Impact of SMEs on Economic Growth

This assignment delves into the significance of SMEs in driving economic growth, innovation, and entrepreneurship. It explores the various factors that contribute to the success of SMEs, such as access to finance, business networks, and government policies. The document also highlights the importance of SMEs in creating jobs, promoting competitiveness, and stimulating innovation. By examining case studies from around the world, this assignment provides a nuanced understanding of the complex relationships between SMEs, entrepreneurship, and economic growth.

Entrepreneurship
and
Small Business
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1.Examine different types of entrepreneurial ventures and explain how they relate to the
typology of entrepreneurship......................................................................................................3
P2.Explore the similarities and differences between entrepreneurial ventures...........................4
TASK 2............................................................................................................................................6
P3.Interpret and assess relevant data and statistics to illustrate how micro and small businesses
impact on the economy...............................................................................................................6
P4.Explain the importance of small businesses and business start-ups to the growth of the
social economy............................................................................................................................8
TASK 3............................................................................................................................................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...............................................................................................................................11
TASK 4..........................................................................................................................................12
P7.Examine, using relevant examples, how background and experience can hinder or foster
entrepreneurship........................................................................................................................12
CONCLUSION..............................................................................................................................13
REFRENCES.................................................................................................................................14

INTRODUCTION
Now a day developing an entrepreneurship and small business is in trends, along with
this government is also supporting to entrepreneur who is starting new business. This is so
because by it their will be increase in economy of country as well as it will increase employment
in a country. Entrepreneurship refers to a procedure in which an individual design, launch and
establish a new business which can be small at initial level. Peoples who establish small business
and entrepreneurship are known as entrepreneurs (Bhachu, 2017). Developing or establishing an
entrepreneurship business incurred huge level of risk because in an individual has to invest huge
amount and there is also risk that business will get succeed or not. This is because in a
marketplace there are various other companies at same industry who are operating business at
large level. This report is based on how management of small business as well as entrepreneur
are done in order to get successful at market. Topics which are discussed in this report are type
of venture which are consider as entrepreneurial as well as impact of small business on economy
of country. Moreover it include key aspects of entrepreneurial mindset and evaluation of
different environment which foster entrepreneurship.
TASK 1
P1.Examine different types of entrepreneurial ventures and explain how they relate to the
typology of entrepreneurship
Entrepreneurship is a process in which an individual who is know as entrepreneur
establish or run a business in order to serve society for gaining profit or doing social welfare. An
individual who establish a new business take several of risk to sustain at a market such as
financial risk, risk if public not like products and services and many more. Their are several type
of entrepreneurial venture available at a marketplace (The Four Types of Entrepreneurship,
2019). Which are explain below:-
Type of entrepreneurial venture:-
Large scale enterprises: These type are entrepreneurship required huge amount of capital
and market shares. Respective type of enterprise manufacture and offer products with new
innovation and creativity to potential customers in order to fulfil their need and demand. They
update variety of products and services according to change in demand as well as requirements
of customers and trends.

Small scale enterprise: These type of firm basically conduct commercial activities at a
small level, their main motive is to generate profit. These type of business enterprise are
generally managed by owner of a company as well as it will not affect at huge level by change in
market trends or demand. Such as grocery store, cafe and restaurants and many.
Social enterprises: These type of enterprises provided or offer products and services
which fulfil need and demand of customers in proper manner (Blackburn, Hart and Wainwright,
2013). Their main objective is serve the society so that they will live their leave life in proper
and effective manner.
Scalable business enterprises: These type of firm are mainly focus on quality of products
instead of manufacturing products on huge quantity. Their main aim is to attract investors that
they will always maintain quality of products.
Type of different type of entrepreneur typology:-
Lifestyle entrepreneur: These type of entrepreneur are mainly focus on generating
profitability, for which they adopt or select appropriate sector in which they can earn more and
more profit and market share. They can be start business at small or large level it will depend
upon interest and financial capabilities of person.
Female entrepreneur: It refers to when a female entrepreneur start or establish a new
venture in order to serve society which innovative and creative products and services. These
entrepreneur are comparatively more creative and innovative form others. Such as Emma Kane
who is CEO of Red Leaf communication.
Male entrepreneur: According to this an entrepreneurship is started or established by a
male entrepreneur. Their main motive is to offer appropriate products and services in a market in
order to generate high profit (Bridge and O'Neill, 2012). Such as Mark Zuckerberg founder of
face book which is used at a worldwide level.
Serial entrepreneur: These entrepreneur are highly innovative and like like to take
challenges and risk. They introduce new products and services in every areas in order to fulfil
need and demand of potential customers.
P2.Explore the similarities and differences between entrepreneurial ventures
 Difference between female and male entrepreneurs
Female Entrepreneurs Male Entrepreneurs

