Impact of Economy on Micro, Small and Medium Enterprises

This assignment provides a comprehensive analysis of the impact of economy on micro, small and medium enterprises (SMEs) in the UK. It includes references to various studies and research papers that discuss the importance of SMEs in job creation and economic dynamism, as well as their role in increasing GDP. The assignment also touches upon social entrepreneurship and its relevance in today's business landscape.

Entrepreneurship and Small Business Management

Table of Contents
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................2
P1 Different types of entrepreneurial ventures which are related to entrepreneurship..........2
P2 Similarities and difference between entrepreneurial ventures..........................................4
P3 Interpret relevant data and statistics to illustrate how micro and small business impact on
the economy............................................................................................................................6
P4 Explain small business and business start-ups to growth of the social economy.............8
TASK 2 ...........................................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
An entrepreneur is a name given an individual who initiates a business idea and further
converts it into a successful business venture. Main aim of any person who becomes and
entrepreneur is basically earning huge amount of profits along with a certain quotient of risks
involved in it. (Ács and Szerb, 2014). Such individuals are known for their innovative ideas and
approach which they bring in with themselves. These innovations earn a great amount of profits
for them in competitive markets. This report is framed on the basis of Redbridge .
In Redbridge which is in Ilford, London, there are many enterprises in Redbridge which are
running their business activities in housing, clothing and restaurants, etc. In present day context,
this report focusses on different entrepreneurial ventures along with their similarities and
differences. This report also throws light on impact of both micro and small businesses on
economy of a country along with key traits of entrepreneurs that make them successful.
TASK 1
P1 Various entrepreneurial ventures and their relation to entrepreneurship.
Any new or freshly started company that runs at a quite lower level is referred to as a
business venture. Entrepreneurship or business ventures lay a significant impact on enhancing
overall economy of a nation. Also they help in reducing unemployment or poverty of a country.
The enterprises in Red bridge undertake numerous activities or business operations that
cannot be performed by entrepreneur himself so it is quite important that businessmen or
entrepreneurs employ a satisfactory amount of employees who are capable enough for
performing business operations in an effective manner. This can only be possible when
entrepreneurs and employees work in absolute harmony with each other and have clarity about
mission and vision of their business concern.
There are some Entrepreneurial ventures which are classified below -
Small business entrepreneurship
Any business venture that is privately owned by a single individual and has quite a lesser
number of employees is referred to as a small scale business venture. Also their sales volume is
expected to be quite lesser in number. Small scale business concerns are generally private
owned businesses. They can either occur in partnership form or sole proprietorships. Main aim,
of these firms is meeting demands of customers so that their overall profitability can further be

enhanced. (Blackburn and Wainwright, 2013). For example, Sole Traders can easily operate
their functions in small business entrepreneurship as sole traders and have simple structure of
business and low-budget setup.
The individuals are serial entrepreneurs who comes up with unique ideas to managing
innovation and meeting needs of society. This sector has wide area of scope to provide
qualitative and innovative products and services. This will benefit them to effectively develop
their business and achieve high growth. Main advantages of sole trader businesses is that it can
be set up easily with small amount of funds. Along with this the business structure can be easily
changed according to market demand.
Social entrepreneurship
Social entrepreneurship refers to a business venture that uses or employs certain commercial
strategies with a motive of initiating or bringing about a change in social, financial, and
environmental well-being. Social entrepreneurship initiate with a motive that is enhancing
overall impact that may occur on society as a whole. Changes can either occur on social aspects,
financial as well as environmental factors. Main aim of social business ventures is such that
performance and overall status of people residing in a country can be enhanced.
Scalable start-up entrepreneurship
Scalable business venture refers to a business at begins or initiates as an e-commerce
platform in which transactions can either occur in two ways that is business to business or
customers ( consumers) to business. The growth of this type of venture is noticed as per the time
passes. The individual who run this venture have the ability to generate funds from many
financial resources. The major purpose of this venture is to enhance the standard of living by
providing qualitative goods and services.
For example, in scalable start-up entrepreneurship owner is the only authorized and responsible
person who managers and control top management functions of company. They work effectively
as to increase revenue without implementing sky high cost in their start up ventures. These
ventures remain to be perform in small scale as they aspire to become a great prospect business
organisation.
Aggressive Development Ventures
Aggressive development or business ventures are a part of scalable business ventures. In
this business venture\, entrepreneurs are such that are capable enough of initiating their business

