Entrepreneurship and Small Business Management Report

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Entrepreneurship and Small Business
Management
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Contents
Entrepreneurship and Small Business Management........................................................................1
Introduction......................................................................................................................................3
LO1..................................................................................................................................................3
P1.................................................................................................................................................3
P2.................................................................................................................................................5
Lo2...................................................................................................................................................7
P3.................................................................................................................................................7
P4...............................................................................................................................................10
LO3................................................................................................................................................11
P5...............................................................................................................................................11
P6...............................................................................................................................................14
LO4................................................................................................................................................16
P7...............................................................................................................................................16
Conclusion.....................................................................................................................................18
Recommendations..........................................................................................................................18
References......................................................................................................................................19
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Introduction
Many entrepreneurs are coming into the market to establish their entrepreneurial venture and
want to expand as well grow that ventures (Kirzner, 2015). There are several types of
entrepreneurial ventures which will get discussed in that report along with their similarities and
differences. This report will also include the relation between the typology of entrepreneurship
and entrepreneurial ventures.
The micro, small and medium businesses have a great impact on the social economy that part
will also get described in that report by highlighting the impact on local, national and global
economy for better understanding. And also the skills and traits possess by successful
entrepreneur with their real examples and how their personal and background experiences
influenced them to form a successful business will get discuss in that report along with this How
a small business is started, grow and developed will get discussed in this report.
LO1
P1
Examine different types of entrepreneurial ventures and explain how they relate with the
typology of the entrepreneurship
In that part the discussion on the different type of entrepreneurial ventures, similarities,
differences and typology of the entrepreneurship along with their relationship with
entrepreneurial ventures will get done.
Entrepreneurs
Entrepreneurs are an individual or a group of individuals who takes responsibility for designing,
launching and establishing a business by putting financial and other resources and also
responsible for all the outcomes of the business (Drucker, 2014)
Entrepreneurship
It is an act of doing something innovative done by an entrepreneur to establish a business in the
market. An entrepreneur uses his idea and innovation to provide offerings into the market and for
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that purpose he forms business and bears all the risks of that business with the aim of profit
making (Drucker, 2014).
Typology of the entrepreneurship
The typology of entrepreneurship divides it into three groups (Kuratko, 2016)
Individual entrepreneurship
In that type of entrepreneurship individual solely takes responsibility of starting a business and
bears all the risk with the aim of profit earning (Langkamp, et.al, 2012).
Corporate Entrepreneurship
This is undertaken within the structure and context of an existing organisation. And there are
many entrepreneurs works in it with the aim of gaining market share and profit earning
Public sector entrepreneurship
These are those entrepreneurs who provide their offerings for public benefits and helps in solving
social problems and can be governmental authority or any voluntary organisation.
Types of entrepreneurial ventures
Start-up ventures
These are those ventures started by an individual or group of individuals with the great idea and
innovation to provide product and services in the market with the aim of earning some profit (Su,
and Li, 2011).
Acquisition
When an individual or a group of individuals acquire a business of any other organisation by
using their resources and takes responsibility of running and growing the business with the aim
of profit making is called acquisition (Su, and Li, 2011).
Franchise
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In that type of venture, a franchisor gives authority and sale a part of his business with
intellectual property, business model and brand to the franchisee who owns a part of the business
for making some profit.
Join ventures
When two or more business ventures join together and establish a single business entity by
sharing ownership, returns and risks, as well as governance are called joint ventures. The aim of
these ventures is to generate higher profit, gain market share, and higher growth in the market.
Public and private sector partnership
When a public company and private sector establishes an agreement of doing business together is
called a public-private partnership (Su, and Li, 2011).
Relationship between the typology of entrepreneurship and entrepreneurial ventures
In a start-up business, the individual entrepreneurship applies because this venture is started by
an individual or team of individuals. In an acquisition or joint venture there applied corporate
entrepreneurship because they are existing ventures which is run by the entrepreneurs. Public
sector entrepreneurship applies in public-private sector partnership (MacGaffey, 2014).