These type of entrepreneur is managed and run
by female entrepreneurs.
Whereas in this entrepreneurship business is
managed and operate by male.
These entrepreneur are less risk taker they
analysis each and every situation or condition
before start business operations.
On the other hand these type of entrepreneur
are more risk taker they generally take decision
without considering many things.
 Similarities between female and male entrepreneurs
Female Entrepreneurs Male Entrepreneurs
There main aim and objective is to generate
profit as well as increase customers base in
order to sustain at a market for a long time
(Burns, 2010).
Whereas in case of male entrepreneurs they
also focus on generating profit as well as
sustaining at a market for long duration.
To sustain in market for long run they offer
new and innovative products to customers by
which they get attracted as well as encourage
for purchase.
This will happen same in case of male
entrepreneur they also conduct market research
and introduce new innovative and creative
products to retain customers.
 Difference between serial and lifestyle entrepreneurs
Serial Entrepreneurs Lifestyle Entrepreneurs
Their main aim is to serve society and fulfil
need and demand of customers by offering
innovative products to customers.
Main objective of these entrepreneur are to
develop a business in order to fulfil as well as
pursue their passion.
They develop their business in various
innovative sector instead of staying at one by
offering products and services.
They develop business to earn profits by
continuing their passion on proper manner.
 Similarities between serial and lifestyle entrepreneurs
Serial Entrepreneurs Lifestyle Entrepreneurs
Like lifestyle entrepreneurs they are also
passionate about their work as well as they
offer or introduce new range of products and
These type of entrepreneur are generally focus
on completion of their hobbies and they fill
switch area of working when their passion of

services according to innovation and creativity. that area get achieved (Carland, Carland and
Stewart, 2015).
Respective type of entrepreneur also like to
work with new and innovative concept as well
as they also introduce products according to
innovation at market.
These type of entrepreneur like to develop new
innovative things in order to attract customers.
TASK 2
P3.Interpret and assess relevant data and statistics to illustrate how micro and small businesses
impact on the economy
Entrepreneurial business can be conducted on the two levels i.e. micro and small level.
These type of business required less amount of capital as comparison to large business due to
which they also earn low amount of profit as well as turnover ratio. Micro business refers to
business which is operate at small scale and which have five or less than five staffs at their
workplace (Carraher and Paridon, 2015). Capital required to established this type of business is
approx or less than $ 35000. On the other hand small level business refers independently owned
company in which there is very few employees are working as well as which generate less profit
and revenue. In United Kingdom, government support entrepreneurs because by it they able to
boost their economy in appropriate and effective manner. Along with this it will also develop
employment to unemployed peoples. There are other several positive impact of small and
medium enterprise on the economy of a country. Some major of them are explain below:-
Increasing job opportunities – When an individual open or established a small and
macro business they required other several peoples who operate business activities in effective
and appropriate manner. Due to which they able to develop employment opportunities at local,
state, national and international level. For this reason government also support to small and
macro business enterprises.
Increase in per capita income – Per capita income refers to income earned by an
individual in a particular country economy. This will analysis average income of a country by
which development and growth rate can be evaluate in effective and appropriate manner
(Chittithaworn and et. al., 2011). Such as in United Kingdom there are numerous of small and

macro business enterprise due to which there is increment in per capita income of country in
effective manner. Along with this it will also improve standard of living at respective country.
Optimum utilisation of resources – When an individual develop or established small
and macro level business operation they required various type of resources. Such as inventory,
funds, labour, land and many more. For all this they have less amount so they understand how to
use resources in appropriate and effective manner so that wastage of resource can be avoid or
reduce (Cooper and Folta, 2017). On the other hand in case of large business enterprise they
start their business with huge budget due to which they are not mainly focus on optimum use of
resources.
Impact of Small and medium business enterprise can be evaluated and presented by using
graph and chart. Below given data and graph shows that impact of small and macro business
entrepreneurship on United Kingdom:-
Year Value addition by SME's in UK economy
2008 100
2009 85
2010 82
2011 90
2012 100
2013 105
2014 120
2015 140
2016 135
2017 130
2018 130

