
and experienced failure in their first start-up business but never gave up on their dreams.
CONCLUSION
The conclusion is been drawn from the above project report is that Entrepreneurs are the
creators of the innovative products in the market. Enterprise's brings newly creative and
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innovative ideas in the market. By introducing new products in the market they generate profits
and revenues. It is been concluded that entrepreneurship always seeks for growth and
development options through performing diversification and mergers in their business. The
social entrepreneurial ventures serve the society by offering innovative products which provides
solution to resolve social problems of the public. It is also been concluded that Micro and Small
Businesses contributes to the economy. They offer new employment opportunities to the public.
The conclusion is being made that every successful business is lead by an entrepreneur.
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REFERENCES
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Dana, L. P., 2018. ENTREPRENEURSHIP & SMALL BUSINESS.
Goss, D., 2015. Small Business and Society (Routledge Revivals). Routledge.
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and medium enterprises–literature review of past trends and future directions. World
Review of Entrepreneurship, Management and Sustainable Development. 14(3). pp.312-
332.
Idris, B. and Saridakis, G., 2018. Local formal interpersonal networks and SMEs
internationalisation: Empirical evidence from the UK. International Business Review.
27(3). pp.610-624.
Kraemer-Eis, H. and et.al., 2018. European Small Business Finance Outlook: December 2018
(No. 2018/53). EIF working paper.
Lee, Y. S., 2018. Government guaranteed small business loans and regional growth. Journal of
Business Venturing. 33(1). pp.70-83.
Sadeghi, V. J. and Biancone, P. P., 2018. How micro, small and medium-sized enterprises are
driven outward the superior international trade performance? A multidimensional study
on Italian food sector. Research in International Business and Finance. 45. pp.597-606.
Smith, I.J., Tether, B., Thwaites, A., Townsend, J. and Wynarczyk, P., 2018. The performance of
innovative small firms: a regional issue. In New Technologies and the Firm (pp.
54-82). Routledge.
Online
UK SME Data, Stats & Charts. 2018. [online]. Avalaible through
<https://www.merchantsavvy.co.uk/uk-sme-data-stats-charts/>
Are entrepreneurs born or can they be taught?. 2019. [online]. Available through
<https://www.bbc.com/news/business-23157638>
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