The Role of SMEs in Today's Economy

The assignment explores the role of SMEs in today's economy, highlighting their contributions to job creation, innovation, and economic growth. It discusses the challenges faced by SMEs, such as access to funding and resources, and examines the importance of government support programs for these businesses. The assignment also considers the impact of digitalization on SMEs and the need for them to adapt to changing market conditions.

Entrepreneurship &
Small business
management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types of entrepreneurial ventures and how they relate with typology....................1
P2 Similarities and differences between entrepreneurial ventures.............................................3
TASK 2............................................................................................................................................5
P3 Interpret data to define the impact of small businesses on an economy................................5
P4 Importance of small businesses to the growth of social economy.........................................7
TASK 3............................................................................................................................................8
P5 Characteristic, traits and skills of successful entrepreneurs...................................................8
P6 How entrepreneurial personality reflect their motivation and mindset...............................10
TASK 4..........................................................................................................................................11
P7 Using relevant examples, how background and experience can hinder or foster
entrepreneurship........................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The term entrepreneurship consists with the tendency of an individual towards organising
their own business and to run it effectively and profitably by using all styles of leadership,
managerial calibre and decisions making. Thus, the concept of entrepreneurship refers with
development and coordination of entrepreneurial functions by using new and innovative
techniques, An entrepreneur is the person who bears all business risks and uncertainties which
occurred in running a business unit smoothly and efficiently. Small business entities are
developed in order to sustain numerous benefits from target market; these associations are an
integral part of Britain by capturing 99% areas of business (Carraher and Paridon, 2015). In UK's
economy, there are several small business entities are being establishing and increasing day by
day, they are also liable for providing job opportunities to people and improving the living
standard of people. Apart from this, the coursework is going to be described various
entrepreneurial ventures and its typology. A research will conduct to interpret the impact of
small businesses on an economy. Readers will also come to know about various characteristics,
traits and skills of an entrepreneur which makes them able to take market risks and become
successful in future. Entrepreneurial personality will be discussed through OCEAN model as it is
needed for effective entrepreneurship.
TASK 1
P1 Different types of entrepreneurial ventures and how they relate with typology
Entrepreneurship entails with process of coping and evolving a new business venture by
having a specific aim to obtain profits and become successful to take several risks. In simple
words, its a study of how new businesses are created and what is the actual process to start a new
venture. On the other hand, an entrepreneur is the person who has an idea to innovate an unique
product or service which is worthy for people and able to satisfy their needs and wants in the best
possible manner. Entrepreneurs also focus on improving market image of their business by
providing them new and innovative products. Along with this, entrepreneurship starts being able
to take initiatives and have a courage to persevere and commit by all threats and failures (Desai,
2013).
Entrepreneurship is an ability to understand and determine business areas where there's
opportunity to make someone's life better; basically it is an experiment that is done to make
better living standard of society. Henceforth, it is essential for people to demonstrate the bridge
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at marketplace and create goods or services accordingly thus to satisfy desires of target audiences
and improve their living standard. It will also support them to
There is defined various entrepreneurial ventures that are defined as beneath: -
Scaleable start ups entrepreneurship – These are newly created firms which highly
focused on research and development activities. A digital marketing start up company is a
scaleable start up as it is based upon high technology or innovations. In addition, the basis
purpose of these organisations is to find out new technologies which enables to make easier
individuals' life (Fayolle, 2013).
Small business entrepreneurship – In current aura, Britons are following a trend of
creating and executing a small business just to fulfil their basic financial needs; implementation
of such entities does not require high capital or investment. According to market research, there
is over 5 million new starts ups are smoothly running in UK. Small business entities also render
an upliftment to economic condition of the nation through eradicating social issues like –
poverty, unemployment and so on. These entrepreneurs are honestly fulfilling their corporate
social responsibilities as well thus to capture market interest.
