Entrepreneurship and SMEs in UK

The assignment discusses the importance of entrepreneurship in the UK's economy, focusing on Small and Medium-Sized Enterprises (SMEs). It examines the cultural and educational struggles that entrepreneurs face while also emphasizing how their background and experience can help them succeed. The document references various studies and sources to provide a comprehensive understanding of SMEs' role in the UK economy.

UNIT 9
ENTREPRENEURSHIP

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Various entrepreneurial ventures and their relations to typology of entrepreneurship......1
2. Exploration of differences and similarities between entrepreneurial ventures..................3
3. Presentation of statistical data of micro and small businesses impact on economy...........5
4. Contribution of small and medium businesses towards growth of economy after Brexit..6
5.Differentiating 2 successful entrepreneurs from other managers on the basis of their
characteristics and skills.........................................................................................................7
6. Examination of how background and experience hinder or fosters entrepreneurship through
examples.................................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Entrepreneurship is the persistence of progression towards innovative ideas. An
entrepreneur has the ability to recognise and analyse opportunities, so that they are able to create
products and services that will satisfy their customers (Dees, 2017). It involves coming up with
innovations and taking risks in order to achieve success. There has to be creativity and flexibility
while using resources in an optimal manner, which is the very essence of entrepreneurship. This
report will go through various entrepreneurial ventures and their relationships to
entrepreneurship typology. It will explore the differences and similarities between them as well.
There will be a presentation of statistical data, that will help understand the impact of micro and
small business on economy as well as its contribution towards UK's social economy. This report
will also cover 2 successful entrepreneurs, their characteristics, traits and how they differ from
normal managers. At last, explaining how background and experience of entrepreneurs can affect
entrepreneurship will be done.
TASK 1
1. Various entrepreneurial ventures and their relations to typology of entrepreneurship
An entrepreneur has to assess the various types of entrepreneurial ventures before setting
up their business. It is a crucial step when deciding what kind of organisation has to be formed
and how it will be done (Scarborough, 2016). These are present in private and public sector, and
entrepreneurs can decide in which area they would like to start operations. Given below are the
different types of entrepreneurship.
 Micro entrepreneurial ventures:
Micro entrepreneurial ventures are those enterprises that have limited investments. Capital is
generally funded through personal savings or contributions from family. These consist of sole
proprietorships or partnerships and the owners act as managers. They employ less than 10
workers in their organisation and are more inclined towards labour (Burns, 2016). Operations are
done on a local basis and these consist of shop owners, plumbers and mechanics. They can grow
into small or medium enterprises once they have required financial resources available.
 Small entrepreneurial ventures
These entrepreneurial ventures are set up by those entrepreneurs that generate capital through
personal savings, loans from banks. Line of credit or government grants. They employ around
1

50-100 workers and have assets less than £10 million per year. These are generally corporations,
sole proprietorships or partnerships (Barringer, 2015). For example, grocery shops, bakeries and
hair dressers are considered small ventures. They operate across cities and provide job
opportunities to local economy.
 Medium entrepreneurial ventures
Medium enterprises are invested through different sources of funding that include venture
capitalists, angel investors and loans from financial institutions. They have about 200-250
employees and generate a revenue of around £50 million. These corporations consist of
restaurants and legal service providers (Schaper and et.al., 2014). It has large scope for growth as
they operate across towns and cities.
Typology of Entrepreneurial Ventures
Large Entrepreneurial Venture:
Large organisations with revenues that exceed £100 million and generally consist of
corporations that manufacture goods and services at a big scale. They have long term goals that
help them to increase revenues and profits which ensures their success and growth. Their
investments are done by crowdfunding and venture capitalists. They operate internationally and
have more than 500 employees (Baum, Frese and Baron, 2014). Their contribution towards
economic development is high as well and they provide job opportunities across nations.
Social Entrepreneurial Venture:
Some entrepreneurs set up organisations that aim at benefiting the society. They analyse
various problems that are evolving around the country and use innovations to solve them. Their
products and services are created in such a manner that social issues are attended to and care is
taken of the environment as well. They collect funds through charities, donations and personal
contributions (Bruton and et.al., 2015). There is no profit earning motive and an example is
educational institutes. They grow and expand with time.
Scalable start up Entrepreneurial Venture:
There are entrepreneurs that have unique ideas and innovations, which they feel can
change the world. This is why they develop scalable start up entrepreneurial ventures. They
attract investors such as crowd-funders and angel investors, that allow them to manufacture high
quality goods and services for citizens of the country. They have employees who are motivated
2

