Entrepreneurship and Small Business Management: A Comprehensive Report

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Entrepreneurship and Small business Management

Table of Contents
INTRODUCTION.....................................................................................................................................2
LO1........................................................................................................................................................3
P1 DIFFERENT TYPES OF ENTREPRENEURIAL VENTURES AND THEIR RELATION TO THE TYPOLOGY
OF ENTREPRENEURSHIP....................................................................................................................3
P2 THE SIMILARITIES AND DIFFERENCES BETWEEN ENTREPRENEURIAL VENTURES.........................7
LO2........................................................................................................................................................9
P3 IMPACT OF MICRO AND SMALL BUSINESS ON THE ECONOMY....................................................9
P5 THE IMPORTANCE OF SMALL BUSINESSES AND BUSINESS START-UPS TO THE GROWTH OF THE
SOCIAL ECONOMY...........................................................................................................................12
CONCLUSION.......................................................................................................................................14
REFERENCES........................................................................................................................................15
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INTRODUCTION
Entrepreneurship has become one of the most important parts of developing nations. The
entrepreneurship and establishment of small businesses are developing the economy of the
country. This assignment will help the learners to understand the impact of national culture
and economy on entrepreneurship. Situational factors will also be analysed. The venture
types and their typology will be discussed. The impact on the economy due to small
businesses will also be assessed. The entrepreneurial traits, characteristics, and skills of
successful entrepreneurs and how they are different from managers will also be discussed.
In the end, the different environments that foster entrepreneurship will also be examined.
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LO1
P1 DIFFERENT TYPES OF ENTREPRENEURIAL VENTURES AND THEIR RELATION TO THE
TYPOLOGY OF ENTREPRENEURSHIP
ENTREPRENEUR
An entrepreneur is a risk-taker who takes financial risks to start a business. The main motive
of an entrepreneur is to run the business to earn a profit. The entrepreneurs take the
financial risk to get high returns from that particular financial investment. In other words,
entrepreneurship is a process to start the business and to run it with proper planning and by
using certain resources (Kirkley, 2016). The entrepreneurship is very effective for personal
growth as well as social and national growth. If an entrepreneur is getting success in a
particular company that means a country is developing from different aspects.
Entrepreneurs innovate and develop new and different products and services from the
market and promote them to customers. The entrepreneurs start promoting their products
from the small level and make it large later. There are various entrepreneurs the four main
types of entrepreneurship have been defined below for better understanding (DeSantola
and Gulati, 2017).
TYPES OF ENTREPRENEURIAL VENTURES
Small business entrepreneurship- when an individual start its business at the initial level
and hire the friends and family members to run the business with very less investment is the
small business entrepreneurship. These type of entrepreneurs aims to feed the family by
making money from their small business. Entrepreneurs can take loans and also borrow
money from friends and families.
Example- Consultants, plumbers, grocery stores and travel agents. These businesses are run
to earn limited profit to fulfil their own needs and requirements. These entrepreneurs are
not more focused on social development. They just start a small business to earn limited
profit by which they can fulfil his own and family needs and wants.
Scalable start-up entrepreneurship- some people carries a strong vision to change the
world and they take the initiative with the same vision. This is called the scalable start-up
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entrepreneurship. In which every individual find out the different ways to make their vision
successful. They visit or coordinate with various investors to deal with them. These kinds of
entrepreneurs are quite innovative because of that the entrepreneurs face investment
issues a lot in it (Morris et al., 2018).
There are some well-known scalable entrepreneurs such as Mark Zuckerburg, Bill Gates,
Arianna Huffington, Steve Jobs, Caterina Fake, and Pierre Omidyar.
Large company entrepreneurship- some entrepreneurs wish to serve the unique and
innovative products to a large number of customers. They are very focused towards finite
life-cycle and the entrepreneurs also make changes continuously in its products and
services. They are also focused on implementing the process of providing the products and
services to customers that make their products and services unique and different from the
market. This helps to attract customers easily. As these entrepreneurs think and plan big
therefore they are also needed to follow certain rules and legislation of government to
maintain its reputation over the nation or the globe. It helps the entrepreneurs to maintain
transparency with customers.
The examples of large business enterprises in entrepreneurship are Apple, Microsoft, Yahoo,
and Google and so on. The small investment they had done and achieved the giant success
(Piperopoulos and Dimov, 2015).