ideas so that better quality gods and services can be provided to customers. This further helps in
enhancing overall customer base . An example of such a business is joint ventures where profits
and losses are shared based on capital invested.
Large business Entrepreneurship
In other words, this is also stated as corporate entrepreneurship. The firms which are
owning this venture are working for a big level and aiming to achieve high sustainability in the
marketplace. Entrepreneurs of large business ventures are capable of managing their businesses
all by themselves. Also they can undertake any sort of risks that may occur during such business
operations.
For example, intraprenuers is a person who act as a manager within a company they
promote innovative product development and marketing. They are encouraged by organisation to
develop their innovate ideas while being employed within a company. Organisation support them
on the basis of funds and human resources. Intraprenuer mainly focus on developing creative and
innovative ideas into a most profitable ventures while operating their functions in organisation
environment.
P2 Similarities and difference between entrepreneurial ventures
The enterprises discussed above have some distinctions and similarities which are stated
as below:-
Differences
Small v/s large business enterprise
Basis Small Business Enterprise Large Business Enterprise
Scope They operate at local level. They operate at national or
international level.
Size They are smaller in size when compared
to large business enterprise.
They are relatively larger in size than
small business enterprise.
Employees They have lesser than 250 employees. These enterprises have 250 or more
employees.
Social v/s Scalable

Basis Social Business Enterprise Scalable Business Enterprise
Scope Social enterprises work to resolve
the issues faced by peoples.
These firms serve to large number
of customers for the enhancement
of their sales and profitability.
Functions They don't just function for
economic motive (profits) but also
work for creation of social as well as
economic resources for community.
Their major function is to enhance
the standard of living of people by
rendering goods and services of
optimum quality.
Lifestyle and survival Entrepreneurial Venture
Basis Lifestyle Entrepreneurial Venture Survival Entrepreneurial Venture
Scope Lifestyle entrepreneurial ventures
typically have limited scalability and
possess less potential for business
growth
The major objective of these
ventures is to basically survive so
as to meet the financial obligations
of venture.
Functions These businesses functions so as to
sustaining a specific level of
income.
These ventures are used for
survival and fulfilment of basic
needs.
Similarities
Lifestyle and survival entrepreneurial ventures:
BASIS Lifestyle Survival entrepreneurial
venture
SCOPE Life style ventures perform their
business operations as to achieve
growth and profit.
Survival ventures operate their
functions as earn profit and
goodwill.
SIZE They don't have wide size. Survival ventures perform

their business as to survive so
they did not have more
wideness in their size.
Social and Scalable:
BASIS Social Scalable
SCOPE Social entrepreneurs run their
operations in wide area which
includes rural and urban areas.
These entrepreneur ventures
provide their facilities in urban
and rural areas.
FUNCTIONS They perform their functions
as to reduce social problems.
Scalable enterprise run their
business operations to erase all
problems and issues faced by
society.
Small and large enterprise:
BASIS Small Large business enterprise
MOTIVE Small business enterprises run
their business as to satisfy
needs of customer while earn
profit.
Large enterprises aimed to earn
large amount of profit while
satisfying needs of customers
in great extent.
FUNCTION Small business enterprises
perform their functions in
large marketplace.
Large business enterprises run
their business functions on
large platform with great
opportunities.
P3 Interpret relevant data and statistics to illustrate how micro and small business impact on the
economy
Micro and small businesses are backbone of United Kingdom economy and mainly
contributes large deal in terms of employment creation. For example, data published by CBI
(Confederation of British Industry) showed that approximately 89% of small and medium

