Report: Impact of SMEs on the UK and European Economies

This report examines the significant contributions of Small and Medium Enterprises (SMEs) to the UK and European economies. It begins with an introduction highlighting the importance of SMEs in the UK's economic landscape, followed by an analysis of their revenue contribution, job creation, and impact on innovation. The report delves into the political and economic impacts of Brexit on SMEs, comparing the effects on different UK regions and industries such as retail and construction. Furthermore, it explores the impact of SMEs in Germany and Japan. The report then differentiates between entrepreneurs and managers, outlining the characteristics essential for entrepreneurial success, including effective communication, a clear purpose, self-belief, and critical thinking. Finally, it discusses factors that foster and hinder entrepreneurial success, emphasizing the importance of an entrepreneur's background. The report concludes with a summary of key findings and a list of references.

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Table of contents
Introduction......................................................................................................................................3
Task 2...............................................................................................................................................3
Contribution of SME.......................................................................................................................3
Examining the role of SMEs on national economy.........................................................................5
Comparison between impact of SMEs for two UK regions............................................................6
Comparison between retail and construction industry.....................................................................7
Impact of SMEs on two European countries...................................................................................7
Task 3...............................................................................................................................................8
Difference between entrepreneur and manager...............................................................................8
Characteristics an entrepreneur should have for achieving the success..........................................8
Big five personality model...............................................................................................................9
Maslow pyramid and correlation between entrepreneurial characteristics and entrepreneurial
success...........................................................................................................................................10
Factors that foster and hinter the entrepreneurial success.............................................................10
Importance of positive and negative background of the entrepreneur..........................................12
Conclusion.....................................................................................................................................13
Reference list.................................................................................................................................14

Introduction
In the running economic status of UK, SMEs can be considered as the important
contributors. SMES are being highlighted as the most dynamic sector for the socio economic
betterment in different countries (Cowling 2016). By bringing thee economic growth as well as
prosperities, the SMEs play the crucial role in business environment. The purpose of this study is
to shed light on the significant impact of small, medium and large size organization on the
emerging UK economy.
Task 2
Contribution of SMEs
It has been identified that near about 47% of revenue to the UK economy gets contributed
by the small micro and medium sized Enterprises. By boosting the productivity rate this
Enterprises support to expand and increase the impact on the socio economic status in this
country. It cannot be denied that especially the micro Enterprises are responsible for the majority
of cross job creation in the last 5 years through the recession. In a research on mid-size
organizations in UK, it has been identified that small business sectors can be considered as
engine for job growth (Elmagrhi et al., 2017). In terms of productivity it can be said that
especially the small business companies have involved it in in cells through the international
markets. In terms of driving innovation from the last 5 years in UK economy the small
companies has developed the complete relationship between Innovation and growth.
Political impact
After the Brexit movement political and stability has become one of the important
concerns for the UK economy. Due to the impact of instability, Political situation in UK has

dealt with measure uncertainty due to the clearance of European companies from the UK market.
As per the financial times it is mentioned that the UK economy has been approximately 1.5%
smaller then and it would have been without the Brexit situation. However, by arguing this some
of the business analyst have increase the figure as 2.5% by supporting the impact of Brexit
(Market-inspector.co.uk 2019). It cannot be denied that not only the large organization but also
small micro and medium sized Enterprises have also faced the devastating effect of Brexit
(Eveleens, van Rijnsoever and Niesten, 2017).
Although Brexit it has increased the political uncertainty in UK economy but it is also
true that after the Brexit vote, the dominance of large Organization on the UK economy, has got
reduced. The small, medium and micro size Enterprises have got the equal chances for
establishing their noticeable position in the market. After the Brexit vote increasing rate of
turnover in the UK economy has got controlled by medium small and micro sized Enterprises.
Economic impact
After the Brexit movement the financial uncertainty have also brought huge impact on
the trade field. Analyzing its impact on particularly for small and medium-sized Enterprises it
has been identified that those have faced moderate economic growth experience. Due to the
decreasing economic growth demand for UK goods have fallen compared to the investment in
UK goods. In that case it can be assumed that in order to create the innovative service and goods
the company make face challenges from the competitors. On the other hand, analyzing the
economic impact it has been identified that due to you less finding the business remains motor
for the companies to introduce innovative thinking. On the other hand due to recession as well as
inflation the innovation uncertainty as well as less demand have created negative impact on the
small all medium and micro sized organizations.

