Governmental Support for Small and Medium-sized Enterprises

This report delves into the crucial role of the UK government in fostering the growth and development of small and medium-sized enterprises (SMEs). It begins by highlighting the significant contribution of SMEs to the UK economy, including their substantial share of businesses and employment. The report then outlines the various governmental policies and approaches designed to support SMEs, such as financial aid, training programs, and business education. It also explores the challenges SMEs face, including financial constraints, technological limitations, and regulatory burdens. The study uses the example of Olive Oak cash and carry to illustrate these points. The literature review covers the roles SMEs play in the economy, the problems they encounter, and the government's initiatives to address these issues. The research questions focus on the economic roles of SMEs, the challenges they face, and the government's support mechanisms. The rationale emphasizes the importance of understanding government strategies for SMEs, while the conclusion summarizes the key findings and their implications for SME growth and development.

Research

Contents
Title..................................................................................................................................................1
INTRODUCTION...........................................................................................................................1
Background of the research.........................................................................................................3
Research problem.........................................................................................................................5
Aim and objectives......................................................................................................................5
Research Questions......................................................................................................................6
Rationale......................................................................................................................................6
LITERATURE REVIEW................................................................................................................6
Roles that small and medium-sized companies of the UK are playing.......................................6
Problems SMEs are facing in operating business........................................................................7
Governmental roles for development and growth of small and medium-sized companies of the
UK................................................................................................................................................9
REFLECTION...............................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

Title
Roles of Government in the growth of small and medium-sized firm.
INTRODUCTION
In regard to small and medium-sized companies it is found that in the UK there are around
5.94 billion companies are of small sized that creates 99.3% of the total business. Small and
medium-sized companies also provide 3/5 of the employment (UK Small Business Statistic,
2019). So, from this ratio and data it can be said tat small and medium-sized companies are
playing a vital role in increasing economy. Government is also playing several roles for
developing all small and medium-sized companies. There are several policies that have been
developed by the government that affects small and medium-sized companies in both positive
and negative manner. Labour market policies, tax policies, social and gender policies have
critical impacts (Taiwo, Falohun and Agwu, 2016). It all depends on the ability of SMEs of
making use of policies, strategies and having positive outcomes. So, it can be said that from
information that government provides several facilities and support to small and medium-sized
companies in growth and development. It boosts confidence of SMEs of competing with others
and it works as motivation for them that leads success and effective growth.

There are several approaches that have been developed by the government such as: pick
the winner model, growth oriented approach and traditional versus growth oriented policy. All
these governmental policies and approaches are playing a vital role in growth and development
Illustration 1: Number of Private Sector Business in the UK
Sources: (Business Population Estimates for the UK and Regions, 2020)

of Olive oak cash and carry. It is also stated that Government of the UK provides fund to these
companies and makes them financial strong. Government knows that expect financial stability,
small and medium-sized companies have several effective resources that are effective.
Innovation and creativity are main keys of success of small and medium-sized companies
(Agnese, Rizzo and Vento, 2018). So, for promoting them and making them able to compete
with larger companies and taking advantages of external opportunities, by providing all
appropriate financial and other resources, government support SMEs.
Background of the research
All those companies that have employees fewer than 250 are known and comes under
small and medium-sized companies. Main aim of SMEs is to promote entrepreneurship and
fostering their families. This present study is based on Olive oak cash and carry that is part of the
food wholesaler industry. It is located in the UK and have around 54 employees. This company
is striving hard for expanding business and competing with large organizations. It is going to
discuss small and medium-sized companies as what roles they are playing in economy
development (Zafar and Mustafa, 2017). It will further discuss some problems that small and
medium-sized companies including Olive oak cash and carry face as compared to large
organization. Lastly, it will discuss several roles that government of the UK is playing for the
growth and development of SMEs. Policies made by the government, fund provided by it helps
SMEs in solving all problems that they face and also makes them able in taking competitive
advantages and accomplishing pre-determined goals. With the help of views of different authors
and by conducting literature, researcher will gather secondary data and all information relevant
to the research topic. All published data and articles play a vital role in gathering information and
helping out scholar in accomplishing pre-determined aim and objectives.