Form above given graph it can be analysis that economy of United Kingdom is growing
with the increase in small and medium enterprise. This shows positive growth in both aspects in
effective and appropriate manner. Along with this it is also essential for future growth of country
as well as enterprise.
P4.Explain the importance of small businesses and business start-ups to the growth of the social
economy
In an organisation small and medium business enterprises that are very important for
organisational development and enhancement to grab opportunities and maintain sustainability in
firm (Dennis 2011). There are some very important factors or attributes that helps in achieving
economic development that are as follows:
Large employment opportunities:
One of major factor that contribute by small and medium business enterprise is that they
give contribution in enhancement of employment opportunities to large masses in economy of
UK. Start ups and small businesses helps to economy by giving best and new opportunities and
Illustration 1: Impact of SMEs on growth of an economy
(Source: Impact of SMEs on growth of an economy, 2018)

products to ultimate consumer base and enhance their living standard by giving unique products.
To enlarge business opportunities organisation give best salary and compensation to their
employees so that they can also give their best in organisation enhancement.
Innovation:
The one of important factor that largely contributes in economic and personal
development that is give innovative products and services to consumer. Innovative products and
services should be build after accessing needs and wants of customers and give them better way
to live and enhance their living standard (Fassin, Van Rossem and Buelens, 2011). They work to
enhance living and give best products and services that fulfil their future needs and demands in
proper manner.
Social status:
The one of important factor that give best living style and standard of people and enhance
their per capita income which is an important indicator of economic growth and enhancement.
When living standard of people increases their social status before the society also advances that
is an important factor.
Sustainability:
Sustainability is also one of important factor that are very obligatory to gain competitive
advantage for long period of time. Due to fierce competition organisation have to deliver best
quality products and services that never harm to their self esteem and culture. People are very
concern for environment and always want to eco friendly products and services so accordingly
they have to build products so that they in better manner satisfy their emerging needs and wants
and grab large market share and gain competitive advantage.
TASK 3
P5.Determine the characteristic traits and skills of successful entrepreneurs that differentiate
them from other business managers
Entrepreneur refers to an individual who established or run a new innovative business
operations in order to fulfil need and demand of customers in effective manner so that they able
to attract them to purchase products or visit store again and again (Gorgievski, Ascalon and
Stephan, 2011). To become a successful entrepreneur they required various skills that will help
them in conducting work and taking decision in effective and appropriate manner. Two major

example of successful entrepreneur are Marks Zuckerberg and Bill Gates, whose skills are given
below:-
Skills of Marks Zuckerberg:-
Encourage to take risk: It is consider as one of the most necessary skills which encourage
an individual to take risk in order to conduct work in effective and appropriate manner. This is
because it is necessary for an entrepreneur to take decision by understanding situation and need
of customers (Islam and et. al., 2011). In respect of Marks Zuckerberg he takes risk and invest
all his money in developing face books, this shows it is essential for a person to take risk if they
want to become successful businessman.
Communication skills: It is most important skills which is required for a successful
business. This is so because they have to communicate with various peoples in order to make or
conduct work in proper manner. Such as investors, suppliers, customers, stakeholder and many
more. It is necessary because if entrepreneur not able to communicate their vision and aim to
other person in effective manner then they will not able to attract them for investment or
purchasing products.
Skills of Bill Gates:-
Visionary: It is also one of the essential and necessary skill for an entrepreneur because
they have to be visionary so that they can forecast future in advance and then develop strategies
and plans in effective and appropriate manner. Along with this by respective skills an
entrepreneur can also understand issues or problems which may face by an organisation while
operating business. This will help in developing strategies, plans and policies in effective and
efficient manner.
Flexible and adaptable: It is necessary for a business entrepreneur to be flexible and
adaptable so that they can adopt changes in effective and appropriate situation. In today's time
need and demand of customers are changing in short time duration so it is necessary that
company owner must adopt changes in effective and efficient manner. Which help them in
attracting customers in high manner (Kirzner, 2015). In respect of Bill Gates he is so innovative
and creative that he develop Microsoft which make work of other easy. Along with this he is
flexible and adaptable that which help them in understanding and adopting changes ineffective as
well as in appropriate manner.

