Entrepreneurship and Small Business: A Report on the UK Economy

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ENTREPRENEURSHIP AND SMALL
BUSINESS MANAGEMENT
1

Table of Contents
LIST OF FIGURES.......................................................................................................................3
INTRODUCTION................................................................................................................... 4
LO1.......................................................................................................................................... 5
P1 Types of Entrepreneurial Ventures in Context with entrepreneurship typology. .5
P2 Differences and Similarities among the entrepreneurial ventures........................7
M1 Demonstration of the entrepreneurial ventures in context with public and
corporate sector.................................................................................................................9
LO2........................................................................................................................................ 10
P3 Interpretation of the impact of micro and small business on the economy with
the help of relevant data.................................................................................................10
P4 Importance of small business start-ups in the growth of social economy..........11
M2 Difference between in the impact of the small, medium and large business
through relevant statistical data.....................................................................................12
LO3........................................................................................................................................ 15
P5 Differentiate the characteristic traits and skills of entrepreneurs from managers
........................................................................................................................................... 15
P6 Assessment of entrepreneurial personality that reflects the motivation and
mindset of entrepreneurs................................................................................................16
M3 Line of argument related to entrepreneurial characteristics................................17
LO4........................................................................................................................................ 19
P7 Background and experience that fosters the entrepreneurship...........................19
M4 Link between the entrepreneurial characteristics and influence of personal
experience and background...........................................................................................20
CONCLUSION..................................................................................................................... 21
REFERENCES.................................................................................................................... 22
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LIST OF FIGURES
Figure 1 Number of Private Sector SMEs in the UK Economy.....................................11
Figure 2 Number of Employees Classified in the Private Sector Business.................13
Figure 3 Share of Business in the UK According To Size..............................................14
3

INTRODUCTION
From the present market situation in the UK economy, it is being noticed that the
development of the economy is purely based on the start-ups of small business and
by the growth in the entrepreneurial business. Both the entrepreneurship and the
small business start-ups have enhanced the distribution channel, increased the
opportunities for employment and contributed to the growth of the local economy. In
this report, the emphasis will be led upon the demonstration of entrepreneurship and
different entrepreneurial ventures. The report will also focus on the impact of small
business management in the UK by representing the statistical data. The insights will
be led on the different characteristics pursued by different entrepreneurs whose
mindset is influenced either through education, family backgrounds and so on.
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LO1
Introduction
The various entrepreneurial ventures are emphasized in this segment which
influences the whole economy.
P1 Types of Entrepreneurial Ventures in Context with entrepreneurship
typology
Entrepreneurs: The people who take the responsibility of undertaking the risk by
providing innovative ideas and execute the same in the business are termed as an
entrepreneur. Entrepreneurs are the one who develops the new business idea in the
market with some innovations and makes it different from that of competitors. Thus
they continuously focus on the targeted customers and fulfil their demand and thus
become the successful entrepreneurs (Schumpeter, 2017).
Entrepreneurship: entrepreneurship is solely based on the level of knowledge of a
person which is applied in the business. Entrepreneurship is the art of coming up
with the on-going market trends and develops the opportunities to overcome the
challenges (Schumpeter, 2017).
Different Types of Entrepreneurship Ventures:
The entrepreneurship ventures are classified on the basis of ownership, on the basis
of gender and on the basis of size (Welter et al., 2017).
On the basis of Ownership:
Private: The ventures that are managed by individuals and group of individuals for
earning the profit from the business instead of focusing on societal welfare. The main
aim of private ventures is to focus on growth and development and to regularly
improve the products and services (Burchardt et al., 2016).
Public: The ventures that are managed and governed by the government with the
aim of creating value to the people of society. The shareholders of such enterprises
are not fixed. As there is the involvement of government, the activities involved in the
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business are less risky and are based on the old procedures. The example of public
sector enterprise in London is London Boroughs (Welter et al., 2017).
Voluntary: the voluntary sectors are managed by the group of individuals whose
main motive is not to earn profit but to focus on the welfare of the society. They focus
on upbringing the living standards of the people by providing basic facilities that they
require (Welter et al., 2017).
On the basis of size:
Small-Scale Enterprise: the small business enterprises employ more than 50
employees and the turnover generated by such enterprises are not more than £10
million. While on the other hand, the enterprises that employ less than 10 employees
and generate the revenue of £2 million are the micro enterprises (Burchardt et al.,
2016).
Medium-Sized Enterprise: in the medium size enterprise there are 250 employees
in the firm and tends to generate the turnover of £50 million (Welter et al., 2017).