Social entrepreneurship – This type of entrepreneurs are known as innovators or creators
who focused on transmutation of status quo across the globe thus to make it a finer place. In this
way, social entrepreneurs develop several programmes with an aim to carry out certain positive
changes in wider communities as well as empowering them for social improvement and deepen
its influence upon societies. As similar as scaleable start ups, social entrepreneurs also work to
enrich lives of people by providing them effective resources.
Large entrepreneurship – It comprises with pre-existing firms which are focusing upon
developing new ideas and identify opportunities in other areas thus to expand business activities
and functions. The main objective of large business enterprises is to gain a competitive position
at marketplace. Radical needs or wants of customers and invention of new technologies put
pressure upon corporation and they move ahead to corporate entrepreneurship.
Typology of entrepreneurial ventures: - Serial entrepreneurs – It comprises with those business owners who come up in market
by having unique or innovative ideas to generate effective products and services. Serial
entrepreneurs are willing to participate in completion of daily working activities or
operations of their organisations (Drucker, 2014). Along with this, the prime motive of
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these entrepreneurs is to develop their venture which generate high profits and revenues
in less time period; they align responsibilities to other who have ability to work in an
effective manner. The copycat entrepreneurs – Usually, these kind of entrepreneurs are copied to other
businesspersons; they follow their strategies and success mantras to apply the same in
their own business organisation. In this modern aura, it is so easier to find out others'
confidential information and use it for own growth and success. Its a mentality of copycat
entrepreneur, to acquire others' key policies of doing business also helps them to obtain
high growth and success as well as accomplishing their career goals and objectives. The researcher entrepreneur – These entrepreneurs are the person who love to learn
always and assess the things. Researcher entrepreneurs think that research make them
able to compete with external rivals and they will easily obtain high competitive edge.
Before applying in strategy in business, such entrepreneurs do proper research on specific
subject area and identifies its pros and cons (Hlady‐Rispal and Jouison‐Laffitte, 2014).
Thus, learning helps researcher entrepreneurs to face all future challenges and threats.
 The determined entrepreneur – Such kind of entrepreneurs are highly devoted to their
work and activities, they are consenting to do any business activity in proper way
although, a determined entrepreneur believes that success cannot be obtain by copying
other, in this relation they developed their own ideas or strategies thus to becomes
booming in market.
P2 Similarities and differences between entrepreneurial ventures
Every entrepreneurial venture have its differences and similarities as per their size, scope,
nature, aims and objectives. Following is discussed similarities & differences
Basis Similarities Differences
Small and large
business
enterprises
Small and large, both business
associations are established to obtain
high market profitability and sales
revenues. In this relationship, their
entrepreneurs offer qualitative and
value added products thus to grab
attention of large group of audiences.
With the view of diverse bureaucratic
level, large scale business
organisations are required more time
in making any decision due to wide
functional areas. Whereas in small
business entrepreneurs do not take
much time while making business
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Furthermore, small and large business
enterprises also fulfil their corporate
social responsibility in the best possible
manner (Kiss, Danis and Cavusgil,
2012).
decisions; this aspect helps such
enterprises to grow at fast pace in
comparison with large organisation.
Apart from this, small businesses
have ability to take high risks because
they have enough capital to deal with
such issues whereas small business
associations cannot bear high market
risks due to their less working areas
and low cost of capital.
Social and
scalable
enterprises
Social and scalable business
organisations are implemented to
deliver something innovative to society.
These start ups are worked to change
the entire world by launching diverse
tools and techniques that enables to
make easier people life and provide
them maximum level of satisfaction.
The main objective of social and
scaleable entrepreneurs is to improve
the level of society and provide them a
new way to live life.
Venture capitalists are easily attracted
towards scalable start ups cause it has
effective co-founding teams and they
maintain a balance between profits
and risks.
Apart from this, the main aim of
social entrepreneurs is to remove
poverty and unemployment within
societies. They focus on resolving all
social issues which affect living
standard of people. Social
entrepreneur develop various events
this to raise social awareness among
people as they can know about their
rights and duties (Kuratko, 2016).
