UK SME Sector: Assessing Impact on Economic and Social Development

This report examines the significant role of micro, small, and medium enterprises (SMEs) in the UK's economic and social development. It highlights the contribution of these businesses to economic growth through GDP contributions and employment opportunities, noting that over 90% of employment in the UK is generated by micro and small businesses. The report further explores the social impact of SMEs through charitable activities, community support, and the promotion of equality by operating in diverse areas. It compares the impact of SMEs across different industries, such as retail and construction, and contrasts their influence in the UK with that in other EU countries, particularly in the context of Brexit. The analysis emphasizes the importance of SMEs in fostering fair competition, contributing significantly to the UK's GDP, and driving economic activity through various sectors like food processing, textiles, and manufacturing. The report concludes that SMEs are crucial for job creation, poverty reduction, and overall economic prosperity in the UK.

Entrepreneurship And
Small Business
Management
(Part 2)
Report

Interpretation of data which impacts on micro and small business
The opportunity of becoming successful and risk of being failure of a particular country can
be assessed from the analysis of the economic condition of that country. SME refers small and
medium size enterprises in which employees work in defined numbers. Small firms have more than
10 but less than 50 employees, and in micro firms are having less than 10 employees who works for
attaining business objectives. Economic development of a country mostly depends on the
performance of the business organisation of that particular country (Mariotti and Glackin, 2012). In
this context, much contribution comes from the growth and development of the micro and small
business.
A number of roles are played by the micro and small business in the growth and
development of the economy a particular country and the following discussion will highlight the
which factors are influenced by the micro and small business-
Economic growth
The output which is produced by micro and small business contributes to the gross domestic
production which is one of the most known indicator of the growth and development of the country.
Moreover, a lot of employment opportunities are created by the operation and function of the micro
and small business which also supports to the growth of the economy of the United Kingdom.
School and local government
In order to draw the attention of the clients and to manage the industry rivalry different types
of CSR activities such as donation and charity are undertaken by different micro and small business
organisation. For examples, some primary schools and high schools of United Kingdom are
operated through the financing of micro and small business organisation (Mariotti and Glackin,
2012). Moreover, the tax which are paid by the small and micro organisation is mostly used to
manage the operational cost of the local government such as cost of the defence.

Figure
: CSO’s Business Surveys Establishment Register
It is observed from the above graph that most of the employment is created through the
establishment and operation of micro and small business. More than 90% employment opportunity
of the United Kingdom is created through the micro and small business organisation. According to
statistics and graph it has been analysed that micro and small business have major share in
economic and political growth by running different businesses such as food processors and drinks,
textile garments, printing publishing, wood and related products, chemical and non metallic
minerals etc. that are providing different job opportunities and remove unemployment which leads
to economic growth of UK.
Future growth
The number of entrepreneur in micro and small business sector is increasing day by day.
Most of the small business are operated in order to meet the requirements of the household of the
United Kingdom. Recently, it has observed that more than 25% of the small business organisation is
established in order to support the large industry. For example, spare parts of the cars and
motorbikes are being produced by the micro and small organisation. So, it can be concluded that
more and more employment will be created by micro and small business organisation in near future
which will contribute to the growth and development of the economy of the United Kingdom
(Mariotti and Glackin, 2012).
Interpretation:
Micro, small and medium businesses are contributing in the financial growth and

development of country. Such enterprises runs their businesses by understanding the needs of
customers and make efforts to provide that kind of products which influences customers more. For
instance by running such business, employment opportunities are created that improves the
economical position of UK. It reduces the poverty by providing employment to people and
maintaining profitability. In UK, there are number of small, micro and medium firms who pays tax
and generate employment opportunities that helps to improve the economy that leads to growth and
development of country.
Explaining the importance of small businesses and business start-ups to the
growth of the social economy
Small business organisation has a great contribution to the growth and development of the
economy. Moreover, social economy of a country also influenced by the operation of the small
business organisation. On the other hand, start-ups which are mostly technology oriented business
organisation also contribute to the growth and development of the social economy. The ways in
which small business and business start-ups contribute to the growth and development of the social
economy are discussed in the following paragraph-
Charities
Most of the charities of United Kingdom are coming from the contribution of the small
business organisations and business start-ups. Almost all the charity organisations of UK works for
the development of the backward sectors. For example, unemployed people are given training by
these organisations so that they can contribute to the development of the society funding
(Scarborough, 2012). Moreover, some organisations also supports to the disabled community to
make self-employment which also contribute to the development of the community.
Crowd funding
Small business organisation and business start-ups are increasing the savings of the people
through creation of employment opportunities. These savings are invested in the productive sectors
again which is contributing to the development of the social economy. Such rotation of funds in the
economy of a country can be defined as crowd funding (Scarborough, 2012).
Employment
People with less education and limited capital can start small business organisation and
business start-ups which creates employment of themselves as well as employment opportunities of
others. In this context, life standard of the people increases due to more disposable income and
more awareness due to income opportunities which also supports to the development of the society.
It is observed that more than 6000 employment opportunities are created by the small business
organisation and business start-ups in 2006 which has directly contributed to the development of the
society.

Equality
Large business organisations are mostly centralised and develops the socio economic
condition town areas. But small business organisations and business start-ups are operated in any
areas based on the availability of the resources. As any people can start small business and business
start-ups in any areas equality in the society can be ensured (Stokes and Wilson, 2010).
Impact of small business in economy of UK:
 Fair competition and economic flourishes of United Kingdom has ensured through the
growth and development of the small business organisation.
 More than 2 trillion pounds of the GDP of the United Kingdom comes from the contribution
of small business organisation.
 More than 5.6 million business organisations of the United Kingdom are operated based on
the small business which means most of the employment opportunity of that region is
created by this sector (Kao, 1994).
Impact of Micro business in economy of UK:
 The contribution of micro business in the economy of United Kingdom can’t be ignored as
more than 48% employment of the United Kingdom is the contribution of the micro
business.
 More than 19.5% of the economic activity of the United Kingdom is performed by micro
organisation.
Compare the impact of SME for the UK utilising two different industries
Basis Retail Construction
Impact This industry impacts positively on
UK's economy by providing different
types of products and services to
customers. It can be consider as small
business that can run a business by
involving less than 10 employees.
This industry concluded in
medium size that employs more
than 10 but less than 50 people
that leads to economical growth.
Contribution It involves producing, distributing,
and selling of goods and services
which are uses by customers on daily
basis and improve economical
conditions.
This sector contributes 7% of
GDP by providing employment
opportunities and paying taxes
that helps to improve the UK's
economy.

Compare the impact of SME for two EU countries
It has been analysed that small and micro enterprises are effective that helps to improve the
economy of EU countries. It impacts on EU countries such as SME creates various job
opportunities and expand their business by attracting people. After Brexit, it became difficult for
large enterprises to run their business as per new rules, which advantageous for SME to set their
business and provide employment chances to skilled people that helped to improve economy.