Managing Small and Medium Enterprises: Nature of Entrepreneur, SME Start-up Processes, Business Concept and Competitive Advantage, Growth and Development, Challenges and Government Measures

This report highlights the nature of entrepreneur along with the SME startup processes also the business concept and source of competitive advantage. In addition to this the present level of the demand and competitive environment also the growth of the business and various challenges in managing the business and SME current growth and development strategy is also highlighted in this report.

Managing Small and
Medium Enterprises

Table of Contents
Introduction......................................................................................................................................1
Findings............................................................................................................................................1
Recommendation.............................................................................................................................5
Conclusion.......................................................................................................................................5
References........................................................................................................................................7

Introduction
Small and medium enterprises are the type of business enterprises which are started by the
single entrepreneur with small amount of capital in order to satisfy the needs and wants of the
customers, these are the small and independent businesses having small number of employees,
the increasing number of small and medium business are largely contributing towards the growth
and development of the economy, the number of employees involved in the small and medium
business are generally less than 250. This report highlights the nature of entrepreneur along with
the SME startup processes also the business concept and source of competitive advantage. In
addition to this the present level of the demand and competitive environment also the growth of
the business and various challenges in managing the business and SME current growth and
development strategy is also highlighted in this report.
Findings
Nature of the entrepreneur
An entrepreneur is someone who is always ready to take challenges and bearing all the
risk for the purpose of getting the rewards effectively, the entrepreneur bear the risk in the
process of starting the small or medium businesses, he has the ability to create an innovative and
developed business entity (Al-Jabri and Al-Busaidi, 2018). With his abilities like creativity,
future orientation, innovator, challenge taker his builds an small and business enterprises leading
towards continuous growth and development of the entity and economy. The entrepreneur with
their ability and characteristics plays and important role in the smooth functioning and operations
of the small and medium enterprises, they are the main reason behind the successful
implementation of the small and enterprises as it all the enterprises started with some innovative
ideas of an entrepreneurs. The entrepreneurial ventures are the kinds of business entity that are
started with some innovation and opportunity in order to produce the economic and social value
leading towards the overall development effectively. The main nature of the entrepreneur is that
they are the one who create business venture and bearing all the risk for the purpose of earning
rewards effectively (Cassells and Lewis, 2019).
SME start-up processes
In order to successfully implement the innovative ides into the real business entity it
requires essential and step to step process to be followed by the business owner, there are
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essential plan and strategy that needs to be followed by the entrepreneur in order to successfully
implement the business. such the simply first and foremost the entrepreneur needs to define the
vision and mission of the business and then the objective of starting the business needs to be
highlighted in order to have the clarity of work and then accordingly the basic strategy in order
achieve the objective should be defined and outlined by the entrepreneur and finally in order to
transfer the innovative idea action plan needs to be written effectively (Chung and Au, 2021).
Business concept and source of competitive advantage
The increasing number of small and medium business largely contribute to the growth
and development of the business, but with increasing competition in the marketplace, in order to
gain the competitive advantage business can considered various sources. There are number of
sources available that will helps business to gain competitive advantage in the marketplace. some
of the sources are highlighted below:
People: The people or the workforces is the main driving force behind the gaining
competitive advantage for the company. If the workforce is creative and innovative, producing
better results than it will leads to gaining competitive advantage for the businesses.
Quality customers services: providing quality and value added services to the customers
will help in satisfying their needs and wants which automatically leads to building strong
effective relationship with them effectively. this will helps business to gain competitive
advantage in the marketplace.
Proper knowledge of local market: In order to satisfy the needs of the local market it is
very essential for the small business to have proper knowledge of the changing needs and wants
of the customers in order to compete with the competitors available and gain competitive
advantage in the marketplace.
Innovation: One of the most essential sources which will helps small businesses to gain
competitive advantage in the marketplace is the innovation, with changing needs and wants,
small businesses needs to bring innovation and creation in the marketplace in order to attract
large number of customers (Duréndez and Madrid-Guijarro, 2018). Innovation will help small
and medium business to gain competitive advantage in the marketplace.