Male and
female
enterprises
In this, similarity signifies that aims
and objectives of male and female
entrepreneurs are same as both are
willing to grab high market growth and
profitability through their products and
Female entrepreneurship aims to
encourage women empowerment
within societies and these enterprises
give employment to women mostly.
It is the mentality of communities that
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services. Along with this, both wants to
capture the interest of an ample amount
of people; it results increase sales
revenues.
Male and female entrepreneurs forms
several products and services that can
satisfy customers' needs and wants in a
pervasive manner.
male entrepreneurs are more
confident rather than female
entrepreneurs; it makes differences
between bother enterprises.
Although, male entrepreneurship
starts for improving living standard of
family.
In addition, male entrepreneurs take
less time in decision making process
whereas female entrepreneurs analyse
and monitor all aspects of business
before making any business decision.
TASK 2
P3 Interpret data to define the impact of small businesses on an economy
It has been outlined that in past decades, undertakings of small business is become a
crucial part in respect of prudent state of a nation. Micro, small and medium scale business
associations are increasing at fast pace as it is liable for economic growth and expansion of
countries like UK. In addition to this, these firms are also getting huge defrayal from government
revenues in order to carry out various functions or operations in the best possible manner. Each
and every that sort of business has a vast impact on UK economy; additionally such business also
supports social development and welfare. On the other side, British government is also bolstering
SMEs in several ways, like – reducing tax rates or duties, flexible process to start a business,
giving them licence very easily and so on as it interpret that new ventures are highly liable for
providing job opportunities to people of UK (Meyer, 2011). In regards to improvising economy
of a nation, such independent entities can took place to affect contrarily or emphatically.
Therefore, government decides to continue ad libbing fare and trade rates, gross domestic
product rate etc.
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(Source: The Role of Startups and Small Businesses in Today’s Economy, 2018)
At the time of economic crises in UK, small businesses were really beneficial to
overcome with this situation and balance the economy of the nation. The contribution of the
service sector to the United Kingdom s GDP has risen from 59 to 72 per cent 2 over the past
couples of years. In the UK, the vast majority of businesses employ fewer than 10 people,
accounting for 33% of employment and 19% of turnover. Within SMEs, micro-businesses (with
less than 10 employees) are booming. There are now 5 million of these businesses in the UK, up
from 3.5 million in 2000.
On the other side, BREXIT there is an ample number of effects has been appeared in UK
economy; at this time government authorised bodies discovers an effective approach to protect
the nation from the influence of BREXIT which is advancement of independent or small
business associations it gives an opportunity to opening wide range small businesses and
eradication of unemployment, increasing trades within an economy (Rasmussen, 2011).
Category Headcount of Staff Balance Sheet Total Annual Turnover
Micro-Enterprises <10 ≤ £2 m ≤ £2 m
Small Companies <50 ≤ £10 m ≤ £10 m
Medium sized firms <250 ≤ £50 m ≤ £43 m
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Illustration 1: Role of SMEs in UK economy

Contribution of Micro and small business on growth of economy of UK
 Job creator – Almost 50% population of UK is involved in non-governmental
organisations whereas 30% population is rendering its services in SMEs. There is almost
6.6 million has executed small and macro business in past years; these aspects helps in
enhancing income sources and booming up their financial stability. Therefore, small
businesses are one of the important source of generating employment opportunities of
UK economy.
 Development of infrastructure – In last decades, SMEs has started to contribute in
evolving infrastructure of underdeveloped areas of a country. With an aim to fulfilling
their social obligations, small businesses provide basic facilities to local communities, i.e.
hospitals, water, transportation, communication and so on (Slavec and Drnovsek,
 Removal of unemployment – When Britain decided to left EU, UK's economy was
faced unfavourable situations. In this manner, government has taken certain corrective
action to remove poverty and unemployment; it gives funds or grants to an individual
starts their own venture and become independent. This can boost up standard of wider
communities.