Figure: UK SMEs growth statistics
(Source: Clearbooks.co.uk 2019)
Although the economic factors have brought negative impact on operational practices in
Assamese but it is also true that SMEs have made their positive contribution towards the
employment rate in this country. Analyzing the data from 2014 it has been identified that the
contribution of assemblies have got increased in the employment sector.
Examining the role of SMEs on national economy
Analyzing the industrial strategy in UK it has been identified that near about 60% of the
all private sector jobs in UK under the assemblies where the 16.3 million employees are being
served (Clearbooks.co.uk 2019). It is true that in every year the SMEs are increasing their
contribution towards the UK economy. In the year 2018 the massive growth in in small and
medium-sized Enterprises have been introduced in the UK market (Lee and Brown 2016). In this
year almost 5.7 million businesses have got introduced in the different sectors such as energy,
Industrial and business. Small, micro and medium sized organizations constitute a significant

role in the economic development in UK and by contributing in different regional economic
development process by creating new job and investment opportunities, ensuring the potential
and capital sustainability the small and medium-sized Enterprises have contributed towards
bringing the economic growth.
Comparison between impact of SMEs for two UK regions
Analyzing the northern part of UK it has been identified that is MS have brought the
positive impact in case of ensuring higher living standard as well as standard wages structure for
the employees. It is true that improving the rate of productivity is a central concern of UK
Government as per the 2018 industrial strategy (Love, Roper and Zhou 2016). By following the
strategy the small business organizations have started contributing in case of raising the
productivity by boosting the northern economy in UK. Analyzing the situation in Northern
region it has been identified that all the small all organizations have started contributing towards
ensuring the higher productivity rate however it is also true that comparing to the large
organization, it is very less. In this situation the small and medium enterprises leaders have
started enhancing their viewpoints on increasing productivity rate as well as dealing with the
opportunities and challenges in this particular religion.
Analyzing the growth of SMEs in in Southeast region of UK has been identified that
most of the areas in this region are dealing with various economic challenges which are directly
impacting on the growth of this particular region. Due to increasing demands for innovation as
well as technological reforms in the market the small and medium enterprises are dealing with
high market pressure (Clearbooks.co.uk 2019). By continuing this it has also been identified that
SMS have contribute 60% in the employment rate in case of dealing with the challenges
regarding the height on over rate in private sector. mostly in the largest cities like Manchester

and London SMEs introduced near about 2 million jobs over the last five years for the UK
economy.
Comparison between retail and construction industry
In order to ensure the community engagement in case of bringing the growth in UK
economy, the contribution of small and medium-sized organizations cannot be ignored. After the
contribution of SMEs on the retail sector the business owner has started introducing the customer
based marketing practices. It is true that the modern Retail Industry is being highly dominated by
the small and medium enterprises. However it is also true that FDI has not brought any
noticeable impact on the micro small and medium sized Enterprises. On the other hand in case of
construction sector, the SMEs have draught innovation and quality management (Fsb.org.uk
2019).
Impact of SMEs on two European countries
Due to the changes in territorial patterns as well as performance abilities of the
companies the contribution of small and medium-sized enterprises in the European market gets
changed. It is true that the distribution patterns of SMS across the European region as well as
cities in case of employment size sectors and economic rate different. Analyzing the situation of
small and medium-sized Enterprises in Germany it has been identified that the compared to the
other countries it is quite large. In case of Germany market the s m e sector is dominated by the
micro Enterprises which has less than 10 employees. On other hand near about 17% of SMEs r
medium and small sized enterprises in Germany with the total numbers of 50 to 250 employees
(Tatoglu et al. 2016). Japanese economy has also got influenced by the SMEs. It has been
identified that near about 70% of national in this country has got influenced by the small and
medium sized organizations (Minarelli, Raggi and Viaggi 2015). by contributing in case of

