Comprehensive Analysis of SMEs' Impact on the UK Economy (Module 9)

This report provides a comprehensive analysis of the impact of Small and Medium Enterprises (SMEs) on the UK economy. It highlights the significant contributions of SMEs to employment, innovation, and competition, supported by statistical data. The report explores the importance of startups and businesses of all scales in driving economic growth, evaluating the differences in contributions between large, medium, and small-scale enterprises. Furthermore, it examines the impact of SMEs at various economic levels, including regional, national, and international contexts, and compares the impact of SMEs across different industries and countries. The report concludes by summarizing the overall positive influence of SMEs on the UK economy, while acknowledging some associated challenges. The analysis includes comparative data from different regions, industries, and countries, offering a multifaceted perspective on the role of SMEs in economic development.

UNIT 9

EXECUTIVE SUMMARY
This report highlights impact of the Small business on economy by showing the different
contribution of the SMEs to the economy in the way of employment, innovation and competition
by justifying the answer by the way of Data. Further this report explains the importance of the
Start-up in the economy and the importance of all the scale business in the growth of the
business by the way of explaining each scale importance and in the end report highlights impact
of SMEs on different level of economy.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
P3 Illustrate with the stats and data how SMEs has impacted the UK economy........................4
P4 Explain the importance of Small and start up business in development of the economy......5
M2 Evaluate difference in Large, Medium and small scale contribution toward the economy. 6
D2 Explain the impact of Small scale business at different level...............................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
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INTRODUCTION
SMEs is the small scale enterprise who has less than 250 employees in the organisation and Start
up are the enterprise who has recently established. Report highlights about the impact of the
SMEs in the UK economy. After that report shows the advantage of the SMEs in development of
economy and in the end explains the contribution of all scale organisation in economy and on the
different level of the economy.
MAIN BODY
P3 Illustrate with the stats and data how SMEs has impacted the UK economy
Macro and small business are always known as a back born of the UK economy as they
contribute and impact the economy very vastly as SMEs contribute 99.3% of all private sector
which accounts for 5.7 million business in the UK at the start of the 2018 and which generally
explains that SMEs offers a variety of Job opportunity and opens a new room for the new market
which has contributed very much toward the economy. Out of the total SMEs which are opened
in the UK 44.1 percent of the business used to survive for the first five years. That equates to
almost 415,000 new businesses being born in the UK every year while 328,000 cease trading on
an annual basis.
Some big contribution of the SMEs are as follows:
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Source: SMEs Data, 2018

Employment: In total 16.3 million jobs were created in the last year by SMES and micro
business itself, which has played a very crucial role in decreasing the unemployment in the
economy but at the same time the job created by SMEs are not that long lasting for the economy
as many SMEs out of that die due to some or other reason and the problem of the employment
again arise for the economy. As 30% of start up dies in the first year itself and in the long run
60% of the SMEs dies in the first five year of the establishment (Jamali, Lund-Thomsen and
Jeppesen, 2017).
Competition: SMEs has always forced the big organization to increase the quality of their
service or product in the economy by offering a good competition in the market. Their are 5.7
million businesses which has been opened in the previous year which are 99.9 percent of all the
business. which has helped the economy to see the best result from the organisation but most of
the SMEs are provided fund by the bank and the organization which falls behind in handling the
competition used to close the business and which result in bankruptcy which eventually create
the burden on the economy.
Creativity and Innovation: These are the two big thing which is contributed by the SMEs to the
economy as SMEs brings the séance of new things and idea in the economy which has helped the
UK government to grow and also helps the SMEs in establishing their business and increasing
the revenue of the business. In year passed, SMEs total turnover was 1.9 trillion pounds which
was almost 52 percent of all private sector in UK.
Comparison the impact of SME’s for two UK regions
London Manchester
SMEs account for 99.8% of total private sector
business in the London. There are 1061 Smes
in London. 49.8% of employment in the
London is provided by SMEs. SMEs in Uk
used to make up for 47.7 percent of the revnue
in the UK. London used to be the region in
which there are 1563 business for every 10,000
business
Manchester is most grown region as region has
seen the 36% of rise in the opening of the
SMEs in the last year. 60 percent private
organisations come under SME business.
About 43 percent employment in Manchester
is coming from SMEs. Manchester used to
have 23,845 businesses in there city.
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Compare the impact of SME’s for the UK utilising two different industries
Retail Construction
16 percent of the retail business come under SMEs
in UK. There are more than 560 SMEs kin
retail business. Which is 1percent of all. SMEs
has increased the employment in retail sector
by 19 percent. SMEs accounts for 34 percent of
retail sector turnover. In UK, 69 percent of
SMEs have made profit in 2018 (statista.com,
2019). About 8 percent companies coming
under this category has made loss.
Their are 1000 SMEs in the constitution
industry. Which is 5 percent of total business.
8 percent employment In construction industry
are employed by SMEs Statista. (2019)
If total turnover of UK in construction business is
taken into consideration, then it is seen that 8
percent of total turnover is generated by these
businesses. In UK construction business, 74
percent SMEs have seen profit in 2018. Only 3
percent companies faced loss. This show it has
brought profit to the business.
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Source: SMEs Data, 2018