P4 Importance of small businesses to the growth of social economy
BREXIT is one of the important consideration for UK government, under this UK has
departed from EU. It occurs when more than 50% has voted UK instead of Europe. Before
Brexit, UK corporations are bound to follow decisions of EU government; it had to follow all
laws and legislations of European Unions. It got reduce per capita income of a economy. Apart
from this, several issues were also involved, like – trade barriers at the time of leaving EU. UK
economy was also facing cutting off exports from several nations in Europe Unions.
In this relation, to remove adverse impact of BREXIT government has taken several steps
thus to deal effectively with this situation (Blackburn, Hart and Wainwright, 2013). For instance
– Britain government has removed all restriction on trade which are appeared in corporate
sectors. There is a free entry of foreign investors who can invest in small business organisations
as well, credit facilities at lower rates is also provided to people as people can expand the era of
their business operations. In addition to this, SMEs plays a vital role in growth and
diversification of a nation with regrading of providing them job opportunities and giving chance
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to new innovation, flexibility in trade activities, equal distribution of wealth to all industrial areas
and so on. Improvements in such areas of business put an immense wallop on UK's economy.
Furthermore, Small business associations are considered as backbone of an economy.
Supporting growth of SMEs and start-ups is fundamental for improving economic condition of
the nation, these associations are pursuit to innovation and progress. Small business
organisations combined turnover constitutes almost half (47%) of private sector turnover in the
UK, reaching an annual total of £1.8 trillion. There are three major ways that SMEs contribute
to a nation, i.e. provide opportunity to attain financial independence, create job opportunities and
encourage innovation. Below is defined significance of small businesses on different level: -
 Local level – With an aim to carry out their social responsibilities, SMEs are focused on
growth and advancement of local communities.
 National level – In UK, across 51% of total SMEs are established and contributing 196
billion in GDP rate of the nation. In 2017, it has created 76% revenues and 24%
employment opportunities (Bridge and O'Neill, 2012).
 Regional level – Small businesses are also look out towards manufacturing sector as it
produces economic goods thus to attract numerous customers.
Apart from this, departure of UK from EU business associations has faced of depression
because after this they cannot trade with European countries. Most of revenues of industries in
United Kingdom were come from EU. Hence, to overcome with this situation government of
United Kingdom has formulate several policies and strategies which assists entrepreneurs to start
their new venture. In order to diminishing the adverse impact of Brexit, Britons are establishing
more and more enterprises. As per the research, it is viewed that in 2016 there were 5.5 million
private sector organisations. Government of the nation is also positively contributing to support
small businesses through loans or grants. Therefore, it can be said that small businesses works an
engine of growth which allows government and public both to get goods and services which they
need to grow,
TASK 3
P5 Characteristic, traits and skills of successful entrepreneurs
In order to become a successful or efficient entrepreneur it is essential for individuals to
have certain specific skills, knowledge and traits which differentiate them from others. These
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skills, characteristic and traits helps entrepreneurs to attain their career goals and objectives
effectively. Steve jobs and Richard Branson are the famous personalities; both are a great
inspiration for individuals who want to become a successful entrepreneur in their career.
Following is described main characteristic or traits of these entrepreneurs: -
Passion and motivation – It is one of the most important trait of an entrepreneur as these
people should be passionate and self motivated in order to accomplish all tasks and activities.
Having a great passion to do working activities helps enterprises to improve quality of their work
and identifies various growth opportunities (Carsrud and Brännback, 2011). Beside, a self
motivated entrepreneur enable to lead others and can also provide them guidance to attain
business goals and objectives.
Not afraid to take risks – Entrepreneurs are risk takers and they always willing to dive
deep to face future uncertainties. They make new innovations and create unique products or
services so as to grab better opportunities from target market; entrepreneurs also make attractive
products in order to capture attention of an ample amount of people. For manage future risks and
uncertainties, these people make strategies and policies so as t
Self belief, hard work and disciplined dedication – Entrepreneur believes in themselves,
they are self confident and this is the reason most of entrepreneurs get successful in their career.
Mark Zuckerberg and Steve Jobs got failure so many time but they do not lose believe on
themselves and now both has become a great and successful businessman over the world. Intense
focus of entrepreneurs on their ideas and innovations. Additionally, they are willing to work hard
and defy the odds which makes them palmy.