enhancing the productivity date the small and medium-sized Enterprise sector has develop the
stronger entrepreneurial dynamics, which has need the economic situation more stronger in
Japan. By enabling the SMEs for exploring the Technologies as well as products ability of the
companies has got increased (Stam 2015).
Task 3
Difference between entrepreneur and manager
The main difference between the entrepreneur and manager, it can be said that an
entrepreneur is an owner of the company, on the other hand the manager is employee in an
organization. In order to achieve the goals the entrepreneurs takes risk for the Enterprise. Major
vision of entrepreneur is to achieve the profitability. Entrepreneur is one man show who can able
to run the entrepreneurship. With some unique attributes as well as skills the entrepreneurial tries
to implement his idea through business (Tinkler et al. 2015). A successful entrepreneur is a
responsible person. An entrepreneur is responsible for both the success and failure of the
company. On the other hand, the manager is responsible for all the administrative related
activities in the workplace. By continuing this, it can be said that
The job role of a manager is to managers employees so that the smooth operation in the
organization can be ensured. A manager should have the quality of leadership, accountability and
decisiveness. On the other hand the entrepreneur focuses on expanding business idea by
introducing innovations. By continuing this, it can also be said that the entrepreneur aims to
achieve higher rate of profitability (Usai et al., 2018). On the other hand manages focuses on
motivating others towards achieving the organizational goal. In case of taking the responsibilities

and ensuring the engagement of individuals towards achieving the goal in managers approach is
to deal with the organizational problems in formal way.
Characteristics an entrepreneur should have for achieving the success
A successful entrepreneurs should have effective communication ability so that the
person can be able to share his ideas with the people who are associated with them. An
entrepreneur should have clear purpose. Without any clear expectation the entrepreneurs cannot
be able to get success in the field. The best entrepreneurs strongly believe in themselves. With
this kind of characteristics as well as incredible sense of self believe, self-esteem of the
entrepreneur can be developed. Before introducing any idea in the market a successful
entrepreneur should know no about the needs off the market. With the critical thinking ability
and Critical analytical skills the entrepreneur can be able to identify both the opportunities and
challenges the market. The entrepreneur should have concern regarding the contribution of
culture in case of achieving the success (Yapa Abeywardhana 2016). An entrepreneur should
have the ability of face both the success and failure. By constantly challenging themselves, the
entrepreneur enhance the ability for managing the situations. Incredible network is another
important characteristics an entrepreneur should have. Having a right mindset is also very
important for entrepreneur so that the market opportunities can be properly utilized. By
continuing this, it can be said that with effective
Big five personality model
In the big five personality model depending on openness to experience the ability of the
entrepreneur has been highlighted. The five big personality model is being considered as one of
the popular model that helps to evaluate the characteristics of an entrepreneur (Kerr, Kerr and Xu
2018). As per the model it is mentioned that open is very important in case of enhancing the

intellectual resource of the entrepreneurs. It is true that based on the creativity as well as
preferences the entrepreneur can be able to elaborate his score in the business field. Extraversion
is mother important characteristics which helps to develop the positive emotion confidence
positive energy and tendency towards exploring new things. Conscientiousness is another
component of Big Five model that help to enhance the standard self-discipline of a person that
helps to achieve the goal (Kerr, Kerr and Xu 2018)). Agreeableness helps to influence the Co-
operative tendency of the entrepreneur. It helps to develop the cooperating nature in a person.
Emotional stability is being considered as one of the sensitive components that plays an
important role for enhancing the confidence level of the entrepreneur. By arguing this it has been
identified that there are seven common characteristics which are visible in a successful
entrepreneur. By anticipating in the trends and identifying the future opportunities as well as
organizational challenges the entrepreneurial focus on hard working so that goals can be
accomplished.
Maslow pyramid and correlation between entrepreneurial characteristics and
entrepreneurial success
In case of highlighting the entrepreneur needs Maslow has developed the pyramid on
needs. Highlighting the five basic needs the Mash law hierarchy need theory has been developed.
In this theory based on the psychological safety social self-esteem and self-actualization the
characteristics of individuals have got highlighted. In case of highlighting the correlation
between entrepreneurial success and entrepreneurial characteristics it has been identified that due
to the complex interaction between individuals environmental as well as social factors the
relationship between the entrepreneur characteristics and their success gets influenced (Antoncic
et al. 2015). It is true that depending on the certain attributes such as risk taking ability as well as