Current level of demand and the competitive environment
The small and medium business are the growing business in the economy, with small
amount of capital requirement to start new business the demand for the small and medium
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business are increasing effectively, in addition to this the it is owned and managed by the single
entrepreneurs only getting all the profit and bearing all the risk, in addition to this they also
largely contribute to the growth and development of the economy also so with such factors the
demand for the small and medium businesses in increasing (Hosoda, 2018). But there are various
factors available which directly influence the functioning of the businesses such as the level of
competition available which is generally high in case of small business and also the threat of new
entrants which creates strong barriers on the entry of new firm. In addition to this there are
number of substitute products available in the market which creates threat and barriers for the
small businesses effecting their profitability and productivity. The high bargaining power and
suppliers power will also directly influence the functioning and profitability of the business, in
order to gain competitiveness it becomes very essential for the small businesses to analyse the
competitive environment and needs to take corrective measure in order to deal with the various
factors available and gain competitiveness in the marketplace (Machmud and Ahman, 2019).
Growth and development of the business
The growth and development of the business is very essential in order to survive in the
competitive environment and continue to grow. In order to effectively understand the growth and
development of the small and medium business the growth stages can be taken into consideration
as highlighted below:
Stage 1 Existence: under this stage the businesses needs to be concerned about the
connecting and finding more customers so as to satisfy their needs effectively.
Stage 2 survival: The next stage is the survival, the business have their basic business
plan, they owner of the business effectively evaluate their expenses and measure their revenue in
order to effectively survive in the marketplace.
Stage 3 Success: under this stage the business owners has reached a certain stage where
they have are earning enough profit and has reached a economic growth and is being successful.
Stage 4 Success growth substage: The business organisation finds all the resources and
risk in order to effectively plan their growth.
Stage 5 Success Disengagements stage: The business needs to manage the external
environmental changes and implement the essential strategies in order to operate effectively.
Stage 6 Take off: The business moves towards continuous growth quickly and also hot to
continuously finance their growth and development (Nikabadi and Hakaki, 2018).
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Resource Maturity: At this stage the business has essential staff and resources in order
carry out their activity and plan their operations.
Challenges of managing and running the business
The owner and managers of the small business faces various challenges in managing and
handling their business activity effectively. theses challenges will directly influence the
functioning of the business and affecting their profitability and productivity, these challenges can
be related to the availability of proper finance to carry out their activity (O'Dwyer and Gilmore,
2018). Some of the challenges faced by the small business in managing and running the business
are highlighted below:
Finding skilled and qualified employees: One of the major challenges faced by the small
business in managing and running their business is non availability of skilled and qualified
employees in the business. The non qualified employees will lead to poor performance which
leads to effecting the overall performance of the business (Park, 2018).
Availability of finance: In order to run and manage the business the availability of
finance is one of the major source required by the business organisation, non availability pof
finance will create problems for the business in managing their business.
SMEs present growth and development strategy
There are number of growth strategy available that can be used by the small business in
order to grow and develop themselves in the marketplace. Some of the strategy that can be used
by the growth and development strategy that can be used by the small and medium business are
highlighted below:
Market penetration strategy: This strategy allows business to focus on selling existing
products into the already existing market in order to attract large number of customers and
maximise their profit, this strategy will allows small business to increase the sale of their existing
products in the market through using various promotional activity and increasing the customers
base effectively.
Market development: The another strategy that can be used by the business organisation
can be the market development strategy, this strategy allows business organisation to focus on
selling existing products into the new market, this will helps business to expand their market size
through entering into the new international market, this will allow business organisation to
enhance their performance and increase their productivity effectively (Poulin and Tran, 2020).
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Product development: The product development strategy will allow business to offer new
products into the existing market, this will help company to increase their customers base
through offering them new and innovative products continuously, this can be done through doing
market research and understanding the taste and preferences of the customers continuously.
