SME's Contribution to the UK Economy: A Comprehensive Report

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WHAT MAKES AN ENTREPRENEUR?
TASK 2

Executive Summary
Micro and small businesses are the most crucial components of the business environment.
According to the government of the UK, if the organisation has less than 10 people and if the
yearly income of the company is less than 2 million GBP then that organisation is considered as
a microenterprise. Whereas, in the case of the small enterprises they work with having not more
than 50 employees and the yearly revenue of this type of organisations usually do not cross the
boundary of 50 million GBP. The report assessed the influence of small business in the economic
development of the country along with further recommendations that helped in improving the
clientele base of the consultant business.
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Table of Contents
Introduction......................................................................................................................................3
Define the concept of an SME, and evaluate the growth and financial contribution of micro,
small and medium private organisations to the UK Economy........................................................3
Examine the role of SME’s and analyse how they contribute to the national economy.................6
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
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Introduction
Both the Micro as well as small businesses are the most crucial components of the business
environment of a nation. If the micro and small organisations are not performing their job
correctly then the country is unable to improve them internally (Li and Rama, 2015). In the case
of Micro business, it can also be defined as a start-up business. The overall structure of the
micro, small, medium and the large organisations are completely depending on the organisational
formation, strength of the staffs, yearly revenue and sales volume of the company. The report
also highlights the concept of an SME, and evaluates the growth and financial contribution of
micro, small and medium private organisations to the economy of the UK. In addition, the report
also focuses on the role of SME’s and the techniques of how they contribute to the national
economy.
Define the concept of an SME, and evaluate the growth and financial contribution of
micro, small and medium private organisations to the UK Economy
The economic condition of the UK is very powerful. The main reason behind the good economic
condition is the strong business actions of different types of organisations within the country. In
the present time, businesses are making great applications in their particular divisions and
helping the country constantly in order to enhance the overall performance. The country runs
different organisations but still, sometimes the economic condition of the country is not
developed enough. However, the business companies are efficiently building and producing a
healthy atmosphere which might help the country to curb the trouble condition.
In the case of business within the country, both the micro as well as the small companies is
playing a crucial role in the economy of the country. Moreover, in the present time, according to
the different statistical reports the organisations are utilising and able to develop the country’s
economic condition. According to the market status in the UK, there are around 6.2 million
business firms who are functioning. In the year 2000, all the small and medium-sized company
has faced a massive downfall. In addition, in 2018, there are around 28000 businesses have been
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shut down in the UK. The main reason behind the massive downfall is a large number of
businesses and industry.
Impact of micro business
Generally, all the micro organisations function under a private sector within the country (Legg et
al., 2015). So, according to the statistical report of the UK, it can be recognised that the private
sector organisations are the backbone of the UK’s business economy.
● There are more than 6 million micro-businesses in the UK who are using their own
management techniques in order to make a huge profit. There are around 96% of the
organisations in the UK are the micro business.
● According to the market survey of the UK, there are more than 9.2 million people are
operated under the micro organisations in the UK, that is around 35% of the total
employment rate of the country. So, from the above statistical report, it can be stated that
the micro organisations are helping the nation in order to enhance employment by
recruiting a huge number of applicants from various sectors.
● The companies have collectively combined and produced around 901 billion GBP of
yearly income which has been considered as 22% of total income amount.
Impact of small business
In the case of small business, these are functioning in fewer regions in the country. The main
reason behind the small growth is, the government is constantly assisting the small-sized
companies by offering all the necessary assistance in order to become more significant according
to the global business scale (Lussier and Sonfield, 2015).
● According to the global business report of the UK, there are more than 2921.52 small
enterprises that are working in the country and the percentage of small enterprise
business is only the 5% of the total businesses.
● Small business enterprises also participating in minimizing the overall unemployment
rate of the country. The main reason behind this is, they have selected near around 5
million people from the UK and by performing this, the UK is able to hold around 16%
of the employment rate of the country.
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● Based on the global business statistics of the UK, in the year 2018, there are around 600
billion GBP revenue has been generated by small business enterprises.
Figure 1: Impact of SMEs in the UK economy
(Source: Kurnia et al., 2015)
According to the overall statistical analysis of the UK, it has been classified that both micros, as
well as the small organisations, are developing their own competing forces in the business. The
main objectives of these kinds of organisations are enhancing and keep on developing the circle
or the business reach.
The sudden slowdown in 2008, had bounced the overall economic condition of the United
Kingdom. According to the market survey on nominal GDP, the country is able to secure the 6th
position. In the year 2019, the overall GDP has increased by 0.8%. It has been forecasted that at
the completion of the economic year, the overall growth of GDP might strike 1.6% than the past
year. In the year 2010, in the United Kingdom, the unemployment rate was around 89 because of
the unexpected breakdown of the economy of the country. In 2019, the overall rate is decreased
by 4.1% (Kurnia et al., 2015).