The life cycle of entrepreneurship firms
When a business comes into existence it gets started, grow and after that becomes well
developed and if not able to survive than declined (MacGaffey, 2014).
launch– in that stage a business is started and run by an entrepreneur by presenting it into the
market
Breakthrough stage – in that stage the business survives and gets many challenges in the
market.
Maturity stage – the business grows and developed in that stage
Declined – if a business is not able to survive in the market than declined
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Hence there are different types of entrepreneurship ventures which relate to the typology of
entrepreneurship in a great manner and a business is also take birth than grow and get mature as
well as after certain period of time suffers from death (declined) like a human being.
P2
Explore the similarities and differences between entrepreneurial ventures
In that part the differences and similarities between entrepreneurial ventures will get discussed
and also the relationship between intrapreneurship and social entrepreneurship will get described.
Differences between three main entrepreneurial ventures
Area of differences Lifestyle businesses Smaller profit
venture
High growth venture
Meaning These are the small
businesses that
provide its owner
autonomy,
independence and
control
These are
independently owned
and operated for
making some profit
These are highly
innovation focused
venture that has
potential to grow and
expand
Aims Long term growth and
profit making through
self-directed business
Grow into a long term
business that is
sustainable and
profitable
Aims at generating
significant wealth for
owners and investors
Investors Small business loans
and funding through
friends and family as
well as personal fund.
Microloans, bank
loans and funding
through family and
friends
Accelerators, venture
capitalist and
government loans
Outcomes They provide income
for their owners and
services and product
for good quality of
life
Provides necessary
products and services
also providing tax and
employment
They create jobs and
revenues and having a
great impact on the
economy
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Examples Self-employed
individuals or one
person firms
Restaurants and retail
store stores.
IT companies or
companies producing
medical devices
Similarities between entrepreneurial ventures
All the entrepreneurial ventures are based upon new ideas and innovation whether it is small
medium or large venture. These ventures are established on a high risk because entrepreneurs
invest their money and other resources to earn a desirable profit. These ventures are owned and
run by the open-minded entrepreneurs who have the capability to grow and expand these
ventures. These ventures aim at providing more innovative products and services to achieve great
success and growth at a large level. These ventures require funding to establish and grow the
businesses. All this ventures need an infrastructure to develop and establish in the market.
Intrapreneurship
Intrapreneurship can be termed an act of behaving like an entrepreneur while working with a
large organisation. It is a recent concept that giving attention to those employees who are having
the potential to become an entrepreneur. An intrapreneur is an individual who takes
responsibility and puts his efforts in order to solve a problem.
Social entrepreneurship
These are those entrepreneurs who provide their products and services to solve social problems
and satisfy the social needs of the public. They aim at maintaining the welfare of society and
works for their benefit. These organisations can be for-profit, non-profit or hybrid.
There are many things between these ventures which differentiate themselves from each other
and also some similarities can be seen among these ventures. Intrapreneurship and social
entrepreneurship is an important part of the entrepreneurship.
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Lo2
P3
Interpret and assess relevant data and statistics to illustrate how micro and small business
impact economy
The impact of SME’s in the social economy will get discussed in that part along with its role in
the economic development of a nation. This part will also include the impact of SME's on local,
national or international economy and impact of medium size and large business on the
economy.
Contribution of SME's on the world’s economy
Small and medium businesses are playing a vital role in the world's economy. They are
providing job opportunities to the public and ensuring the flow of money across the various level
of society (Bridge and O'Neill, 2012). At one point in time, SME's have created 33% of the
national income and 45% of the total employment in developing countries. According to some
estimation, more than 95% of enterprises are SME's across the world and are accountable for
60% of private sector jobs. SME is providing 52% global economic contribution (Liedholm and
Mead, 2013).
Hence SME’s are an important part of the world’s economy. These are providing job
opportunities for society and giving a big contribution to GDP for the economic development of
the world (Storey, 2016). The government is also supporting these businesses to grow and
develop at a large level (Burns, 2016).