Adaptable and flexible – Being flexible and ready to accept market changes help
entrepreneurs to deal with numerous situations. Although, if an entrepreneur is inflexible towards
market needs he or she cannot. Effective entrepreneurs, like – Steve Jobs and Mark Zuckerberg
apply all possible suggestions related with optimization which supports to raise their offerings
and meet clients needs.
Creative and determine – Creativity helps to make connections between unrelated
situations and generate something new and unique. Entrepreneurs would be able to often come
up with new solutions and satisfy customers' needs in the best possible manner. Another
characteristic of entrepreneurs is to be determined as they does not thwarted by defeats or failure.
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They find opportunities of success in defeats. Therefore, successful entrepreneurs does not
believes in rumours and focus on their work.
Main skills of entrepreneurs are stated as under: -
Communication skill – An entrepreneur should have strong communication skills thus to
interact with all inside and outside environment of the company. In addition to this, effective
communication skills supports people to take imperative business decisions as interaction with
staff members to share their ideas and views effectively.
Leadership and management skill – It is essential for an entrepreneur to be a good leader
and manage who have capability to manage all tasks and activities in the best possible manner.
An entrepreneur has ability how to influence people to do specific task (Chittithaworn and et. al.,
2011). Mark Zuckerberg and Steve jobs, both have leadership and managerial skills which makes
them able to attain their organisational goals and objectives.
Time management skills – An entrepreneur has good time management skills through
which they can accomplish all tasks and activities on or before their time schedule. Time
management also helps entrepreneurs to review their work and make necessary modifications if
it is required.
Practical skills – These skills are comprises with goal setting, decision making, planning
& organising and so on. Thus, entrepreneurs have ability to set goals and objective for entire
organisation as well as individuals so as to attain market growth and success. For this purpose,
they also make several plans and policies; it helps in coordinating people as they can work
together. Planning is also related with making financial forecasting of the company.
P6 How entrepreneurial personality reflect their motivation and mindset
An entrepreneur personality is same as the leader and manager of an organisation. Each
and every entrepreneur has different personalities which makes them to deal with future
challenges and face all risks in the best possible manner. In entrepreneurship, personality
dimensions has a control upon motivation level of individuals. Thus, for better understanding of
entrepreneurial personality, there is acquired a OCEAN model that is stated as under - Openness to experience – If an entrepreneur is open or transparent towards accepting
market changes and trends; it helps them to able to make imperative business decisions
and grab better future opportunities. In addition, individuals behaviour towards dynamic
environment enables to take risks and grab better future opportunities.
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 Conscientiousness – It links with orientation of an association to meet desired goals and
objectives. If an entrepreneur is focused and goal oriented then he or she can be
successful. Mark Zuckerberg and Steve Jobs are the people who concise towards their
work so as to attain business goals in a certain time period. Extraversion – The person should be extrovert and out-version; it implies if
entrepreneurs can share freely their ideas or opinions with other then that trait of their
personality help them in encouraging staff members as well (Chrisman and et. al., 2012). Agreeableness – Entrepreneurs should be features, i.e. trust, kindness, affection, love,
pro-social and so on then they can easily influence people and make decisions fast.
 Neuroticism- it involves mood swings, low emotion, sadness, depression, irritability etc.
many personalities have such issues and thus entrepreneurs need to overcome with these
issues. It helps to attain their career goals and objectives at fast pace.
TASK 4
P7 Using relevant examples, how background and experience can hinder or foster
entrepreneurship
Small business owners come from a variety of backgrounds, each with their own reasons
for pursuing self-employment. Basically, entrepreneurship is an amalgamation of various risks
factors, thus it is quite difficult to be a victorious entrepreneur. Entrepreneurial behaviour also
get affected by their past experience and background which creates hurdles in accomplishing
their goals and objectives. Background of an entrepreneur affect their mindset and attitude to do
working activities. It encompasses with diverse aspects, i.e. educational background, family,
society from where these people belongs. It is assumed that whatsoever people seen in their past
and learn from families; they will remain it for lifelong. These are the places from where people
learn and acquire most of the knowledge. Mark Zuckerberg and Steve Jobs belongs from good
family, get higher education and both have strong command on their specialised. Therefore, it
can be said that if a person belongs from good cultural, his family follow certain traditional or
values; they will apply and follow the same in their business practices (Blackburn, Hart and
Wainwright, 2013).