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Examine the role of SME’s and analyse how they contribute to the national economy
Here are the roles of SME discussed below:
● It is the responsibility of the SME to writes all content in the case of online delivery that
must meet the total outcomes
● Make a report on a daily basis within the deadline of the project
● Makes all design document regarding the courses
● Stores all content for the report and apply different calculation mechanisms
● Check the content quality at the time of development and processing and even after
generating output
● Makes necessary improvements that totally depend on the feedback from the program
director
Local: In the case of small enterprises, it generally works within the local market of the country.
The main objectives of the small business organisations in the local market are to bring
competition in the market in order to enhance the overall economy of the market. For performing
this local person needs to be hired.
National: In the case of a national perspective, the movements or the operations of the small
enterprises create a huge negative impression on the tax accumulation program of the country
(Haider et al., 2017).
Regional: By spreading business into various regions of the country, the firms make an
impression on the regional marketplace. In the case of the regional economy, employment
improvement condition may not be observed.
International: In the case of the small business firms in international businesses, they may
encounter some hurdles such as limited capital, improper market, information and many more.
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Figure2: Performance Review of SMEs
(Source: Sainidis and Robson, 2016)
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SMEs in two UK regions
London region North-East region
There are approximately 163000 companies In the north-east regions, there are around
1.32 million business organisations
In the London region, there are around 810
operations per 10000 residents
In the case of the north-east area, there are
around 1570 businesses operations are
performed in 10000 residents
In the London region, there are around 48000
staffs
In the north-east regions, there are around
24000 workers
Table 2: Comparison of SMEs in two regions
(Source: Created by the author)
Figure 3: Comparison of SMEs in London and North-East region
(Source: Lin and Lin, 2016)
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SMEs in two different industries
Retail industry Construction industry
There are around 556000 business firms in the
industry
There are around 310000 business firms in
this industry
The retail industry operates more than 21% of
the total profession
In the case of the construction industry, it
operates around 10% of overall employment
It generates around 46% of the yearly revenue It generates around 18% of the yearly revenue
Table 3: Comparison of SMEs in two different industries
(Source: Created by the author)
Figure 4: Comparison of SMEs in the retail and manufacturing industry
(Source: Eniola and Entebang, 2015)
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SMEs in two different countries
United Kingdom Germany
In the case of the United Kingdom, there are
more than 6.5 million business firms
In the case of Germany, there are around 3.25
million business firms
In the United Kingdom, there are more than
20 million staffs under small and medium
organisations
In the case of Germany, there are around 2.4
million employees operators under SMEs
Table 4: Comparison of SMEs in two different countries
(Source: Created by the author)
Conclusion
From the present study, it can be concluded that both businesses i.e., small and medium-size
organisations are essential for the perspective of a country. The main reason behind the business
is, it has various connections with the socio-economic situation of the country. Apart from that,
the report also highlights the concept of an SME, and evaluates the growth and financial
contribution of micro, small and medium private organisations to the economy of the UK. In
addition, the report also focuses on the role of SME’s and the techniques of how they contribute
to the national economy.
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References
Eniola, A.A. and Entebang, H., 2015. SME firm performance-financial innovation and
challenges. Procedia-Social and Behavioral Sciences, 195, pp.334-342.
Haider, S.H., Officer, C.S., Asad, M., Fatima, M. and Abidin, R.Z.U., 2017. Microfinance and
Performance of Micro and Small Enterprises; Does Training have an Impact. indicators, 4(1).
Kurnia, S., Karnali, R.J. and Rahim, M.M., 2015. A qualitative study of business-to-business
electronic commerce adoption within the Indonesian grocery industry: A multi-theory
perspective. Information & Management, 52(4), pp.518-536.
Legg, S.J., Olsen, K.B., Laird, I.S. and Hasle, P., 2015. Managing safety in small and medium
enterprises.
Li, Y. and Rama, M., 2015. Firm dynamics, productivity growth, and job creation in developing
countries: The role of micro-and small enterprises. The World Bank Research Observer, 30(1),
pp.3-38.
Lin, F.J. and Lin, Y.H., 2016. The effect of network relationship on the performance of SMEs.
Journal of Business Research, 69(5), pp.1780-1784.
Lussier, R.N. and Sonfield, M.C., 2015. “Micro” versus “small” family businesses: a
multinational analysis. Journal of Small Business and Enterprise Development, 22(3), pp.380-
396.
Sainidis, E. and Robson, A., 2016. Environmental turbulence: impact on UK SMEs’
manufacturing priorities. Management Research Review, 39(10), pp.1239-1264.
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