Illustration 2: Estimated Number of Businesses in the UK By Size
Sources: (Business Population Estimates for the UK and Regions, 2020)

It will also discuss problems that SMEs face and that creates barriers in the path of
success and competition with large companies. Some problems that this study will discuss
include: lack of finance, lack of access to new technology and resources that can make their
work easier. Due to lack of finance, they find problems in attracting customers because they
cannot invest much in marketing activities for promoting products.
Research problem
There are several internal and external factors that may create several problems in
successful research. Some external factors that may create barriers in completing research in
successful manner are: climate change, political changes, economic changes and others. Climate
change or situation of Corona Virus is one of the main problems. Due to this, researcher may
find problems in gathering information relevant to the topic so, he will require relying on only
secondary data (Zachosova, Babina and Zanora, 2018). Lack of financial and human resources
can also create problems as it may delay in the submission of research project. It can also affect
image of the company due to late submission. Lack of finance and poor financial stability can
affect quality of the research study that is the main key of success of research. So, for protecting
against failure and all these problems, it is important to make an effective plan along with
available resources and others.
Aim and objectives
Aim
“To discuss roles played by the government in growth of small and medium-sized firm”.
Study of Olive Oak cash and carry.
Objectives
 To discuss roles that small and medium-sized companies of the UK are playing.
 To explore challenges or problems that SMEs face.
 To discuss governmental roles for development and growth of small and medium-sized
companies of the UK.

Research Questions
11 What roles does SMEs of the UK are playing in development of the economy?11 What problems SMEs are facing in operating business?11 How government of the UK is helping out to small and medium-sized companies in
growth and development?
Rationale
One of the main reasons of selecting this topic is to make all small and medium-sized
companies about strategies and roles that government is playing for their development.
Sometimes, small and medium-sized companies do not have knowledge about benefits and
strategies that especially have been developed for them by the government. So, by conducting
research on this topic, Olive oak cash and carry and other companies can make themselves
beneficial by knowing effectiveness of all roles and strategies. It can also help them out in taking
competitive advantages and competing with large organizations. It can improve economy of the
country and can also increase employment rate (Owen and Mason, 2017).
LITERATURE REVIEW
Roles that small and medium-sized companies of the UK are playing
According to the view of Ayandibu and Houghton, (2017) SME plays a very important
role in developing the economy of UK in terms of providing the job opportunities to the needy
people which directly helps in eradication of unemployment situation in economy. Also, by
promoting the innovation and new thinking of the people SME gives chance to the people to
indulge themselves in the development of economy. Amoah and Amoah, (2018) also said that,
only by putting and taking the small steps the development of the whole economy is possible and
the SME helps the economy in taking those small steps which finally leads to the development of
economy. Apart from that SME also bring new talents and new ideas of the people which again
contributes a lot in the development of economy.
However on a critical note Abbasi, Wang and Abbasi, (2017) said that SME instead of
helping the economy in development, it is adversely affecting the growth and development of the
economy. Since under SME fresh talent or fresh people are given the chance to come but it is
adversely affecting the developing process of economy due to the lacking and deploying of

experienced talent. Also, on the one side SME is promoting the innovation but contrary it is very
risky because of the involvement of financial risk of the economy which may sink in case of
failure of the SME. Schell, Hiepler and Moog, (2018) also said that in SME while giving the
employment to the needy one, may sometime select those workforces which not only affects the
working of SME but also act as a hindering point regarding the development of the economy.
Jayasooriya, (2020) said in the regards to roles that SMEs are playing is to increase
productivity. It is stated that small and medium-sized companies contribute around 47% of
revenue to the UK economy. It helps in increasing productivity. But there is requirement of
proper and effective resources for working more effectively. SMEs have ability to adapt changes
as compared to large organization and this ability helps them out in being in the competition and
having their effective position in the market. It also makes them able to maximize as well as
stimulate competition. Lyver and Lu, (2018) contradicted and said that flexibility is their key but
there are several barriers that occur in the path of their success. As like large organization, small
and medium-sized companies do not have resources, financial stability and major changes in
micro and macro environment affect them to the great extent. It affects their overall productivity,
performance and ability to take competition advantages.
Problems SMEs are facing in operating business
ZARROUK and et.al., (2020) said that there are some policies and acts have been
developed that are affecting UK trade negatively. Such laws make difficult for small and
medium-sized companies to navigate all rules because they require vast amount of money and
time for staying compliant. So, it is being recommended that some policies need to be re-
developed or re-designed. It is also suggested that government requires removing many taxes and
plenty of taxes relief should be given to SMEs. But some authors. Belhadi and et.al., (2018)
argued and said that if government provides relief in taxes then it can complicate matters. It can
also provide avenues for exploitation via tax avoidance. So, in this regard they said that there is
requirement of providing flat rates for things like inheritance, and it could save money for
smaller firms. They also said that by making reduction in corporation tax and by eliminating
tariffs, SMEs should be provided benefits and all challenges can be decreased
Diksha Dutta, (2020) argued and said that according to them, SMEs are facing
technological risks and this challenge is directly associated with financial risks and lack of