and driven with passion. There is high potential and scope for these organisation to prosper,
which can lead them to earn high profits.
2. Exploration of differences and similarities between entrepreneurial ventures
Entrepreneurial ventures are of many kinds and they are all different from each other.
Their goals, targets and sizes vary, which makes it easy for an entrepreneur to decide which one
would be best suited to start up (Glaeser, Kerr and Kerr, 2015). The differences between micro,
small and medium enterprises are as follows:
Basis Micro Enterprises Small Enterprises Medium Enterprises
Investments These entrepreneurial
ventures require low
capital and funds are
mainly personal savings or
borrowings from family
and friends.
Small entrepreneurial
ventures fund capital
through personal savings,
loans or line of credit
(What’s the Difference
Between Micro Businesses
and Small Businesses,
2018). Their investments
are comparatively higher.
Medium entrepreneurial
ventures require high
investments (Naudé,
2014). These are
generally funded by
angel investors and
venture capitalists.
Employees Micro enterprises have less
than 10 employees and
work is managed by the
owner.
They have about 50-100
employees and managers
are present in different
areas.
These organisations have
200-250 employees.
Each department has a
manager.
Profits/
Turnover
These organisations
generate a revenue of
around £1 million.
The profits earned by
small enterprises are
between £1 to £20 million
(Lipset, 2018).
Medium enterprises
generate £20 million and
can go up to £300
million.
Scope These entrepreneurial
ventures do not have much
scope due to lack of
resources.
Small entrepreneurial
ventures have scope to
grow as they generate
good amounts of revenue
and have all required
Medium entrepreneurial
ventures have a high
scope of growth because
they provide products
and services across cities
3

resources. and can grow
internationally.
Operations Micro enterprises run
operations in a particular
locality or city (Decker and
et.al., 2014).
Small enterprises operate
across cities.
Operations of medium
enterprises are done in
different cities and states.
The differences in typologies of entrepreneurship are as follows:
Basis Large entrepreneurial
ventures
Scalable start up
entrepreneurial
ventures
Social entrepreneurial
venture
Size These are large
organisations that earn
revenues of over £1
billion.
These are medium
organisations that
initially earn £500
million and gradually
build their way up.
These are small
organisations that
generate more than
£300 million
depending on
contributions.
Operations They operate at a large
scale and have units
across the world.
They have operations
at different states in a
country (Terjesen,
Hessels and Li, 2016).
They initially start in a
country and then
continue towards
global operations.
The similarities between micro, small and medium entrepreneurial ventures are that they
all have been started up for the purpose of providing products and services to the public.
Investments have to be made by them in order to start business operations and they have a
common objective of generating revenues for their respective purposes and growing business
operations. Small and medium organisations have managers at different departments. They both
create long term goals (Scarborough, 2016). Their business provides a huge contribution towards
the growth of country's economy. These enterprises have entrepreneurs that are willing to take
risks and run operations.
4

3. Presentation of statistical data of micro and small businesses impact on economy
Micro and small business dominate UK as they contribute to 94% of total companies in
the country. Every year, new enterprises are set up and as of 2016, there are 5.5 million SMEs
present in private sector. 60% of them collect funds through external sources when establishing
themselves. They include loans and government grants. The economy is dependent on these
organisations as they contribute 50% towards GDP growth. Due to Brexit, SMEs have been
impacted negatively as it has led to a decrease in their productivity, thus providing comparatively
less contribution towards UK's economic growth and development. Some small businesses did
not get a chance to export their products and services, which has limited their opportunities of
achieving success (Dees, 2017). They are not being provided the support that they require and
new policies and frameworks are making it even more difficult for them to run operations.
Illustration 1: Different Organisations in UK
(Source: Essential Facts You Should Know About SMEs in the UK, 2018)
Small and micro entrepreneurial ventures provide 48% of total employment opportunities
to citizens of UK. But they have a turnover of 33%. While medium businesses provide 12% jobs
and have a turnover of 14%. Large organisations have the highest turnover of 53% and only
contribute to 40% of providing employment opportunities. In recent times, there has been a
positive influence towards growth in innovations and competition which has created a good
5

