Entrepreneurial Ventures: Types, Impacts, and Environments (BUS101)

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Entrepreneurship and Small Business Management
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Table of Contents
Introduction......................................................................................................................................3
LO1 Explore and illustrate the range of venture types that might be considered entrepreneurial. .3
P1 Examine different types of entrepreneurial ventures and explain how they relate to the
typology of entrepreneurship...........................................................................................................3
P2 Explore the similarities and differences between entrepreneurial ventures...............................4
M1 Investigate a diverse range of entrepreneurial ventures to demonstrate an understanding of
entrepreneurship in both the public and corporate sector................................................................5
D1 Critically examine the scope, development and growth of entrepreneurial ventures................6
LO2 Assess the impact of small businesses on the economy..........................................................6
P3 Interpret and assess relevant data and statistics to illustrate how micro and small businesses
impact on the economy....................................................................................................................6
Fig.1- Share of businesses in UK according to size....................................................................7
Fig.2- Employment in Private sector businesses in the UK........................................................8
Fig.3- Revenue impact of small, medium, and micro business in UK economy........................9
P4 Explain the importance of small businesses and business start-ups to the growth of the social
economy...........................................................................................................................................9
M2 Evaluate the differences that small, medium and large businesses make to the economy,
applying relevant data and statistics................................................................................................9
Fig.4- Business birth and death rates in UK..............................................................................10
Fig.5- Survival Rates of businesses in UK started Between 2011 – 2016................................11
Fig.6- Challenges faced by SMEs in UK between 2011 – 2016...............................................11
D2 Critically examine how small businesses have an impact on different levels of the economy
in a local, regional, national and international context..................................................................11
LO3 Determine and assess the key aspects of an entrepreneurial mindset...................................12
Entrepreneurial characteristics and mindset:.................................................................................12
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Skills set of the entrepreneur:........................................................................................................13
Personal entrepreneurial tendency:................................................................................................13
LO4 Examine the different environments that foster or hinder entrepreneurship.........................15
The factors that influence the decision to start a business:............................................................15
The risks and rewards of business start-up:...................................................................................17
The potential rewards of business start-up....................................................................................18
The risks and uncertainties of business start-up and how they can be mitigated..........................18
Conclusion.....................................................................................................................................19
References......................................................................................................................................20
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Introduction
From the arrival of the industrialization, many eminent personalities discovered new notion that
was efficient enough to revolutionize the world. The prominent entrepreneurs have given birth to
huge organizations. Such organizations created vast opportunities and value for the society.
Entrepreneurship is the action that includes start up of new businesses in the desire of
profitability but with a high financial risk. The strong perception of innovation that is possessed
by the entrepreneurs can make huge change in the market and society. The type of
entrepreneurship changes with the type of the businesses, motivational and technological aspects.
This study traverses and exemplifies the wide range of entrepreneurial ventures and shows the
various similarities and dissimilarities between the ventures. In this study, assessment of the
impact of small businesses on the economy is done. This study also highlights the factors that
have great influence on the decision making of starting a new business.
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LO1 Explore and illustrate the range of venture types that might be considered
entrepreneurial
Entrepreneurship: Entrepreneurship can be defined by the action by which one or more
businesses are created with the aim to earn profit with taking the risk of finance. It is the
willingness or the capacity for developing, organizing as well as managing a business venture
(Phillips et al., 2015). Entrepreneurs can be defined as the individuals with a strong knowledge
of business and innovative ideas for making drastic change in the community and the market that
may be local, regional or global.
Entrepreneurial activity: This can be defined by the action so that value can be generated by
formation or growth of economic activity with the help of identification and exploitation of new
goods and services, processes or new markets.
Enterprise: Enterprise can be defined by the entrepreneurial activity which is conducted by
resourcefulness and initiatives taken by the entrepreneurs.
P1 Examine different types of entrepreneurial ventures and explain how they relate to the
typology of entrepreneurship.
Entrepreneurial ventures: In this type of venture the entrepreneur is the person responsible to
start and run the business with confined capital or resources. The risk and the reward of the
business venture are also taken account by the entrepreneur. The business plan in this type of
venture is generally the innovation or revolution of new goods and services in spite of changing
an already existing business model (Rauch and Hulsink, 2015). Here the uncertainty level is very
high however; the target return is also very high.
