The Role of SMEs in Economic Growth

This assignment delves into the crucial role of Small and Medium Enterprises (SMEs) in economic development. It analyzes various factors that contribute to entrepreneurial intentions and the success of SMEs, drawing upon relevant academic literature. The discussion encompasses topics such as social entrepreneurship, cultural influences on innovation, and the impact of demographic factors on entrepreneurial pursuits. The assignment aims to provide a comprehensive understanding of the dynamics shaping the SME landscape.

ENTREPRENEURSHIP
AND SMALL BUSINESS
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1...........................................................................................................................................3
P1 Different types of Entrepreneurial Ventures..........................................................................3
P2 Similarities and Differences between types of Entrepreneurial Ventures.............................4
P3 Impact of Micro and Small Business have on the Economy.................................................6
P4 Importance that Small Businesses for the Growth of the Social Economy...........................6
PART 2............................................................................................................................................7
P5 An entrepreneur's characteristic traits and skills....................................................................7
P6 Aspects of the Entrepreneurial Personality reflect Entrepreneurial Motivation....................8
P7 Hinder and Foster in Entrepreneurship due to Person's Background....................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Entrepreneurs are very significant contributors for the national economy. Small and
medium businesses are exceeding in numbers in every industry, proving themselves to be the
greatest employers in the Great Britain. UK's market is full of small and medium enterprises
which are new in the industry as a start up, by minor entrepreneurs. This project will be dealing
with different types of entrepreneurship and their contribution in the upliftment of the local and
national economy. The report will also be discussing about the similarities and differences in
these classified sections of entrepreneurship. This project report will be focusing on the scopes of
emerging micro and small entrepreneurial ventures and their contribution in the growth of the
country's economy. The characteristic traits and personal attributes needed for an entrepreneur to
emerge with a successful entrepreneurship venture is also included in a major part of this report.
PART 1
P1 Different types of Entrepreneurial Ventures
There are various types of entrepreneurial ventures in United Kingdom, as they are
classified with their capacity of human resources, that is, the head count of employees and the

gross revenue they produce in a financial annum. These are the major types of entrepreneurship
ventures classified on the above mentioned basis:
1. Small Business Entrepreneurship: These days, the exceeding number of entrepreneurs
and startups in the United Kingdom are small businesses. Almost 99% of the overall
companies contributing to the UK's national economy are small businesses and they
employ an amount of 50% of all others who are not involved in working under the
government. Almost half portion of the non- governmental human resources are
employed by the small businesses (Fayolle and Gailly, 2015). Small businesses includes
stores and services like grocery stores, travel agents, consultants, internet based
commerce storefronts, hairdressers, and electric, plumbing and carpentry services. Small
entrepreneurs are anyone who is engaged in running their own business. They hire
employees from the local geographical areas or pick them from their own family. They
bares makes any profit. Such businesses are always funded by their own investments, or
friends , or family or small business loans (Liñán and et. al., 2011).
2. Scalable Startup Enterprise: Scalable startups are not similar to the small businesses,
they functions to be the Silicon Valley entrepreneurs and their investors. They establish
their company with a definite vision of creating a change in the world (Dennis Jr, 2011).
Since, day one of their business their efforts are towards the mission of bringing that
change and make it possible. They have to work hard in order to attract the investors who
are also crazy to seeing that change in the world and they are known as venture
capitalists. They hire their employees considering their skills and knowledge seriously.
They only employ the best and brightest human resources that are made available to
them. Their dream is to grow in the industry and expand their venture (Chittithaworn and
et. al., 2011).
3. Social Entrepreneurship: They are the entrepreneurs who are innovators. They keep
their eyes on the creation of products and services which brings in a solution for the
social needs and issues in the society. They work to make the world a better place and
they have no dreams to acquire shares in market or to make profit. They are funded by
the wealth of the founders of the organization. They basically don't target for profits.

P2 Similarities and Differences between types of Entrepreneurial Ventures
Entrepreneurial ventures are classified according to their sizes and types. There are public
and private entrepreneurship which are classified on the basis of ownership. Public
entrepreneurship are basically governmental organizations established for the services of the
public in the state and don't focus on the profit making side as a business. Private
entrepreneurship, on the other hand, are owned by individuals or group of individuals who has
nothing t deal with the government (Colombo and et. al., 2012). The below given table will help
in recognising the differences and similarities in the case of role and characteristics of small,
large, scalable and social entrepreneurship:
Basis Small Businesses Large Businesses Scalable
Entrepreneurship
Social
Entrepreneur
Role Their role in the
society is to
provide essential
goods and
services to the
society in the
middle level of
the economical
stage. They
doesn't focus on
making more of
profits.
They aim in
serving the highly
economical
classes in the
society. They
focus on making
more profits for
the growth of
their organization
and expand their
business into
larger levels.
They also aim for
bigger profits and
has a vision to
make changes in
the world, but
mostly the
changes are
based on
technology and
they are aim in
the development
of their business.
Their role in the
society is to
demolish the social
demons. They work
to solve the issues
in the society and
serve the social
needs. They don't
aim to make profits
and their efforts are
to make the world.
Characteristics They have a grip
on the customers.
As the owners
have direct
communication
and interaction
with the
They are experts
in making the
goods or services
that their
company has
been producing
since their
As in case of
large
entrepreneurship,
they are also
experts in making
goods or services
that they have
They conduct
surveys and
research to know
the needs of the
neglected
communities in the
society. They also