environment for SMEs to operate (Schaper and et.al., 2014). They are imposed smart rules and
regulations as well as tax structures that makes it easier for them to function. 47% of turnover
comes from small and micro businesses that employ less than 10 workers and this amounts to a
total of £1.8 trillion which directly goes towards economic growth. They have provided jobs for
over 2 million people since 2010, which makes them the support system of economy.
Innovative SMEs have high growth rates which lets them produce and process products
and services effectively. They have increased their sales by 0.7 % which has also led to
employment growth. The heavy competition has also caused an increase in productivity of these
organisations and directly influences the GDP. Their creativity and flexibility have allowed them
to adapt to changes that occur in the economy. They attract and train talented individuals, who
later develop products and services that fulfil the needs of customers (The Role of SME's in the
UK Economy, 2012). Large industries and organisations can only contribute towards the
economic growth, when they are provided with resources and raw materials from the small
enterprises. Therefore, the impact of micro and small business in UK has noted to be a positive
one and their contribution has helped the economy to grow and prosper by providing job
opportunities, increase in international trade and bringing new innovations as well as adapting to
crisis that occur in the country.
4. Contribution of small and medium businesses towards growth of economy after Brexit
When UK decided to part ways from EU, Brexit came into action. This had a huge
impact towards the economy as well as small and medium businesses. They had to face many
challenges during this change but some managed to survive and continued their operations.
Presently, Large companies do not contribute as much to local communities and societies, while
small and medium enterprises have seen a growth which has led to development of economy.
People buy products and services that are innovative and new, which has raised the standard of
living (Glaeser, Kerr and Kerr, 2015). The emergence of new small entrepreneurial ventures after
Brexit, has led to an increase in employment opportunities at a local level. The population of UK
has grown in the past years and there are individuals that require jobs in certain localities. This
opportunity has helped to rise GDP as well. Due to Brexit, customers are worried about
uncertainties, which is making them buy small and medium companies' products as provide
quality goods.
6

Large companies purchase raw materials from small and micro organisations, for which
they can manufacture their products. They are reliable on these enterprises, as their productivity
will decrease if they are unable to allocate required resources. SMEs had struggled to export and
create trade relations, but they recently have started to trade internationally. This has helped the
economy to grow sustainably (Terjesen, Hessels and Li, 2016). The drop of currency rates has
created potential for them to export in China, Canada, India and Australia as it makes trading
cheap and affordable for them. This aids in increasing sales and revenues, directly leading to
growth in social economy. Brexit did not result in much panic, in return SMEs have taken
initiatives to focus on their goals and handling situations which they can control. It has provided
a platform in which local communities are starting to establish micro, small and medium
organisations, which has successfully lead to increase in job opportunities and aggregate GDP of
UK.
The use of technology has drastically helped SMEs to establish themselves. It keeps costs
of variable overheads low and entrepreneurs are not required to physically open up their
organisation. They can start their business anywhere, with the help of latest digital technology as
well as advertise themselves through social media platforms. This has significantly led to
increase in growth of social economy. They are able to communicate directly to their customers
and understand their product preferences and needs. It has changed the attitude of people and has
made them build an entrepreneurial mindset (Glaeser, Kerr and Kerr, 2015). Even during
recession, small and medium businesses managed to continue business operations as their
products were diverse and unique. After Brexit, there has been an increase of over 450,000
SMEs in UK and has been continuously growing as well as developing ever since. They have
overcome many challenges and are currently the highest contributors to the complete UK
economy.
5.Differentiating 2 successful entrepreneurs from other managers on the basis of their
characteristics and skills
In order to succeed in today's business world, an entrepreneur has to have a set of
characteristics and skills, that sets them apart from other business managers (Naudé, 2014). Mark
Zuckerberg is a successful entrepreneur and owner of the famous social media website,
Facebook. He created this page while he was at college and is now worth almost £70 Billion.
7

