Small Business Impact on Economy: Examining Entrepreneurial Ventures

Small businesses have a significant impact on the economy, including job creation, innovation, and opportunities for individuals. Entrepreneurial ventures can be similar or different in their objectives, goals, risks, and number of employees. For example, small business entrepreneurship may not focus on growth and profitability, while scalable startup entrepreneurship aims to offer new products and attain higher profitability. The risks in small business and social entrepreneurship organizations are lower than in other ventures, while the risks are higher in startup entrepreneurship due to higher investment. Small businesses employ fewer than 50 employees, while large companies can employ more than 1000. In the UK, there were almost 5.972 million SMEs in 2020, with micro-sized enterprises employing up to 9 people making up the majority of SMEs. Small businesses and business start-ups contribute to the growth of the social economy by creating employment opportunities and conducting CSR activities.    

LO2 Assessing the impact of small businesses on the economy
P2 Examining the similarities and differences between entrepreneurial ventures
Some of the similarities and differences between entrepreneurial ventures are explained below:
In the case of small business entrepreneurship, the objectives and goals are not structured well
and these organizations usually don’t give that much effort to gain growth and profitability.
Scalable startup entrepreneurship aims to offer new products and works to attain higher
profitability and large company entrepreneurship intends to improve new products and
marketing strategies to survive in the market (Shvydka, 2021). Social entrepreneurship seeks to
offer the customers good products to make a better world. The risks in both small business and
social entrepreneurship organizations are slightly lower than in other ventures. But the risks are
higher in startup entrepreneurship because of having a higher amount of investment and the
risks are medium in the large company entrepreneurship. The numbers of employees in small
businesses are not greater than 50 employees but in a large company, the employees' number
can be greater than 1000. Conversely, the employees' number in both scalable startup and
social entrepreneurship is based on size and the business structure.

P3 Interpretation and assessment of related statistics and data to explain how micro and
small businesses impact the economy
The small and micro businesses in each industry contribute a lot to a country’s economy.
Nowadays, the number of small and micro businesses is enhancing rapidly through offering
various kinds of products and services which helps to make a higher income.
Figure 1: No. of SMEs in the UK from 2010 to 2020 (Number of SMEs in the UK 2020 | Statista,
2021)
From figure no.1 we can notice that almost 5.972 million SMEs were conducting in the UK. In
micro-sized enterprises, there engaged up to 9 people that make up the greater number of
SMEs at approximately 5.7 thousand. The number of employees between 10 to 49 employees is
classified as small enterprises and also marked in the UK about 211 thousand.

Figure 2: Shares of Businesses in the UK by size, 2020 (Business population estimates 2020,
2021)
As the following figure shows that in the UK most of the businesses employ lower than 10
people and these kinds of businesses account for only 21% of turnover and 33% of
employment. In micro-businesses, there were accounting for 96% of all businesses. Besides,
there have 8000 large businesses which are accounting for only 0.1% of businesses apart from
485 of turnover and 39% of employment.
P4 Explanation of the importance of small businesses and business start-ups to the growth of
the social economy.
For keeping up with the development of the social economy, small businesses and business
start-ups have a greater influence as both of the businesses help to create employment
opportunities which added to the growth of the GDP in the economy and also conducts
different CSR activities. Small businesses help to create employment opportunities that reduce
unemployment problems and employees also get the chance to learn from the basics of the
business which can be taken up to the growth of the social economy. Apart from this, start-up
businesses in the UK also help to raise higher profitability within a short time and also can
minimize the unemployment problem in a country by hiring lesser-skilled workers with

providing lower salaries (Williams and Martinez, 2018). That results in generating employment
opportunities that have an enormous contribution to the UK’s GDP.