customers, its
easy for them to
realise their
needs and fulfil
them.
establishment.
They lack work
efficiency due to
less interaction
with customers.
specialized in.
Less
communication
with customers
lacks work
efficiency.
collects fund in
order to fulfil those
needs and they
communicate with
the public in the
society regularly.
P3 Impact of Micro and Small Business have on the Economy
The trend of startups and passion for business establishments and entrepreneurship have
been increasing among the youth of Britain. It is clearly visible that SMEs have been thriving in
the business world economy in United Kingdom. The number of SMEs present in UK have been
on rise every year and are increasing steeply per year. The national economy has gone totally
dependent on the small businesses enterprises in order to sustain a healthy economy. SMEs have
been serving as an ingredient in improving the UK's economy, as there are over 99% of Small
and Micro Enterprises in the economy of UK. Small and Medium businesses have a total turner
of £1.6 trillion as the year of 2014. this has been proving to be an important figure within it, but
its much more impressive to realize that the statistics are rising and it shows that the 47% of the
overall turnover of the private sector belongs to SMEs (Fassin and Buelens, 2011).
Majority of the small businesses are of sole traders who are working independently and
doesn't employ anyone under them, but in a whole of the SMEs seem to be the best of employers
who are indirectly creating more opportunities for the human resources that are left idle in the
society in United Kingdom. In UK, a total amount of 24.3 million people are employed by the
Small businesses in UK, as per the statistics in 2014. This amount is enough to prove that it
accounts the 60% of employment provided by the private sector and holds up to a heavy 81% of
the total workforce in the nation (Mullins, 2013).
When the matter comes to the growth of the business, small and medium businesses are
above all other comparative sections of the business. Growth comes from innovation and it helps
in keeping the product creative and market brand new. The businesses serving in the same
traditional ways have to improve their operational processing and business strategies, and the
companies with the modern and creative ideas to bring out goods and services in the market are
to be brought on rise. As a report suggests, there is an amount of 37% of the total SMEs are
always engaged in activities of creativity and innovation. Retail, manufacturing and motor

servicing are considered to be in the largest industries in UK and the small businesses act as the
engine for them. Three of every twenty small businesses are amongst one of these sections and
46% of the total revenue made by SMEs are from one of these sectors.
P4 Importance that Small Businesses for the Growth of the Social Economy
Small businesses are play a vital role in the success of a economy. They doesn't just give
success goals to the people dreaming to coming in the sector, but they must be aware of the
needs of the local society whom you need to satisfy with the goods or services that you are
producing in the organization. The Small and Medium businesses even consists of service
providers which major serves the larger businesses in case for several divisional and functional
purposes that they involve within their strategies and operations. Services like catering,
photography and event management are mostly provided by the small enterprises in order to
serve the large enterprises in advertising and promotional activities for their organization
(Hoskinson and Kuratko, 2015). Being an entrepreneur doesn't need to own an organization, but
the person needs to possess the right skills, attitudes and knowledge for contributing his or her
creativity with an organization to come up with an innovative result.
Most of the businesses in UK are categorized under the small businesses. Two out of
every three small enterprise is owned and run by one person. And almost 90% of the total small
businesses employs less than 6 people under their organization. Even though such small firms
employs comparatively less people, they are also a significant source of employment. There are
nearly 2.5 million self employed people among the workers in UK and there will be presence of
one in every eight people of a self employed worker (Chishti and Barberis, 2016).
In 2016, there is a record of 5.5 million private sector businesses being established in the
United Kingdom. This approves an increase by 97,000 in number since 2015 and a count of 2.0
million since the year of 2000. The quantity that are efficient in employing has been seen
increasing by 84,000 and giving annual growth of +3% for both the groups. The population of
business in the south of England is relatively larger as per the comparison with population
residing in the other areas of UK. There is presence of construction related organizations in every
fifth SME that operates in the UK, whereas just 1% is comparatively connected to mining,
quarrying and other sectors of utilities. There are 2.5 million businesses that are registered for the
Value Added Tax (VAT) and Pay As You Earn tax (PAYE) which just accounts to 45% of the
overall small business population.