Entrepreneurship ventures: Entrepreneurship is somewhat similar with entrepreneurial ventures
as the action and behaviour of entrepreneur is alike but the respective business is much larger in
this case. Entrepreneurs are individuals who are motivated by themselves, action oriented and
proactive (Belz and Binder, 2017). These characteristics help them to take quickest decisions and
initiatives so that innovative product and services can be developed. It is also known as a
function of corporate management style. The risk taking nature is also similar with the
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entrepreneurs. Freedom is the main priority for the entrepreneurs. They are very efficient to
develop charts of workflow so that the competition in near future can be visualized for their
mitigation.
Managerial ventures: A managerial workforce is the management of the workers or employees
within the business organization with the target of completion of work. Managers are also paid
employees who are given the authority for making changes inside the business organization but
with taken prior approval (Audretsch, Heger and Veith, 2015). Managers are very active and
tactile in behaviour for controlling the juniors and other employees. There is no necessity of
being innovative for the managers but they can focus on becoming innovative as well as
challenging so that completely new products or services can be introduced in the market or the
business can enter into emerging market.
P2 Explore the similarities and differences between entrepreneurial ventures.
Lifestyle vs. growth entrepreneurship: A lifestyle entrepreneur starts a business with the sole
purpose of making change in the existing lifestyle and not for making profit. For example, Chris
Guillebeau is one of the most famous lifestyle entrepreneurs in the world and the founder of the
blog Art of Non-Conformity. Whereas, the drive force of growth entrepreneurs is the
competitive nature of the business. They create a business with the aim of generating value with
long term effect (Hjorth, Holt and Steyaert, 2015). Hence they are motivated to make a larger
and more competitive business. They make huge investment in business and care less about the
lifestyle. Jim Picariello, the founder of Wise Acre Frozen Treats is one example of growth
entrepreneurs whose business grew very quickly. Thus the major differences between these two
types of entrepreneurship are the goal of business.
Social entrepreneurship: A social entrepreneur is an individual who follows creative
applications having the potency for solving problems regarding the community and society (Rey-
Martí, Ribeiro-Soriano and Palacios-Marqués, 2016). Social entrepreneurs have the will for
taking risks and they give ultimate effort for developing positive changes in community with
their novel initiatives. So, they differ from the growth and lifestyle entrepreneurs in the aspect of
their goal that is to make positive change in the community and not profit making or lifestyle
changing. Bill Drayton the founder of Ashoka: Innovators for the public; Blake Mycoskie,
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founder of TOMS and Jeffery Hollender founder of Seventh Generation are the major examples
of social entrepreneurs.
M1 Investigate a diverse range of entrepreneurial ventures to demonstrate an
understanding of entrepreneurship in both the public and corporate sector.
There is a diverse range of entrepreneurial ventures and the types of the ventures are highly
dependent on the purpose of the business. Based on the purpose, the ventures can be divided into
ventures that belong to two sectors that are public and corporate sector.
In public sector: Government controls the public sector both directly and indirectly. These kind
of entrepreneurial ventures do not focus on the profitability but give emphasis on the welfare and
development of the society. For example, Government Economic Service (GES) is an
entrepreneurial venture in the public sector of UK that offers economic services to the people.
In corporate sector: Entrepreneurial ventures is corporate sectors are owned by individuals or
partners and the organizations are run in private. They offer quality products to the customers
applying a range of marketing strategies. For example, W.L.Gore that is a global materials
science company and manufactures fabrics is an entrepreneurial venture in USA.
D1 Critically examine the scope, development and growth of entrepreneurial ventures.
Newbery and Jinman (2013), stated that different entrepreneurial ventures possess different
mission, vision, goals and objectives which is the main factor that impact the scope of business
organizations. The business organizations can stay in the market for long term by gaining huge
profits only if they are able enough to produce goods and services for meeting the needs and
expectations of the consumers. The focus of the various entrepreneurial ventures must be on
gathering investments and the ongoing trend of the society. According to Carter and Jones-Evans
(2012), the structure of the organizations plays major role in ventures and if this is effective, it
can increase the communication between the various departments so that the activities can be
performed smoothly. The quality of the offered products and the services regulates the growth of
entrepreneurial ventures because only with good quality products the demands of the consumers
can be met.
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LO2 Assess the impact of small businesses on the economy
Sources of entrepreneurial ideas: Entrepreneurial ideas come from work experience, literatures
and books or as an emerging trend. This can also come from a specific gap in the market and
knowledge and skills. Entrepreneurial ideas can be triggered from any event like job
dissatisfaction, job loss or changes in the lifestyle (Block et al., 2015). Entrepreneurial ideas are
linked with creativity and innovation. Creativity is the action or capability to produce unusual
and original products and services and innovation is the application of new products or
processes.