open mind setup the business performance of an entrepreneur can be improved (Yapa
Abeywardhana 2016). It is also true that some of the cases due to the individual characteristics of
entrepreneurs it becomes difficult to analyze the actual reason behind the success
Factors that foster and hinder the entrepreneurial success
Ability for bringing changes as well as positive mind set can help entrepreneur to achieve
goals. There are various factors that have major contribution in case of helping to become the
successful entrepreneur (Antoncic et al. 2015). In order to gain success it is very important for
the entrepreneur to be able to take the action willingly. If an entrepreneur will get afraid to take
the real action in that case it can be challenging for the person to achieve the success. Knowledge
is being considered as one of the important factors that ensures the success of an entrepreneur.
Based on the superior knowledge of the entrepreneurial it becomes easier for the person to deal
with the business issues. Knowledge can also play an important role for enhancing the potential
business synergy so that the entrepreneur can contribute towards the success of the company.
In order to survive in the competitive business environment is very important for the
entrepreneur to have Creative Thinking ability. Due to changes in social economic status
customers have become fond of creativity and innovation. In that case it can be said that
entrepreneur should have the ability to introduce unique ideas in the market so that the business
improvement can be ensured. Before developing any business it is very important for the
entrepreneur to have the business case. Business skills are crucial in terms of handling
operational process in the organization (Yapa Abeywardhana 2016).
Entrepreneurs plays an important role in case of encou6radging the economic situations
such as poverty, unemployment and innovation champions. It cannot be denied that in order to

develop a business financial backup is very important. An entrepreneur, who belongs from a
wealthy family can get the better opportunities in case of introducing a new business idea in the
market. by continuing this, it can also be say that an entrepreneur who belongs from a middle
class or lower middle class background in that case it will be difficult for that person to collect
the funding for introducing a new business in the market (Tinkler et al. 2015). In such cases the
entrepreneur needs to convince the investors so that the funding for the business can be collected
on them. It can be said that the financial background of the entrepreneur is very important in case
of making the business process smoother. Funding is been considered as one of the important
criteria for developing a business. In this situation with the availability of fund it becomes easier
for the entrepreneur to take the business risk (Yapa Abeywardhana 2016). Although it is true that
in case of developing a business and Entrepreneurship needs to focus on taking the business risk.
However it is also true that with the availability of proper economic backup the amount of this
can be reduced.
On the other hand it is also true that educational qualification of entrepreneur is very
important in case of introducing innovation as well as creativity in business. With the proper
education it becomes easier for the entrepreneur to understand the market needs (Tinkler et al.
2015). On the other hand it is also true that with the changing business trends business analysis
has become one of the important parts for developing a business. With proper education and
skills the entrepreneur easily adopts the changes. In case of maintaining the data reports as well
as collecting the information regarding the particular area educational support is very important.
Importance of positive and negative background of the entrepreneur
It is true that family background as well as neighborhood of the entrepreneur has strong
impact in case of determining the entrepreneurship abilities of a person. Depending on the social

mobility innovation can be easily driven. In case of ensuring the successful business as well as
job creation process the motivation from the family members and friends is very important in
case of encouraging the entrepreneur towards taking the risk. It cannot be denied that motivation
is being considered as one of the important contributors in case of ensuring the growth in in
business field. If the entrepreneur will get proper motivation from the family and friends it helps
to the person to concentrate on his goals. With the proper support from the surroundings can also
enhance the ability of decision making. Some of the cases from the family members the
entrepreneurs get their role model. In such cases when the person gets influence from their own
family member in that case concentration as well as dedication towards the job get increased. By
continuing this it can also be said that the education that the entrepreneurial get from their family
helps to deal with difference situation in their life (Lee and Brown 2016). On the other hand it is
also true that family background and neighborhood can also negatively impact on the
entrepreneurship. If a person will get so many discouragement as well as disturbance situation in
such cases the ability as well as self-motivation of the person get affected. Therefore it can be
said that based on the surroundings of the entrepreneurial both the positive and negative impact
can be introduced in his career.
Conclusion
In this case, it can be concluded that massive growth in in small and medium-sized
Enterprises have been introduced in the UK market. In this year almost 5.7 million businesses
have got introduced in the different sectors such as energy, Industrial and business. Small, micro
and medium sized organizations constitute a significant role in the economic development in UK
and by contributing in different regional economic development process by creating new job and

investment opportunities, ensuring the potential and capital sustainability the small and medium-
sized Enterprises have contributed towards bringing the economic growth.

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