Role of the SME’s in the UK economy
The SME's are becoming the backbone of the UK's economy. They are creating various job
opportunities and giving a great contribution to the GDP of the nation. SME’s combined
turnover includes almost half (47%) of the private sector turnover in the UK and reaching an
annual total of £1.8 trillion. The government is also supporting these organisations to grow and
expand by providing loans. According to the year, 2016, 5.4 millions of SME's are accountable
for 99.9% of all private sector businesses and employing over 60% people of all private sectors
approx. 15.6 million people. In the year 2018, the annual turnover got increased to 2.0 trillion.
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Hence SME’s playing great role in economic development and growth through providing annual
turnover, taxes, employment opportunities, innovation, social entities and social security.
A. Impact of medium-sized business on the economy
Any business which has less than 250 employees and more than 50 employees considered as
medium business. These are accountable for 13% of employment in the private sector and
providing 15% of the total GDP in the UK economy.
B. Impact of large businesses on the UK economy
Large businesses are growing very fast and giving an important contribution to economic
development. According to estimates of 2018, there are 8000 large businesses with more than
250 employees and they are accounting for 0.1% of business and giving 40% contribution in
creating jobs. They are providing 48% of the annual turnover of GDP.
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C. Impact of SME's on the local economy of the London
SME’s is playing an important role in the economy of London. London had 805,085 SME’s at
the starting of 2012 and it makes up 99.8% of all London’s private sector business. it is
accountable for 49.8% employment (2.3 million) in London and it is providing 47.7% of
business turnover. In 2014 the foreign exchange turnover of London was 41% of the global
share.
The economic development and growth of the London is very fast due to availability of large
number of small and medium enterprises. They are creating job opportunities and giving a big
contribution in annual turnover of GDP and also creating innovation for the social benefits.
Hence from the above discussion, it is clear that SME's are playing an important role in the
growth and development of the local, national and global economy and beame a big part of the
economy of the world.
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P4
In that discussion, the concept of social economy, corporate responsibility and social enterprise
will get include and further discussion on the importance of SME's on the social economy will
get done.
Social economy
It is formed by a various organisation like co-operatives, associations, foundations and social
enterprises and other types of organisations and they share common values and features. And
uses market-oriented production and sale of goods or services to serve social needs. The social
economy of a country defines social benefits for the community (Austin, et.al, 2012).
Social enterprises
This organisation are owned and run by social entrepreneurs who aim at solving social problems
and satisfies social needs. They aim at serving their members and community as a whole rather
than focusing on financial benefit (Dees, 2017).
Types of social enterprises (Ridley and Bull, 2015)
 Credit union
 Community-based organisations
 Non-governmental organisations
 Social firm
 Cooperatives
Corporate social responsibility
A business is required to be accountable towards self, its stakeholders and the public with a self
business regulating model. CSR is the way through which a business achieves a balance of
economic, environmental, and social imperatives. A well implemented CSR concept can help in
achieving competitive advantages such as increased sales and profit, access to a wide market,
improves productivity and quality, improved brand image and better risk management processes.
It also contributes towards sustainable development and improvement in society (Carroll and
Shabana, 2010). The main purpose of CSR is to encourage business to conduct their business
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activities in an ethical manner and makes a positive impact on society for achieving sustainable
growth
Types of corporate social responsibility
Environmental CSR- in that businesses focus their CSR efforts towards reducing their impact
on the environment
Ethical CSR – it focuses on ensuring that all the stakeholders of the business receiving fair
treatment, from employees to customers
Philanthropic CSR
This type of CSR is frequently associated with giving a donation to the charities that are relevant
to their business in the same way.
Importance of SME’S in the growth of the social economy
The importance of SME's in the growth of the social economy can be seen in the following ways
 These are creating job opportunities for the social development of the economy
 They are providing social security through providing their offerings in the market and
social amenities for the welfare of the society
 Small and medium businesses generating a source of the income for the public
 Serving a larger number of the community through their offerings and satisfying their
social needs.
The social economy includes social enterprises which work for the public benefit and corporate
social responsibility defines the responsibility of a business towards the society as a whole. The
small and medium businesses have a positive impact on social economy and playing a great role
in social economic development. They are providing their offerings to the society , solving social
problems, creating employement opportunties for the social development (Carree and Thurik,
2010).
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