Large Scale Enterprise: the enterprises that tend to generate more than £50 million
of turnover with the 250 employees from the business activities are the large scale
enterprises (Welter et al., 2017).
On the basis of Gender:
Men Enterprise: Such enterprises hold the management by the male members who
solely controls the business activities (Burchardt et al., 2016).
Women Enterprise: Such enterprises are managed and controlled by the woman
and holds the minimum shareholdings of 51% in the company and generates the
maximum employment by the women in such enterprise (Allen and Truman, 2016).
Serial Entrepreneurs: The entrepreneurs that establish the business to a particular
level for handing over the business to the successor on the basis of pre-defined exit
plan and retain the degree of some planning the investment for repeating the
process in the business (Welter et al., 2017).
Intrapreneurs: This is the business entrepreneurs who are the employees of the
business organization and have the authority to initiate in innovating in the services
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and products of the company and restructure the process and converts the business
system into the successful entrepreneurial venture (Welter et al., 2017).
Lifestyle Entrepreneurs: Such type of entrepreneurs that works according to their
passion and emphasizes on performing the work that they love to do instead of
focusing on the profit-making business. This helps them to become successful
according to their passion (Welter et al., 2017).
Social Entrepreneurs: The entrepreneur that aims at providing the solution to the
problem that arises in society. They also serve the products and services with the
intention to develop societal welfare and perform on the basis of the bottom line. The
profits that are earned are reinvested in the enterprise rather than distributing it to
the shareholders. The example of social entrepreneurial ventures is Big issue, Belu
and Divine Chocolate (Zahra and Wright, 2016).
Independent Entrepreneurs: such type of entrepreneurs is the individual that
manages and operates the whole business activities according to their own plan.
With the help of advanced technology, the tasks are performed in an easier way and
some of the tasks are also provided to the freelancers (Burchardt et al., 2016).
P2 Differences and Similarities among the entrepreneurial ventures
Following table differentiates and presents the similarities between the different
types of entrepreneurial ventures:
Entrepreneurial
Ventures
Similarities Differences
Private Enterprise In the private sector
enterprise, the
entrepreneurs also focus
on the customer and
pretend to be the
customer oriented
company (Morris et al.,
2018).
The private enterprise
differentiates with the
other enterprises in terms
of the aim of the company
as the main aim of such
enterprise to earn a profit
(Morris et al., 2018).
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Public Enterprise Public enterprises also
focus on the enterprise’s
growth by providing
employment opportunities
(Morris et al., 2018).
The main motto of public
enterprise is to work for
the society and the profit
earned is reinvested by
the government (Morris et
al., 2018).
Social Enterprise The social enterprises also
focus on society and thus
being a public-oriented
company (Zahra and
Wright, 2016).
Shareholders of such
enterprise are not entitling
to profit and thus the profit
is again reinvested in the
welfare of the society
(Zahra and Wright, 2016).
Lifestyle Enterprise The lifestyle enterprises
are also the customer-
oriented enterprise and
works by performing
business operations
(Morris et al., 2018).
The opportunities in such
enterprises are limited and
instead of focusing on
earning profit they work
according to their passion
(Morris et al., 2018).
Serial Enterprise The entrepreneurs of the
serial enterprise are the
same as others as they
plan the activities and
work for the development
of the enterprise (Morris et
al., 2018).
The serial entrepreneurs
hand over the developed
enterprise to others and
thus the process of
handling over the
enterprise continues
(Morris et al., 2018).
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M1 Demonstration of the entrepreneurial ventures in context with the
public and corporate sector
In every organization, the employer assigns work to the employees of the
organization with a view to developing innovative ideas with the help of them. Such
employees are known as intrapreneurs. They are also involved in the decision
making the process of the enterprise and with the coordination of the teamwork the
employer is able to achieve the objectives of the enterprise and attain the high
profitability and this also leads them to be the successful entrepreneur. Such
intrapreneurs encourage business operations and help the top management of the
enterprise to take innovative decisions.
The objective and mission of the public sectors are decided by the political factors
i.e. the government of the economy in which the enterprise is established (Link,
2016). On the other hand, the objectives and mission of the corporate sectors are
generated in the enterprise that is free from the market economy. In the corporate
sector, the incentives are given in common to the employees while in the public
sector there is no such policy of sharing profits among the employees (May, 2019).
The corporate sector enterprises compare the profitability with that of the public
sector that does not aim at earning the profits. The ethics adopted by the employees
at the workplace, the professional competency and the resources that are provided
by the government impact the performance of the public sector enterprises (Link,
2016). The management system of public sector business enterprise is rigid as there
is the involvement of the political factors in comparison with that of the corporate
sector business enterprises who have the power to develop their own managerial
system (May 2019).