Another example is Warren Buffett, the world's successful investor and has an approximate net
worth of £100 Billion.
The characteristics, traits and skills of Mark Zuckerberg are as follows: Goes beyond comfort zone: Mark Zuckerberg steps out of his comfort zone and is willing
to explore different areas in which he can find success. He communicated with people
from different countries and discussed his visions so that other were able to see how he
worked (Baum, Frese and Baron, 2014). This makes him different as other managers
resist stepping out of their comfort zones, tend to stay inside their bubble and do not take
much risks. Takes criticism positively: Most managers are not willing to face or accept criticism
made by public. But this is what makes Mark Zuckerberg different, as he is ready to hear
about the opinions that critics give him and always sees the positive side of it. He does
not get disheartened, but rather tries to improve himself. Adaptable: Mark Zuckerberg has the ability to adapt under different circumstances and
address situations that need rectifications. He quickly understands and implements
changes when needed (Qualities That Make Mark Zuckerberg An Ace CEO, 2018). This
makes him different as other managers do not have the capability to adapt to certain
situations that arise in a business and rather than embracing it, they start fearing change.
 Aggressive: Mark Zuckerberg strives for constant growth and innovation. He is firm and
stubborn when it comes to taking business decisions and fights for ideas that he feels can
help his company in succeeding (Glaeser, Kerr and Kerr, 2015). While other managers do
not show aggressiveness when conducting meetings about their business and do not fight
for something that they feel right about.
Warren Buffett's characteristics, traits and skills are as follows: Realistic: Warren Buffett is a realistic and analyses his strengths and weaknesses. He is
able to manage his expectations and doesn't chase things that he knows are not
approachable (Barringer, 2015). This makes him different from other managers as most
of them keep unrealistic expectations from their investments and tend to become greedy. Doesn't follow the crowd: Managers make investments in those companies where
investors are high. They usually choose popular opinions and later suffer due to some
unforeseeable circumstance. While Warren Buffett does not follow what other do and
8

sticks to his rational decisions (Naudé, 2014). He has disciplined himself to select those
companies that he feels are worth investing in. Thirst for knowledge: Warren Buffett has a constant thirst for knowledge and spends
most of his time reading about new things. He feels that it is important to learn things that
are interesting and gain as much knowledge as possible. This makes him different from
other managers as they do not read books to gain insights about various happenings in the
world.
 Modest: Warren Buffett is a modest person and keeps reminding himself that he has a
limited role in what he earns. He spends most of his earnings for charities and does not
have ego (Lipset, 2018). This makes him different as other managers are filed with pride
and are pompous at times. Their only motive is to earn and spend money.
Mark Zuckerberg and Warren Buffett are entrepreneurs that have successfully managed
to run their business and make smart investments. It is because of their adaptability and realistic
mind-set, that they are able work efficiently. They get out of their comfort zone and try to learn
about new things by increasing their knowledge (Decker and et.al., 2014). Their modesty and
aggressiveness is what makes them the successful leaders that they are today.
6. Examination of how background and experience hinder or fosters entrepreneurship through
examples
There can be some hindrances that may occur during development of entrepreneurship
due to background or experience of the entrepreneur. But some of them can prove to foster the
business. These can be caused by the following factors: Culture: There are different cultures across the world, which makes it difficult for
entrepreneurs to analyse. Their culture may not be favourable to the idea of starting up a
business, and this can hinder entrepreneurship (Baum, Frese and Baron, 2014). But in the
case of Mark Zuckerberg and Warren Buffett, they were encouraged to develop their
businesses and had help from their peers and family. This aided Mark in successfully
fostering Facebook and Warren by making him believe that he can achieve success
through investing in different companies. Education: Education is key when establishing a business and an entrepreneur is required
to possess knowledge and skills related to the type of organisation they want to start up
(Glaeser, Kerr and Kerr, 2015). This is what helps them in becoming successful. Mark
9

