Analysis of SME's Role and Contribution to the UK National Economy

This report delves into the realm of entrepreneurship and small business management, focusing on the pivotal role of Small and Medium Enterprises (SMEs) in the UK economy. The report begins by defining SMEs and evaluating their growth and financial contributions, highlighting their significance in generating employment and driving economic expansion. It examines the impact of SMEs on the UK's Gross Domestic Product (GDP) and overall financial stability, supported by statistical data and comparisons. Furthermore, the report analyzes the contributions of SMEs in various sectors and regions, comparing their influence in London and Liverpool, as well as the construction and retail sectors. It also provides a comparative analysis of SME impacts in Germany and France. The report concludes by summarizing key findings, emphasizing the characteristics of successful entrepreneurs and factors that foster or hinder entrepreneurial ventures. The report also includes visual aids such as illustrations, graphs, and tables for better understanding and analysis of the topic.

Entrepreneurship and Small
Business Management

Table of content
INTRODUCTION...........................................................................................................................1
TASK 2............................................................................................................................................1
a) Define concept of SME and evaluate growth and financial contribution of micro, small and
medium organisation to UK economy.........................................................................................1
b) Examine role of SME’s and analyse how they contribute in national economy.....................3
CONCLUSION................................................................................................................................8

INTRODUCTION
Entreprenuership can be termed as the practice of establishing and setting up of the
business by takeing calculative financial risks. This activity is followed in return of a decent
amount of profitability. There are various types of business such as micro, medium and large.
They all contribute in economic growth and GDP of nation. Every type of business provide
products and services and contribute in their own way. The report covers data and stats related to
how micro and small business impact on economy. Also, it evaluate importance of SME on
economy.
The traits and skills of a entreprenuer that make them apart from the business managers is
evaluated. The aspects of their personality, that makes them a successful entreprenuer and the
level of the operations which are carried out on the various level of economies will be carried
out. The charachterstics of a successful entreprenuer and on its motivations and mindset is given.
Also the factors related to the background and experience for hindering and fostering the
entrepreneurship is evalauted.
TASK 2
a) Define concept of SME and evaluate growth and financial contribution of micro, small and
medium organisation to UK economy
SME are known as small and medium business enterprises that size and scope depend on
their products and services. Also, size depends on number of employees, annual sales, asset, etc.
They are the main pillars of nation. This is because they provide various types of products and
services and generate employment within the nation.
SME are business that operate at small area and provide variety of goods and services.
There are many SME’s in UK which highly contribute in GDP. They contribute to a great extent
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to economy of UK. The micro level and SME's that operates in the UK are the biggest source of
earning and growth to their economy and improve the overall financial stability to the enterprise.
Illustration 1: Impact of SME on Growth of Economy
Source: Mazzarol, 2017
The above statistics showcase the depth of the positive growth and contribution of micro
and Small enterprise on the financial stability of UK. As per an estimate, micro and SME level
businesses have created about 600 million job opportunities which has helped in improving the
financial stability of organisation. This will help in improving the social well being, improve the
employability rate and enhance the service measures which are followed on a larger scale.
The purchasing capacity and social economic development is boosted by the micro and small
firms. However, despite having such an important role in economy, 42% SME's are not
constantly funded (Cucculelli and Bettinelli, 2015).
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As per an estimation about 33% of a national income and 45% of employment is from the
micro and small level enterprises. This the largest proportion of the organizations that are
operating within UK. About 60 % employees in the private sector are from micro and small level
firm. This has helped in improving the employability rate by 2% in recent time. In the post
Brexit period, SME's are the biggest source of earning and financial growth for the economy of
the UK.
b) Examine role of SME’s and analyse how they contribute in national economy
The SME's and business start ups have a very important and crucial role in the growth
and development of the social economy measures which will help in improving the sales and
establishing a positive impact on the growth of social economic factors within UK (Maresch and
et.al., 2016.).
It can be analysed that in 2009 the SME performance in UK was 80 which in 2010 was
around 90. Also, it can be stated that as compared to 2014 the value added by SME in UK
economic growth was high that is 150. But in 2016 and 2017 the economic growth was decline
but only to some extent.
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Illustration 2: Impact of SME's on social economic growth
Source: SME Performance Review, 2019