P6.Assess how aspects of the entrepreneurial personality reflect entrepreneurial motivation and
mindset
There are several skills and features of an entrepreneur which help them in be successful
at a marketplace. There are also variety of elements which will impact on mindset and
motivation level of a person. In both successful entrepreneur Mark Zuckerberg and Bill Gates
have same personality trait which help them in be successful at a marketplace. There are various
framework which can be used by an individual in order to determine its personality traits. One of
the most used framework is Big Five Framework, whose explanation is given below:-
 Openness to experience: According to this an entrepreneur must be creative and
innovative so that they think new strategies and plans in order to attain goal as well as
serve others in effective and appropriate manner (Lee-Ross and Lashley, 2010). By this
they also able to design and manufacture innovative products and services for their
potential customers.
 Conscientiousness: According to this it will state that an entrepreneur must be always
focus towards their goal and objective which will help them in taking decision in
effective and efficient manner. Along with this by this they also able to conduct work in
proper way by considering others.
 Extroversion: It is essential for a successful entrepreneur to be extroversion so that they
able to communicate with others in proper and effective manner. This will also help a
person in understanding others in proper manner and convince them to conduct work in
appropriate and effective ways.
 Agreeableness: This refers to a personality threat in which make an entrepreneur to be a
trustable person (Luiz, 2011). With whom all other staffs like to work and who take
responsibilities of all essential things which is being conducted at a workplace.
 Emotional stability: According to this element it will be state that in every situation
entrepreneur must be stable. This will help them in taking right decision in every
situation and help in conducting work in appropriate manner.

TASK 4
P7.Examine, using relevant examples, how background and experience can hinder or foster
entrepreneurship
Entrepreneurship procedure is affected by various elements form which some affect it in
positive manner whereas some will affect it in negative ways. So it consider as a responsibilities
of an entrepreneur to understand it and develop strategies and policies accordingly. So that
process will be conducted in appropriate manner. In this background of entrepreneur plays an
essential and important role in various situations such as taking decision, understanding and
handling situations and many more (Gorgievski, Ascalon and Stephan, 2011). Such as if an
individual belongs to a family having business background then that person is also more incline
or encouraged for starting a business with new and innovative ideas in effective and appropriate
manner. Some of major factors are given below which hinder or foster process of
entrepreneurship:-
Level of education: Education level of a person plays an important role in which how he/
she will react on a particular situation. This is so because by this an individual able to earn how
they have to behave in society or in front of others. If a person is highly educated then they will
encourage to take risk in order to attain goal in effective and appropriate manner.
Family background: Another major aspects which affect or impact on entrepreneurial
process is background of a family. This is so if a family is supporting and understanding then
they will encourage their children and help in attaining goal in effective and appropriate manner.
Along with this they also motivate them such as family of Bill Gates. Father of Bill Gates is a
lawyer who motivate him to think creative and innovative and always be different form other.
Moreover all family member of respective person motivate him to take decision by own and be
responsible for that. Same is in case of Mark Zuckerberg, his family always support him to
conduct work in proper manner and never loss hope. Along with this both family also encourage
them to fight or face failure so that they can understand their weakness and overcome it in proper
manner
Nationality: This is also essential element which motivate and encourage an entrepreneur
to conduct work in proper manner. Culture and boundaries of a nation impact on thinking as well
as decision making process of an individual (Luiz, 2011). Such as if there is effective and
positive culture in nation then their citizens think in appropriate manner and get encouraged to

work in proper manner. Both the successful entrepreneur Bill Gates and Mark Zuckerberg are
belong to America which is developed country and every one is encouraged to do work in
effective manner, which plays major contribution in their success.
Above mentioned are the reason which will impact on decision making and succession of an
entrepreneur in effective and appropriate manner.
CONCLUSION
From above discussed point it can be conclude as well as analysis that now a day trend of
entrepreneurship is increased, governments are also helping entrepreneurs who come up with
new and innovative ideas. This is so because by it they able to generate employments for local,
state, country and international level. There are various type of entrepreneurship venture are
available in market as well as there are also different type of entrepreneur who run those business
in effective and appropriate manner. This will also help nation to boost their economy in
appropriate manner. Along with this there are several skills which are required or essential when
a person wants to become successful entrepreneur. It will also required some other several skills
such as past experience, background of family, level of eduction and many more.

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