Protection of intellectual property rights: Businesses have various means to protect the
intellectual property rights. The major means are registration of brand name and logo as
trademark, taking timely patent for inventions or registration of designs of the products.
P3 Interpret and assess relevant data and statistics to illustrate how micro and small
businesses impact on the economy.
Small and medium sized enterprises (SMEs) are those business organizations that employ less
than 250 employees and micro enterprises are those businesses that employ less than 10
employees. In order to illustrate the impact of micro, small and medium businesses on the
economy of United Kingdom both primary and secondary research have been done through
interviews and questionnaires and the statistics are described below:
What is share of small, medium and micro businesses in UK?
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Fig.1- Share of businesses in UK according to size
(Source- Created by learner)
The statistics shows that in the year 2018, 5.4 million micro businesses were running their
businesses in the UK which is 96% of all businesses of UK. The number of SMEs in the UK was
reported to be 245000 that were over 3% of all the businesses. The amount of large businesses
was reported to be 8,000 which accounts for 0.1% of all businesses in UK (Small Business.,
2019).
What is the amount of employment in small, medium and micro businesses in UK?
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Fig.2- Employment in Private sector businesses in the UK
(Source- Created by learner)
The statistics shows that in the year 2018, the micro business in UK have employed 8.8 million
people which is 33% of overall employment in UK. Large businesses have employed 10.7
million people that are 40% of overall employment of the country. Small and medium businesses
have employed 4 million and 3.3 million people respectively.
What is the impact of small, medium and micro businesses in the economy of UK in terms of
revenue?
Fig.3- Revenue impact of small, medium, and micro business in UK economy
(Source: Created by Learner)
In the year 2018, the micro businesses have contributed to the economy of UK with 21% of
turnover whereas the large businesses have contributed with 48% of turnover. The contribution
of small and medium businesses to the economy in terms of revenue is 15% each.
P4 Explain the importance of small businesses and business start-ups to the growth of the
social economy.
The start up business plays major role in the growth of the social economy in all countries across
the world. Such kind of business offers innovative and creative ideas of products, services,
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processes, technologies that help people to fulfil their expectations and demands. It has been also
reported that small business start ups are potential in capturing market quickly and making high
amount of turnover in very less time. The government receives a higher amount of tax from start
up businesses which contributes to the growth of the country. Business start-ups also offer a huge
amount of employment opportunity that decreases the unemployment rate of the country. One of
the positive impacts of start-up businesses is that often they are unable to pay high rate of salary
to the highly skilled employees for having less business capital. Hence, they recruit people who
are less skilled with lesser salary. The small and start-up business in recent years are more
concerned in corporate social responsibilities (Zahra and Wright, 2016). In this approach, they
donate or raise fund for the well being of the poor people of the underdeveloped countries,
contribute for education of homeless children, invest in the betterment of the environment
through decreasing emissions and carbon footprint. Such investment makes huge contribution to
the economy of any country including UK.
M2 Evaluate the differences that small, medium and large businesses make to the economy,
applying relevant data and statistics.
It has been already shown that, in UK the number of small, medium and micro businesses is
much higher with respect to the larger businesses. In every sector and industry SMEs contribute
a large portion. The rate of growth of small, medium and large businesses in the economy of of
UK can be evaluated in terms of business birth and death rates. The business birth rate can be
defined by the amount of businesses that are active and started trading in the respective year.
Whereas, business death rate can be defined by the amount of businesses that are active and
stopped trading in that particular year of reporting. There were 382,000 business births in UK in
the year 2017 which was 414,000 in the year 2016. This is a highest fall in the birth rate of
businesses reported as far. Business deaths were reported to be 357,000 in the year 2017 which is
also higher than the previous year.
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Fig.4- Business birth and death rates in UK
(Source- Onlinelibrary.wiley.com., 2019)
Sustainability of businesses also varies in large, medium small and micro businesses. It has been
also reported that, in UK, about 44.1% of all the business organizations sustain more than five
years and almost 50% of businesses of Britain survive for only four years.
Fig.5- Survival Rates of businesses in UK started between 2011 – 2016
(Source- Entrepreneur., 2019)
In UK, the SMEs give attention toward provision of new innovative and improved products to
the consumers for attracting and increasing the growth of the business. SMEs exports products in
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