Apart from this, often cultural norms and traditional affects their innovations as well
cause usually people does not prefer to do that is against from their believes or values. If in their
past experience, people have faced certain issues, i.e. money loss then will get afraid to take
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money related issues. Whereas if a person get failed in its career then they do not feel confident
to any work. Henceforth, entrepreneurial personality has a positive or negative impact on their
productivity as well as creativeness.
CONCLUSION
As per the above discussion, it get concluded that small businesses are known as one of
the most important part of growth and success of every business organisation. It provides job
opportunities to people in order to improve their living standard. The report has stated various
entrepreneurial ventures, like – scaleable start ups, small business entrepreneurship, social
entrepreneurship and so on. It is assumed that small business entities plays a vital role in
economic growth and development of UK and the nation's government is also providing funds to
establishing SMEs. Apart from this, these associations has also improved international trading of
UK. It is essential for an entrepreneur to have strong skills and knowledge on all areas of
business so as to attain firm's goals and objectives in a certain time period. The person should be
able to make imperative business decisions at fast pace in order to grab better future
opportunities at marketplace.
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REFERENCES
Books and Journals
Carraher, S. M. and Paridon, T. J., 2015. Entrepreneurship journal rankings across the discipline.
Journal of Small Business Strategy. 19(2). pp.89-98.
Desai, V., 2013. The Dynamics of Entrepreneurship Development Management: Planning for
Future Sustainable Growth. Himalayan Books.
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Fayolle, A., 2013. Personal views on the future of entrepreneurship education. Entrepreneurship
& Regional Development. 25(7-8). pp.692-701.
Hlady‐Rispal, M. and Jouison‐Laffitte, E., 2014. Qualitative research methods and
epistemological frameworks: A review of publication trends in entrepreneurship.
Journal of Small Business Management. 52(4). pp.594-614.
Kiss, A. N., Danis, W. M. and Cavusgil, S. T., 2012. International entrepreneurship research in
emerging economies: A critical review and research agenda. Journal of Business
Venturing. 27(2). pp.266-290.
Kuratko, D. F., 2016. Entrepreneurship: Theory, process, and practice. Cengage Learning.
Meyer, G. D., 2011. The reinvention of academic entrepreneurship. Journal of Small Business
Management. 49(1). pp.1-8.
Rasmussen, E., 2011. Understanding academic entrepreneurship: Exploring the emergence of
university spin-off ventures using process theories. International Small Business
Journal. 29(5). pp.448-471.
Slavec, A. and Drnovsek, M., 2012. A perspective on scale development in entrepreneurship
research. Economic and Business Review for Central and South-Eastern Europe. 14(1).
p.39.
Blackburn, R. A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
development. 20(1). pp.8-27.
Bridge, S. and O'Neill, K., 2012. Understanding enterprise: entrepreneurship and small
business. Palgrave Macmillan.
Carsrud, A. and Brännback, M., 2011. Entrepreneurial motivations: what do we still need to
know?. Journal of Small Business Management. 49(1). pp.9-26.
Chittithaworn, C. and et. al., 2011. Factors affecting business success of small & medium
enterprises (SMEs) in Thailand. Asian Social Science. 7(5). p.180.
Chrisman, J. J. and et. al., 2012. Family involvement, family influence, and family‐centered non‐
economic goals in small firms. Entrepreneurship theory and practice. 36(2). pp.267-
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Online
The Role of Startups and Small Businesses in Today’s Economy, 2018. [Online]. Available
through: <Blackburn, R. A., Hart, M. and Wainwright, T., 2013>.
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