Zuckerberg and Warren Buffett had a good educational background, as both of them
studied at prestigious colleges. It fostered their entrepreneurship and brought them to
achieve massive success. If an individual does not have the right education, it can create a
hindrance in the development of their business. Family background: Family is what creates an individual's personality and its
background is a very important factor when developing an entrepreneurship. If a family
does not support the starting up of a business, it can hinder the budding entrepreneur
(Burns, 2016). But when they assist and encourage it, entrepreneurship can be fostered.
Mark Zuckerberg did not have a good family background, which created issues for him.
But it was his friends that helped him in successfully starting Facebook. While Warren
Buffett had the support from his family when he started investments.
 Resources: An entrepreneur may not have the required financial resources to start up
their business and this can be a hindrance in entrepreneurship. The lack of funding
options or other factors can slow down the business development (Naudé, 2014). Warren
Buffett did not have much money to invest in companies, and this hindered in his
success. While Mark Zuckerberg had the required resources at his college, which helped
in fostering his entrepreneurship.
Therefore, it can be said that background and experience of entrepreneurs can hinder or
foster their entrepreneurship. Mark Zuckerberg and Warren Buffett were lucky enough to have
the required education to foster their businesses, as well as a good family background and culture
which helped them achieve success (Scarborough, 2016). Resources may have been a hindrance
for them, but they overcame the challenges and are continuing to run their entrepreneurship in a
positive manner.
CONCLUSION
This report on entrepreneurship can infer that typologies of entrepreneurship come under
micro, small and medium entrepreneurial ventures and they all have different sizes and
structures. Their similarities include having a common business objective and methods of
investment. It can be concluded that small and micro organisations contribute to 94% of total
companies in UK and new enterprises are set up, which totals to 5.5 million in private sector.
Brexit had negatively impacted these entrepreneurial ventures, but they have managed to help in
the economic growth and development. Mark Zuckerberg and Warren Buffett are 2 successful
10

entrepreneurs that possess skills and characteristics that are different from other managers, which
has helped them to succeed in their businesses. But there were some cultural and educational
struggles that they had to face, which hindered their entrepreneurship. Meanwhile, their
background and experience helped them to foster their business.
11

REFERENCES
Books and Journals
Barringer, B. R., 2015. Entrepreneurship: Successfully launching new ventures. Pearson
Education India.
Baum, J. R., Frese, M. and Baron, R.A., 2014. The psychology of entrepreneurship. Psychology
Press.
Bruton, G. and et.al., 2015. New financial alternatives in seeding entrepreneurship:
Microfinance, crowdfunding, and peer‐to‐peer innovations. Entrepreneurship Theory
and Practice. 39(1). pp.9-26.
Burns, P., 2016. Entrepreneurship and small business. Palgrave Macmillan Limited.
Decker, R. and et.al., 2014. The role of entrepreneurship in US job creation and economic
dynamism. Journal of Economic Perspectives. 28(3). pp.3-24.
Dees, J. G., 2017. 1 The Meaning of Social Entrepreneurship. In Case Studies in Social
Entrepreneurship and Sustainability (pp. 34-42). Routledge.
Glaeser, E. L., Kerr, S. P. and Kerr, W. R., 2015. Entrepreneurship and urban growth: An
empirical assessment with historical mines. Review of Economics and Statistics. 97(2).
pp.498-520.
Lipset, S. M., 2018. Values, education, and entrepreneurship. In Promise Of Development (pp.
39-75). Routledge.
Naudé, W., 2014. Entrepreneurship and economic development. International Development.
Ideas, Experiences and Prospects.
Scarborough, N. M., 2016. Essentials of entrepreneurship and small business management.
Pearson.
Schaper, M. T. and et.al., 2014. Entrepreneurship and small business.
Terjesen, S., Hessels, J. and Li, D., 2016. Comparative international entrepreneurship: A review
and research agenda. Journal of Management. 42(1). pp.299-344.
Online
Essential Facts You Should Know About SMEs in the UK. 2018. [Online]. Available through:
<https://www.market-inspector.co.uk/blog/2017/05/facts-about-small-medium-
businesses-in-the-uk>

Qualities That Make Mark Zuckerberg an Ace CEO. 2018. [Online]. Available through:
<https://www.blogbrandz.com/tips/qualities-mark-zuckerberg-ace-ceo/>
The Role of SME's in the UK Economy. 2012. [Online]. Available through:
<https://thoughteconomics.com/the-role-of-smes-in-the-uk-economy/>
What’s the Difference Between Micro Businesses and Small Businesses?. 2018. [Online].
Available through: <https://quickbooks.intuit.com/ca/resources/operations/whats-the-
difference-micro-and-small-businesses/>