financial stability. Due to lack of finance and strong stability, SMEs find problems in making use
of advanced technology. For being in this digital era it is important for small and medium-sized
companies to make use of advanced technologies for competing with large or multinational
companies. But this challenge create barriers in the path of success and increasing productivity.
Shibin and et.al., (2018) said in this regard that cashless society is also bad news for
SMEs. SMEs do not have systems that can support this trend and due to this problem they are
facing problems in attracting customers and making profits. Due to this problem, they find
Illustration 3: Challenges that SMEs are facing
Sources: (Biggest Challenges SMEs in the UK are Facing, 2020)

difficulties in attracting skilled workforces because skilled workforces prefer working with
companies that pay them high.
Governmental roles for development and growth of small and medium-sized companies of the
UK
Government of the UK is playing key role in development and the growth of SMEs. In
this regard Boosting UK Productivity with SME Growth, (2016) said that there are some
initiatives such as: Government's business growth service and UK trade investment. These
initiatives are having several positive impacts on the overall performance and growth of SMEs.
In addition, they also said that government is providing training and practical business education
in which they told them different and effective ways of performing functions by which they can
compete with large organizations. It is also found that business education training helped many
small and medium-sized companies in expanding business internationally and innovating. Long
term education strategy that is being developed by the government can build the next generation
of entrepreneurs. Owen and Mason, (2017) Argued this views and said that according to them
one of the main roles that is being played by the government of the UK is easy access to capital
by SMEs. There are some programs have been developed with the support of British business
bank and it is helping SMEs to take advantages o external opportunities and reducing challenges
faced by them related to finance.
Arshed, (2017) stated in this context that government of the UK is playing several roles
for making SMEs able and competitive. Some major roles that are supporting small and medium-
sized companies include: Building enterprise culture, building capacity for their growth,
providing better and easy access to finance, encouraging them in disadvantages communities as
well as in under-represented groups. Development of better regulations and policy is one of the
main part and role of the government. There are several policies that specially are being
developed for the growth and development of SMEs. Training that government is providing to
SMEs are helping out them in improving their research and development strategy. It is found
from above literature that SMEs face several challenges and lack of financial stability is the main
problem due to which they cannot focus on making use of advanced technology. But with the
help of governmental policies they are making use of technologies to some extent and by
focusing on R&D they can compete with large organizations. Technical and managerial training

increase knowledge and skills of employees of small and medium-sized companies. It helps them
out in promoting innovation and productivity as well.
Gooding and Gul, (2017) contradicted and said that there are several schemes that
have been developed by the government. It provides loan to SMEs at lower or cheaper rates and
lower interest rates and it makes them able to expand business internationally. By getting support
and taking advantages of all these policies, SMEs can improve overall economy of the country.
They can take advantages of external opportunities like making an effective position in the
market, increase customers retention rate and improving brand image. So, overall it can be said
that grants, funding, loans, governmental policies, training, access to finance are some major
roles of government that is helping out SMEs to take growth and development.
REFLECTION
By conducting study on roles that government is playing in the growth and development
of SMEs I learned several things. One of the main reasons of conducting research on this study is
to help SMEs and making them aware about all advantages that they can take by taking help of
the government. It can make them able to take competitive advantages. This study increased my
knowledge regarding effectiveness of SMEs and I came to know that how effective are they and
how they are improving overall economy, But they face some challenges due to lack of financial
stability and lack of resources. So, I got to know that Government works for betterment of people
and that is why it has developed several policies specially for SMEs.
CONCLUSION
On the basis of above discussion and study it has been summarized that government plays
several roles in improving living standard of people. Government makes several policies for
developing SMEs and makes them able to cope up and compete with large organization. It has
discussed effectiveness and importances of small and medium-sized companies of the UK and
ways as how they are improving economy of the country. It has further discussed some
challenges that SMEs face such as: lack of finance, resources, negative impacts of some policies
and others. Lastly, it has shown some policies and steps that have been taken by the government
for growth of SMEs.