PART 2
P5 An entrepreneur's characteristic traits and skills
Jack Ma, born as Ma Yun, founder of Alibaba Group which is involved in business
totally based on internet. He is not from a business family or a family who had a lot of properties
to invest in the establishment of business. He was brought up in China in a poor family, but he
had zeal to study more things than h used to learn. He has stressed a lot to learn English. He
used to go to Hangzou Hotel to learn English from the English speakers who resided there. He
used to give tours and rides to them around the city free as to teach him English. He had
struggled a lot for his education and has faced rejections in career. It took him four years to pass
the Chinese entrance exam. As he pursued BA in English at Hangzou Teachers' Institute, he was
selected as the head of the student council of the university. After his teaching career and post
graduation in Beijing, he had applied for almost 30 different jobs and got rejected in all. He was
rejected for being a police officer and he was the only rejected candidate when at the KFC out of
the 24 people who went for it (Phillips and Pittman, 2014). He has been rejected by Harvard
University all the ten times he applied for admission. It was in 1994, Ma came to know about the
internet and got attracted towards it to start an internet based company in 1995 with his friends in
US. His company's name was China Yellow Pages which earned 800,00 USD within 3 years.
Later in 1999. he found Alibaba group along with his team (Foss and Gibson, 2015).
The basic personal traits and skills that could be learnt from Jack Ma are:
 Dedication: He used to travel a long distance daily as to reach the Hangzou Hotel as to
learn English from the foreigners who used to stay there. It shows the dedication that he
had towards getting the sufficient knowledge that he needs to communicate with the
world.
 Leadership quality: As it says , he was selected as the head of student council at
Hangzou Teachers' Institute, it says he had the spirit of leading people and representing
them in front of others. And this also gives the idea that he had good communication
skills and power.
 Creativity: Soon he got introduced to the internet and he got to its depth, getting more
attracted, he came up with his own innovative ideas to perform on the internet and help
others to do the essential stuff on it, he emerged as one of the very best entrepreneurs of
the 21st century.

P6 Aspects of the Entrepreneurial Personality reflect Entrepreneurial Motivation
As the discussion was done in the above topic, we could clearly see that the Jack Ma was
from a poor family and had to suffer a lot in order to get well educated and to get a job. He had
many issues at personal level but he somehow overcame every hurdles to stand where he is now
standing. There are many aspects that come in way as a person starts his journey on the path to
be an entrepreneur. Its not a big matter to just become an entrepreneur by starting up a new
business by investing sufficient money, but to succeed in that business is a great challenge. In
China, there is very less importance for external languages as they consider Mandarin as
significant for the nation in order to keep up the culture and heritage of China. But Ma used to
travel a long distance, daily, so that he could spend time with the foreigners at the Hangzou
Hotel to learn English (Chaston, 2014). Later, it was one of the same foreigners who became his
pen pal and gave him an easily pronounceable nick name, 'Jack'. There are major influence of a
person's mindset and attitude in their entrepreneur life. The aspects of personality that effects the
entrepreneurship as we could learn from Jack Ma are: Upbringing: A person's upbringing, that is, the conditions and situations in which he has
grown up, plays a pretty important role in his entrepreneur life. As we see, even though
Jack Ma belonged to a poor family, he was somehow educated and he has seen the
conditions in which his parents have been living and he had the dream to bring them all
comforts for their hardwork for educating him. Never Give-up attitude: A person who is on the way to be an entrepreneur, must know
that failure is a part of the game. There will be drops in the business but they must realise
that they could bounce back higher after a strong drop. Jack Ma was rejected from almost
thirty jobs and still kept on going ahead confidently (Storey, 2016).
 Passion: Anyone who has to successful in his or her profession needs to have that
passion for the work. When you love what you do, you can use your own creative ideas
to do it better. Jack Ma, found it interesting when he came to know about internet, he
studied everything related to the internet and thought of establishing an enterprise based
on it. That passion and interest that he had for the internet was put out with his business
skills which he got with his education and he is successful now.

P7 Hinder and Foster in Entrepreneurship due to Person's Background
There are various factors that are very much influencing the entrepreneurial
characteristics from the entrepreneur's personal background and past experiences. Experiences
sometimes teaches some life lessons that no professors could teach people in their classroom
lectures. Following are some of those factors from a person's background and past experiences
that could hinder or foster his entrepreneur life: Family Life: The financial conditions and the situations of an individual's family are
major facts that creates their mindset and objectives in life. Again, we could take the
example of Jack Ma. Ma, as a kid suffered a lot due to financial issues and tough
situations to get educated, etc. The same conditions made up his mind to do something
big in life. Education: Education that he was provided with in such bad conditions brings in more
strength in the influence, as he had to use his knowledge that he learn from the business
school to get started with an internet based business.
 Interests: People have certain interests and hobbies in their life. Some are interested in
games, some in books, etc. Similarly, these interests could bring in ideas that are creative
in order to come up with business ideas (Bridge and O'Neill, 2012). As Jack Ma got
attracted towards internet and he brought up his own ideas for the innovation for his
enterprise to get established and succeed.
CONCLUSION
Entrepreneurs are important contributors in the growth of the local, national and
international economy. The rising number of Small and Medium Enterprises (SMEs) in the
market is definitely acting as the highest employer in the nation. The project have dealt with the
major factors that are associated with entrepreneurship and small business management (Schaper
and et. al., 2014). The report has focused on the contribution in the UK economy made by the
small and medium enterprises. The statistics and other relevant data that are significant for the
development of the economy of the society are also included in this project report. The report
also involves the information regarding the personal aspects and skills that affect the
entrepreneurship venture.

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