Diversification: The last strategy is diversification, under this new products are launched
into the new market in order to attract large number of customers, this is one of the risky strategy
but with innovative products business will be able to earn large amount of profit (Tang and Tang,
2018).
Government measures available to help business overcome the challenges faced
Over the last 35 year the government interest in the small business has increased
positively, continuously working towards the growth and development. there are various
measures available which directly helps the small business to overcome the challenges faced by
them, effectively, the government is continuously providing the financial aids to the small
business so as they can effectively carry out their operations and activities effectively without
any problems and hurdles. In order to support the small business various new schemes have been
developed by the government such as the business finance and support finder which is one of the
simple tool which allows the small business to find the publicly funded sources of assistance that
are suitable to apply for by the small business (Simmers and McMURRAY, 2019). The various
kinds of support facilities are available for the small business such as the financial assistance,
advice services. This will helps business to start, manage and grow in the market effectively. In
addition to this various loans and finance facilities are also available in order to overcome the
challenges.
Recommendation
The government should implement more schemes in order to support the small business to
grow and develop themselves, the support related to the innovation and technology should be
provided to the entrepreneurs so that they can bring more innovation to their business and gain
competitive advantage in the marketplace. More number of source of finance should be provided
to the small business in order overcome various challenges related to the finance.
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Conclusion
From the above report it can be concluded that the small and medium business are largely
contributing towards the growth and development of the economy and the development of the
small business will automatically lead to the growth of the overall economy, this report helps in
analysing the nature of the entrepreneur behind starting the entrepreneur and also the detailed
SME startup process, this report also helps in analysing the sources of competitive advantage and
the competitive environment. In addition to this the challenges of managing the business along
with current growth and development strategy are also highlighted
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References
Books and Journals
Al-Jabri, H. and Al-Busaidi, K.A., 2018. Inter-organizational knowledge transfer in Omani
SMEs: influencing factors. VINE Journal of Information and Knowledge Management
Systems.
Cassells, S. and Lewis, K., 2019. Managing to be environmentally responsible: incentives and
disincentives reported by small businesses. Small Enterprise Research, 26(1), pp.1-17.
Chung, H.M. and Au, K. eds., 2021. Succession and Innovation in Asia's Small-and-Medium-
Sized Enterprises. Springer Nature.
Duréndez, A. and Madrid-Guijarro, A., 2018. The impact of family influence on financial
reporting quality in small and medium family firms. Journal of Family Business
Strategy, 9(3), pp.205-218.
Hosoda, M., 2018. Management control systems and corporate social responsibility: perspectives
from a Japanese small company. Corporate Governance: The International Journal of
Business in Society.
Machmud, A. and Ahman, E., 2019. Effect of entrepreneur psychological capital and human
resources on the performance of the catering industry in Indonesia. Journal of
Entrepreneurship Education, 22(1), pp.1-7.
Nikabadi, M.S. and Hakaki, A., 2018. A dynamic model of effective factors on open innovation
in manufacturing small and medium sized companies. International Journal of System
Dynamics Applications (IJSDA), 7(1), pp.1-26.
O'Dwyer, M. and Gilmore, A., 2018. Value and alliance capability and the formation of strategic
alliances in SMEs: The impact of customer orientation and resource optimisation. Journal
of Business Research, 87, pp.58-68.
Park, J.H., 2018. Open innovation of small and medium-sized enterprises and innovation
efficiency. Asian Journal of Technology Innovation, 26(2), pp.115-145.
Poulin, D. and Tran, S. eds., 2020. Information and communication technology and small and
medium sized enterprises: from theory to practice. Cambridge Scholars publishing.
Simmers, C.A. and McMURRAY, A.J., 2019. Organisational justice and managing workplace
innovation: How important are formal procedures?. International Journal of Innovation
Management, 23(03), p.1950026.
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Tang, Z. and Tang, J., 2018. Stakeholder corporate social responsibility orientation congruence,
entrepreneurial orientation and environmental performance of Chinese small and
medium‐sized enterprises. British Journal of Management, 29(4), pp.634-651.
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