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LO2
P3 Interpretation of the impact of micro and small business on the
economy with the help of relevant data
It is being noticed from the last many years that there has been a remarkable
increase in the growth of small business in the economy of the UK. The growth of the
UK economy has become dependent on small businesses only (Taylor, 2017).
The increase in the small business enterprises is due to the accessibility to the loans
and grants available for establishing the new business. It has positively contributed
to the economic development of the economy. Recently in the UK, the number of
SME in the private sector is 5.7 million in the year 2018. Comparing the number of
SME in the private sector in the year 2000 it was only around 3.5 million. So in short,
there has been an increase of 63% in the private sector SMEs in 18 years (Rhodes,
2018).
From the year 2000, the number of employees is also decreasing continuously as
the people have moved towards the start-up business through innovative ideas and
focuses on establishing the self-business (Taylor, 2015).
Figure 1 Number of Private Sector SMEs in the UK Economy
(Source: Rhodes, 2018)
In the private sector, there were 99.3% small business enterprises and 99.9% SMEs
in the year 2018. The employment opportunities generated in the UK from the private
sector SMEs accounts for 60% which is almost 16.3 million. The generation of
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turnover accounts for 52% which is around £2 trillion from the private sector SMEs
(Rhodes, 2018).
It has been revealed in the Centre of Economics and Business Research as well as
The Hampshire Trust Bank that the increase in the growth of the small business will
be around 11% in the 5 years i.e. from 2015 to 2020 which will contribute to around
£196 billion (Rhodes, 2018). The contribution to the UK economy has been
forecasted from the SMEs in the 10 cities of the UK which will be around £217 billion
till the year 2020. In the UK, London is the centre for establishing the SMEs and thus
it is expected that there will be around 76% contribution of the SMEs in the UK which
will increase till £164 billion till 2020 as compared to £149 in the year 2015 (Rhodes,
2018).
P4 Importance of small business start-ups in the growth of social
economy
Due to the financial crisis in the economy of the UK, there have been various issues
arise in the market such as the rise in the inflation price for the consumers and the
growth of income for the household sector has also decreased. All these resulted in
a certain restriction on the expenses of the consumers. The economy of the UK was
lacking behind in the development as compared to the competitors of Europe. Then
the government of the UK decided to start with developing the small business and
push the small business ahead which has helped tremendously in the development
of the UK economy (Taylor, 2017).
There has been £2 trillion of the turnover generated from the SMEs in the year 2018
and this was majorly contributed by the private sector enterprises i.e. 52% was the
contribution of private SMEs. The employment opportunities were generated by
SMEs to about 16.3 million people i.e. almost 60% of employment opportunities were
generated by the private sector SMEs (Rhodes, 2018). Around 50% of the
enterprises i.e. SMEs committed for expanding the business operations and also to
enhance the employment opportunities. Thus it has been observed from all this data
that in the development of the UK economy the SMEs are the most essential part.
The business activities that form the part of the SMEs are retailing business,
manufacturing business, repairing and maintenance etc. (Rhodes, 2018).
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It has been derived that for the development and growth of the UK economy, small
business has become the strength which facilitates establishing the new market and
generating employment opportunities. Thus small business has also encouraged
innovative ideas to be executed in the business and enhanced the competition by
forming the innovative and creative ideas in the business (Taylor, 2017). The few
examples of innovative inhibitors such as Uber, Angel Funding, and Airbnb has
influenced the competition in the corresponding industries and generated the base
for developing and competing in the market. There is an improvement in the living
standards of the local economy as there has been an increase in the ration of
employment through the SMEs and so it has also contributed in the growth of the
social economy (Taylor, 2017).
M2 Difference between in the impact of the small, medium and large
business through relevant statistical data
Meanwhile, from the year 2000, there has been a constant increase in the business
of the private sector. But in the year 2018, the number decreased by 27,000 and
attained to 5.7 million private sector business in comparison with the year 2017. In
the SMEs, there are at least 250 employees employed. In the private sector
business, the contribution of SMEs is around 99% (Rhodes, 2018).
Figure 2 Number of Employees Classified in the Private Sector Business
(Source: Rhodes, 2018)
There is around 96% of the micros business that employs at least 10 employees in
the firm. In 2018, the number of micro business accounts for 5.4 million in the
economy. There have been 33% of the employment generated from the micro
business which is around 8.8 million among the overall employment generated from
all the businesses. The micro businesses generated a turnover of approximately
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