Compare the impact of SME’s for two EU countries
France Italy
Out of the total business in France 99.9 is
dominate by SMEs in the France. 9182432
people are employed by SMEs . This amount is
61.6 percent of total employment. This has
helped many people in France and reduced
unemployment. 529 billion Euros in 2017 is
contributed by SMEs. This kind of economic
contribution has a positive impact on economic
health of France (Statista. 2019).
99.9 percent SMEs are their in Italy. Which is
3746109 companies. These SMEs are
employing about 11391179 people,
whifile:///home/user/Downloads/SN06152.pdfc
h is 78.5 percent of total employment. It has
increased the income of people in italy. 471.5
has been contributed by the SMEs in Italy.
However, it is quite enough to indicate a
positive impact. This is about 52 percent of
total turnover (Statista. 2019).
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Source: SMEs Data, 2018

P4 Explain the importance of Small and start up business in development of the economy
Creation of employment: The most important contribution of the SMEs toward the economy is
the Job creation as it always prove difficult for the economy to provide 100% employment to all
the skill full individual in the economy but the SMEs helps the economy in doing that as SMEs
always brings the jobs with them which helps the economy to defend the problem of
unemployment in the country as a data suggest that 16.3 million job has been created by the
SMEs in the UK which is a very big number and has contributed adversely in the development of
the economy.
Meeting social purpose: As almost every SMEs is establishes with the sole motive of earning
the revenue by looking the social objective also it has helped the country in building the social
economy as looking at the social objective helps every organisation to build a good goodwill and
the name in the eye of the customer which has always helped the organisation in the long run of
the business (Faggian, Partridge and Malecki, 2017).
Local improvement: As SMEs has helped the economy in improving the quality of the service
in the organization it eventually helps the business in improving the standard of life in the
country as the quality of product which is consumed by the citizen is improved.
Engage significant number of people including the from disadvantaged groups: SMEs has
helped the economy in optimum utilization of their human resources as the SMEs has helped the
business in reducing the unemployment rate in the country.
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Source: SMEs data, 2018

Variety of Carrier: SMEs are the one which has helped the economy to offer variety of the
carrier option to the individual as the success of the SMEs has attracted many new and bidding
entrepreneur toward the respective industry which has helped the economy in getting more and
more proficient individual in the market and at the same time the success of SMEs has also
opened room for the student to choose the best sector in which they are interested.
M2 Evaluate difference in Large, Medium and small scale contribution toward the economy
When it comes on the contribution toward the economy it is very difficult to differentiate in the
business on the basis of the Scale as large scale organisation contribute very much in the
economy but at the same time number of Large scale industry are less than Small or medium
scale industry which means that the contribution of all the industry is equal in growth of the
economy. Larger scale industry used to provide the quality product to the organisation and hence
earn a good revenue from that at the same time small scale and medium scale industry used to
provide good innovative product to the market which also contributed well in the growth of the
economy, Hence it has proved that all the scale organisation is important for the growth
file:///home/user/Downloads/SN06152.pdfof the economy (Wakkee, Van Der Veen and
Eurlings, 2015). SMEs used to provide the employment to the 60 percent of the employee at the
same time 40 percent of employment are provided by the large scale organization. SMEs used to
cover the 99.9 percent of the private area where only 0.1 percent is covered by the large scale
organization. 96% of businesses in the UK employ fewer than 10 people
D2 Explain the impact of Small scale business at different level
Small scale industry has a good impact on the all aspect of the economy as at regional level,
SMEs has the option of offering the good and innovative product to compete with other business
to meet and satisfy the need and demand of the customer effectively at a regional Level. SMEs
generally used to use the heat and trial method in which they generally used to bring the change
on a regular basis to check the validity of their innovation. At the national level organisation
used to expand their business by using more economic resources which eventually increase the
revenue and tax liability which help the country in development as tax are collected by them,
they generally try to give more satisfying product with the help of more researched and
developed product.. At the international level, many SMEs used to export their product to other
country which help the country to have a foreign currency which contributes to growth of
economy (Ceptureanu, 2015).
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CONCLUSION
From the above report it has been summarised that there is very good impact of SMEs on the
country economy which has proven very good for the growth of the economy but there are some
demerits also of it but the positive point has so good that it overlooks the demerit.
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REFERENCES
Books and Journals
Ceptureanu, S.I., 2015. Competitiveness of SMES. Business Excellence and Management
Review. 5(2). pp.55-67.
Faggian, A., Partridge, M. and Malecki, E.J., 2017. Creating an environment for economic
growth: creativity, entrepreneurship or human capital?. International Journal of Urban and
Regional Research. 41(6). pp.997-1009.
Fingleton, B., Eraydn, A. and Paci, R. eds., 2017. Regional economic growth, SMEs and the
wider Europe. Routledge.
Jamali, D., Lund-Thomsen, P. and Jeppesen, S., 2017. SMEsmuch was developed the SME in
the country and in the sector and CSR in developing countries. Business & Society. 56(1).
pp.11-22.
Paul, J., Parthasarathy, S. and Gupta, P., 2017. Exporting challenges of SMEs: A review and
future research agenda. Journal of world business. 52(3). pp.327-342.
Wakkee, I., Van Der Veen, M. and Eurlings, W., 2015. Effective growth paths for SMEs. The
Journal of Entrepreneurship. 24(2). pp.169-185.
online
Statista. [online] Available at: https://www.statista.com/statistics/988702/trade-receivables-on-
turnover-of-smes-by-size-italy/>.
SMEs Data, 2018 [ONLINE] Available through: <file:///home/user/Downloads/SN06152.pdf>.
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