business sector contributes up to 99.9% In private sector businesses. In total, number of small
and micro business sectors operating in UK is 3.1 million. The Redbridge enterprises helps in
generating large amount of revenue for government and provide various opportunities for young
generation to get sustainable jobs.
Illustration 1: Impact of Economy on UK
(Source: Impact of Economy on UK, 2018)
From the graph stated above, it has been made clear that just after when Brexit took
place, it was measured that about 88.2 percent rises took place in micro industries of United
Kingdom. Also, that, the comparison took place with GLLCP then it is identified that the growth
is very faster and the rate of growth is 0.6 percent.
That's why it has been analysed that, small and medium enterprises are laying a q quite
significant impact on economy of UK as compared to other business concerns.
Business ventures and their ratio in UK:
In United Kingdom, total gross value of small business sectors approximately stands at
439.09 billion Pounds, which collaboratively represents 50.1 per cent economy of UK. Whereas,
micro business sector contributes up to 4.5 million business units in United Kingdom. Both of
these business sectors play an essential role in creating job, employments, creating new markets
and contributing effectively in economy of United Kingdom. Small and micro business sectors
help in bringing new and advanced innovation and adaptability thorough contributing in higher
rate. UK Government figures, revealed that these companies approximately accounted for 49.1

per cent and generating turnover for about 85%. Small and micro businesses sectors not only aid
UK to gain effective amount of foreign currency but also helps in strengthening economic
backbone of country. There are some impacts described below:
Job Creation: Contribution of small and micro business sector in terms of employment
in United Kingdom is phenomenal. Authoritative data published by government revealed that
approximately 2.51 million employment opportunities and jobs are created in every subsequent
year (Kuratko, 2016). These types of companies help in providing job security to those
individuals who have difficulties in getting and securing their jobs. Official government figures
of UK showed that total number of females are working in this sector is 55.1 % which is
remarkable as it provides women empowerment culture in country.
Contribution to Innovation: Small and micro businesses continuously keeps on
bringing creativity and growth in communities in which they serve. Small companies provide
various great deal to large companies by giving them effective resources in order to complete
their business operations in qualitative manner. Official government websites showed that small
and micro sector bring about approximately 55.2 % new innovation in UK environment. These
units magnificently attract new and fresh talents to create more innovative products and services.
These industries not only aim to generate more profit but they passionately invest their time in
bringing and implementing different numbers of innovative improvements in their existing ideas.
(Source: Medium, Small and Micro Enterprises, 2019)
P4 Analysis of small scale business ventures along with growth of social economy.
When Britain left the European Union it was referred to as Brexit. Voting done in 23
June, 2016 ended with 51.9% in the favour referendum. In this, Wales and England voted to exit
but Scotland and Northern Ireland decided to stay back in EU. This results in, immediate effects
on economy on UK by collapsing Euro down to 10% and increased in inflation rate up to 1.8 %.
Country was adversely suffered from less foreign trade which results in non-contribution of
Britain in EU budget.
Illustration 2: Medium, Small and Micro Enterprises

There was short term decrease in income and productivity was affected in long term
manner. The Centre for Economic Performance revealed that country income level falls in
between 4,200 to 6,400 pound. This separation mainly affects the performance of small and
micro level business units. By increase in the rate of labour turnover which affects productivity
of company in great manner. Small and medium level businesses firms help in bringing great
innovation and contributes effectively in country GDP (6.1 %) by increasing per capita income.
Therefore, it is essential for Government to create various new businesses in order to revive
country economy. It is required for government to provide various opportunities to help new
entrepreneur to aid them in meeting their goals and grow. Government can also take advantages
from online websites to provide advice and finance options to these businesses sectors. It will
result in enhancing employment opportunities and reducing poverty rate. In addition to this, this
will benefits government to strengthen their economic and social development.
Firms in small and business start-ups aid in improving overall employment rate of UK up
to 2% and provides more than 1.4 Million employment opportunities (UK Small Business
Statistics, 2018). small business sector effectively contributes in private sector business by
99.3%. overall number of employing business increased nearly about 23, 000. In addition to this,
there were more than 5.6 million small businesses sector by the year 2018.
TASK 2
Covered in PPT
CONCLUSION
From the above mentioned report it has been stated that entrepreneurship is a major
aspect that focusses on individuals who tare capable of taking risks and also have traits to
become and successful entrepreneur. When a person believes that their innovative idea can
change and provide benefits to society or world in any way then he becomes an effective
entrepreneur. This project, showcased core concept of entrepreneurship their ventures and their
overall contribution towards society and nation. There are various kinds of ventures such as,
micro, small and large business sector that acquire vast area in market and aid economy of a
country by increasing its GDP.

REFERENCES
Books and Journals
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Online
UK Small Business Statistics. 2018. [Online]. Available Through:
<https://www.fsb.org.uk/media-centre/small-business-statistics>.