Social entrepreneurship- social entrepreneurs are those who wish to serve society and want
to make their lifestyle better in their nation. They develop various kinds of services and
products for the people who can fulfil their wants and needs. They start their business with
the motive to help people from every aspect and to develop them in their lifestyle. The
social entrepreneurs work for-profit and non-profit both motive for social welfare.
The examples of social entrepreneurs are educational institutions, microfinance institutions,
banking services, orphanage homes, and old age homes. These entrepreneurs only work to
provide a better lifestyle for every individual of the country so that they can live happily in a
better environment (Wang, and Chugh, 2015).
HOW THESE ARE RELATED TO ENTREPRENEURIAL TYPOLOGY
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The entrepreneurs are highly motivated to do something different. They start their business
with a different motive. The entrepreneurs could be profit motive or even they could be a
non-profit motive. Their ultimate goal is development whether it is personal and social. The
entrepreneur carries a strong vision to develop the product and services for customers to
get success in a particular field. And hence the typology helps the entrepreneurs to fulfil
their ambitions in the entrepreneurial sector. A highly ambitious and motivated
entrepreneur is required to explore himself before exploring people, places and also what
the people are expecting from the company. The self-analysis is important to analyse that
the person will be able to fulfil the demands and needs of the customers or not. Typology of
entrepreneurship helps the entrepreneurs to understand how motivated and innovative
they are to establish a new business.
Typology of entrepreneurs also helps to determine how much experience they are having in
their professional life and how they will be able to deal with the market challenges. The
typology of entrepreneurship is a complete research of occupational background and the
typology helps an individual to develop himself as a successful entrepreneur. The typology
of entrepreneurs analyses the different characteristics, the capability to take and handle risk
and their level of commitments and achievements. This also opens the doors for future
research and success. The typology of entrepreneurs also helps to evaluate that high low
capability to make decisions and to generate ideas to develop and to promote their
products and services that can make them achiever (Rawhouser et al., 2017).
Figure 1: Typology of Entrepreneurship
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Source: Day and Mody, 2017
The typologies of entrepreneurship and entrepreneurial ventures have elaborated
individually below-
Individual Entrepreneurship- The individual typology is all about handling business by an
individual. An individual design and plan business activities to earn profit for personal
development. They take the initiative to start a business and to run it alone. Overall the
management and activities are conducted and handled by one single person who is an
owner of the company.
Corporate entrepreneurship- the corporate entrepreneurship includes joint ventures,
acquisition, and franchisees. The owners of these enterprises apply the typology in their
enterprise.
Public sector entrepreneurship- these typologies are helpful for the large size of the
organization. The public and private sector organizations can use this typology to provide
better products and services to the society for their welfare. These kinds of
entrepreneurship are required to involve the government to maintain the reputation of the
company (Harlow and Chadha, 2019).
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P2 THE SIMILARITIES AND DIFFERENCES BETWEEN ENTREPRENEURIAL VENTURES
There are many kinds of entrepreneurial ventures and every venture has different roles and
goals for their business although there are some similarities as well as differences. The basic
similarity between entrepreneurial ventures is to develop society by providing innovative
and unique products and services for customers and to people's lifestyle better. Apart from
this, there are various similarities and differences between entrepreneurial ventures that
have been described below-
SIMILARITIES BETWEEN ENTREPRENEURIAL VENTURES
● Almost all entrepreneurial ventures aim to make money by providing various kinds
of products and services.
● The entrepreneurial ventures provide great economic help to the nation. Their
contribution helps the nation to develop and to be more efficient in terms of
economy.
● All the entrepreneurs are innovative and hence their innovation power helps the
entrepreneurs to develop and to expand their business in a wide range.
● Every entrepreneur is required to use their knowledge and skills to start and to run
their business effectively (Oo et al., 2018).
DIFFERENCES BETWEEN ENTREPRENEURIAL VENTURES
Area of
differences
Lifestyle
businesses
Small profit ventures High growth ventures
Meaning These
businesses are
established by
the founders of
the
organization
who wish to
gain a certain
These entrepreneurs
own and operate their
business
independently to make
a small profit to feed
and family and to fulfil
his limited desires.
These entrepreneurs are
highly\y motivated and
potential enough to
develop and expand their
business at large through
innovation.
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amount of
profit from
personal
income.
Aim These
businesses aim
to earn long
term profit for
a better
lifestyle.
They grow by earning
profit from their work and
personal efforts.
They grow by building a
good and healthy
relationship with investors
and owners for
investment.