The radical and high growth of SME's and number of start ups in UK have implemented
a positive aspect on the establishing of the social economic well being in UK. As the number of
these firms have raised in UK with a higher level of operational capacity, this can be said that
these firms supports proper management of the economy and GDP rate within the nation (Snow,
2016). This growth of the enterprise has a multirole benefit on the economy and establishing of
organization which are as follows:
a) Compare impact of SME in London and Liverpool.
Impact on social level:
 Decrease in unemployment rate: From above table it can be analysed that in London
the unemployment rate has decreased up to 74% whereas in Liverpool it is decreased up
to 26%.
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 Rise in weekly income – It can be analysed that in London there is rise in 3.2% weekly
income of people by working in SME’s whereas in Liverpool only 1.7% rise is there in
weekly income.
 Rise in the standard of living: As more and more people are getting recruited, the high
amount of economic stability is achieved. The people are been getting an urban exposure
and their standard of living and way of dwelling has improved to a positive extent. More
and more people are living a better and advance life (Welter and Gartner, 2016).-
 Enhancing the social diversity within country: As these start ups operates on an
international level, they will help in employing the workers or employees from various
countries. This will help in improving the operational capacity which will help in the
effective planning of the service measures which are followed by the enterprise.
Impact on economic level:
 Helps in Gaining Foreign investment: As per an estimate, about 42% of the foreign
investment and export rates that are gained or earned by the organization is been
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contributed by the start ups and SME's that are operating within London. In Liverpool the
investment gained is less than London (Campos and et.al., 2017).
 Increase the GDP of the nation: The start ups and SME's that are functioning within
UK supports a positive rise in the financial stability and gross domestic production rate of
London. In Liverpool there is rise in GDP but only 13%.
b) Compare impact of SME for construction and retail
It can be stated that in retail sector there are many SME entered. Due to this there is rapid
growth in revenue of retail sector. The SME’s are offering products online. Moreover, with
increase in SME the competition level is rising. Thus, the UK retail sector is growing rapidly.
In construction sector there are total 341,625 SME’s. From that about 70% are registered
as micro business.
But both industries are highly contributing in UK economy. They are generating huge
profits and increase in GDP of nation.
c) Compare impact of SME for Germany and France
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It can be evaluated that in Germany there are few SME’s but they all are engaged in innovation
sector. Due to this Germany is technological advance country. SME are bringing innovation in
products and services. It has fasten GDP growth of Germany as compared to other EU countries.
In France there are 138,000 SME’s employing over 30% of employees. The main area of
SME’s is finance.
Difference between the impact made by small, medium and large firms on economy
As discussed above, the small and medium enterprises that are operating within the
organization are the biggest contributor in the growth and rise in the economic stability and
growth rate. All these measures which are followed supports a good rise in the financial stability
and functionality of the country. They are the biggest employer in a country and a major
contributor in the rise in the operations that will help in enhancing the performance and carrying
out functions in an effective way.
Larger firms, on the other hand contributes in meeting the manufacturing and functional
demands of the organization. This will enhance their performance and establish production
stability in market.
Impact of SME on the local, regional and national level of economy
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The SME's will have a deep influence on the local, regional and national level of
economy. On the local level, they will create employment opportunity and innovative
environment and meeting the operational and functional level of the operations which are carried
out by the organization (Maresch and et.al., 2016). All these measures which are carried out by
enterprise on regional level will enhance the overall growth and expansion of the business
activities while, on the national level, it will increase the diversity and overall gaining of FDI by
the enterprise
CONCLUSION
From the above assignment it has been summarized that entrepreneurship and small
business management describe that the entrepreneur use their creative ideas to establish new
product and service in the market by open a new venture.
The present report is based on the Entrepreneurship and Small Business Management.
Furthermore, report has been covered various things such as different types of entrepreneur
ventures, similarities and differences between entrepreneurial ventures. Furthermore, Report has
been described the different characteristic traits and skills of successful entrepreneurs. Moreover,
report has been described the micro and small businesses impact on the economy. Lastly,
reflection has been Examined background and experience can hinder or foster entrepreneurship.
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Mazzarol, T., 2017. Small business isn’t just important to the economy it IS the economy.
[Online]. Available through : <https://cemi.com.au/node/9092>.
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