Outcomes It generates
revenue for the
owners and
provides quality
products and
services.
They generate the tax and
also bring employment
opportunities.
They provide a great
contribution to the
national economy by
creating a higher level of
jobs.
Investors The collects the
funds for
investment
from personal
savings, family,
and friends.
These entrepreneurs
prefer to take government
bank loans, self-funds, and
microloan for investment
in their business.
These entrepreneurs
prefer to collect the funds
from government
accelerators and venture
capitalist for investment in
their enterprise (Wright
and Westhead, 2016).
There are differences and similarities between the entrepreneurial ventures are based on
the vision, mission and the size of the organization. The above table has shown the major
differences among entrepreneurial venture in which the lifestyle, small and large growth
entrepreneurship has been taken to understand the similarities and differences of
entrepreneurial ventures. These similarities and differences also help the individuals to
analyse their capabilities and abilities to be an entrepreneur in a competitive market. These
similarities and differences between entrepreneurial ventures help the entrepreneurs to
perform the activities according to their set objectives.
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LO2
P3 IMPACT OF MICRO AND SMALL BUSINESS ON THE ECONOMY
The small and micro business is tremendously contributing to the development of the
nation. As the small and micro businesses are taking place in a country, the innovative and
unique products are getting developed in the nation that is ultimately developing and
creating a great reputation over the globe for specific products and services. The
opportunities of trading are also increasing that is making the country financially strong
from other nations. As the entrepreneurial businesses are taking place in the world the
employment rate is increasing and this is helping people to improve their lifestyle and to
fulfil their needs and demands through these small and micro-businesses.
In the UK research, it has found that the growth of UK SMEs impacted the overall
Productivity of the UK. The SMEs in the UK has contributed 47% turnover in the total private
sector and has shown a great contribution to the development of the UK's economy. The
UK's SMEs are three times more likely better in innovation and to provide unique and
innovative products and services to customers. Till 2016, the turnover had reached £1.9
trillion approx. of total turnover were in the year of 2016, there were more than 5.3 million
entrepreneurs in small business has shown the 99.8% result in private sectors. In the same
year, 15.7 million people were employed through SMEs and finally, in the year of 2018, the
total turnover of government in the UK was 2.0 million (Rathnayake et al., 2019).
ROLES OF SME’S ON ECONOMY
The small and medium-size businesses are contributing in a great sense. The basic motive of
every business is to provide the best unique and quality products and services to customers
for personal growth as well as for the growth of the national economy. Every small sector
entrepreneur is focusing on the development of products and services to fulfill the needs
and wants of the customers by adding values for them. the value addition concept attracts a
large number of customers towards their products and services and the more selling of
goods and services help the entrepreneur and the nation to be financially strong (Menzies,
2017).
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Figure 2: impact of SMEs on the Economy
Source: Menzies, 2017
There, must be 0-9 employees in the micro-businesses, 10-49 employees in small businesses
and more than 250 employees can work in large businesses and organizations. The small
and micro-businesses in the UK have brought a large number of employment opportunities
which has provided relief to many unemployed people. This has also reduced the inflation
rate and improved the rate of GDP. The SMEs are performing great in the development of
people in the UK. There are 1000 businesses in which the 5,668 businesses have provided
27,027 employments to unemployed people with a total turnover of £3,862 billion. And
hence in the year of 2018, the private sector businesses have given the 100 % result in their
business with 100% employment and 100% turnover in all businesses whether it is micro,
small or medium-sized business.
Figure 3: Private Sector business in the UK
Source: Spence et al., 2018
● The annual turnover increased by £2.0 trillion through SMEs till 2018.
● The SMEs are creating a large number of job opportunities for wellbeing of society.
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● SMEs are giving a great contribution to the development of wealth and reduction in
poverty from the nation.
● Increment in FOREX rate.
● SMEs are establishing and strengthening international trade.
● These are bringing the Tax benefits for governments.
As the SMEs are contributing to a wide range to develop the national economy but there are
many small and micro-businesses which are getting fail. This is very sure that many of the
businesses will not stay longer. There is almost 74% small and micro-business which brought
79% employment and revenue generated by 71 % in a country. This is the data of services
sector wherein manufacturing sector, 15% annual turnover and 10% of employment have
been increased by SME's in the past year. Also, successful SMEs have reduced the rate of
inflation and improved the GDP rate. Overall, the SMEs are giving a positive impact on the
national economy more than the failure of a business (Spence et al., 2018).
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