Entrepreneurship and SME in the UK: A Comprehensive Analysis

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ENTREPRENEURSHIP AND SME IN THE UK
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ENTREPRENEURSHIP AND SME IN THE UK
Table of Contents
Introduction......................................................................................................................................4
LO1: Range of venture types that are considered entrepreneurial (P1 & P2).................................5
Entrepreneurial venture types relating to entrepreneurship typologies.......................................5
Comparison between entrepreneurial venture types....................................................................9
LO2: Impact of small business (P3 & P4).....................................................................................11
Impact of Micro and Small Business on the Economy..............................................................11
Importance of Business Startups and small businesses.............................................................12
Importance of Small Businesses on Different Levels of Economy...........................................14
LO3: Key aspect of an entrepreneurial mindset (P5 & P6)...........................................................15
Characteristic Traits and Skills of Successful Entrepreneurs....................................................15
Entrepreneurial personality in accordance with mindset...........................................................17
LO4 Different environment that foster or hinder entrepreneurship (P7).......................................19
Background and Experience Can Hinder or Foster Entrepreneurship with Examples..............19
Link between Entrepreneurial Characteristics, Influence of Personal Background, and
Experience to Specific Successful Entrepreneurs......................................................................20
Background and experience influencing entrepreneurs positively and negatively....................20
Conclusion.....................................................................................................................................22
References......................................................................................................................................23
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ENTREPRENEURSHIP AND SME IN THE UK
Introduction
In the modern business environment, the entrepreneurial ventures incorporate innovative
technologies in their business operations in order to deliver more efficient products or services.
This report will analyse the interrelationships between the various entrepreneurial venture types
and entrepreneurship typologies, and evaluate the significance of small business in the UK
economy. Furthermore, it will evaluate the various aspects of an entrepreneurial mindset, and
various environmental factors hindering or fostering entrepreneurship.
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ENTREPRENEURSHIP AND SME IN THE UK
LO1: Range of venture types that are considered entrepreneurial (P1 & P2)
Entrepreneurial venture types relating to entrepreneurship typologies
The entrepreneurial ventures can be of different types according to their size, scope, number of
employees and field of work. Moreover, DeSantola and Gulati (2017) opined that according to
the foundations and ownerships of the various types of entrepreneurial ventures, they can be
related to different typologies of entrepreneurship, such as private sector entrepreneurship, public
sector entrepreneurship and social entrepreneurship. According to the size and rate of growth of
the entrepreneurial ventures, they can be categorised into four different types, which are:
Lifestyle entrepreneurial ventures:
This is a particular type of entrepreneurial venture, which is usually operated with a very limited
amount of business capital and this type of entrepreneurial venture delivers its products or
services to a very limited number of customers. In fact, Morris et al. (2018) argued that the
owners of this type of entrepreneurial ventures do not show much interest in expanding their
businesses in new and fresh markets, and they are usually content with just earning enough
amounts of business profits from their earnings. In the UK, approximately 32.2% of their
companies are lifestyle entrepreneurial ventures (Alvarez‐Garrido and Dushnitsky, 2016). The
examples of lifestyle entrepreneurial ventures are small beauty parlours and saloons, freelance
plumbers and electricians, and various other small business owners whose target market is
limited to a small locality. Thus, it can be understood that lifestyle entrepreneurial ventures can
be related to the private sector entrepreneurship typology, since the entrepreneurs operating these
businesses are private business owners.
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ENTREPRENEURSHIP AND SME IN THE UK
Start-up entrepreneurial ventures:
This is one of the major types of entrepreneurial ventures, and it can generally be seen that these
businesses aim for rapidly expanding in their target market and earning that maximum possible
amount of profit within a short time with the help of their new and innovative business ideas.
Eddleston, K.A., Ladge, J.J., Mitteness, C. and Balachandra, L., 2016) argued that their business
ideas brings in new and innovative products or services which are different and more useful than
the existing products or services. This gains the start-up business organisations a competitive
advantage, and allows them to expand their business territories into new and fresh markets as
well, establishing their brand names there. In the UK, approximately 61.3% of their companies
are start-ups (Miao et al., 2019). Examples of start-up entrepreneurial ventures in the UK include
companies like Revolut that provide Foreign exchange services, or Igloo that provide customised
tariffs for energy supply. Unlike in the case of lifestyle entrepreneurial ventures where the
funding comes from the owner's personal savings, the start-up entrepreneurial ventures usually
collect their business capital by selling their shares to venture capitalists, and so they usually do
not face any shortage of capital in any stage. Start-up entrepreneurial ventures can be related to
both the private and public sector entrepreneurship typology, since start-up companies are owned
and operated by private businesspersons, but can sell their shares in public stock exchanges.
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ENTREPRENEURSHIP AND SME IN THE UK
Figure 1: Entrepreneurial ventures
(Source: Colombo, D’Adda and Quas, 2019)
Conglomerate entrepreneurial ventures:
The conglomerate entrepreneurial ventures are the large business organisations that, unlike the
start-up ventures, do not aim to earn the maximum possible amount of profit or expand their
business as much as possible. Instead, the conglomerate entrepreneurial ventures prefer to earn a
moderate amount of profit, and grow their business market gradually. As argued by Colombo,
D’Adda and Quas (2019), they focus much more on establishing their brand reputation in the
market at the maximum possible level. It is important to note that the conglomerate
entrepreneurial ventures also aim to uitilise new and innovative business ideas in order to gain
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ENTREPRENEURSHIP AND SME IN THE UK
competitive edge in the market. It has been seen that approximately 87.3% of the conglomerate
entrepreneurial ventures across the world maintain their own research and development centers,
where they facilitate the developments of innovative technologies that helps them enhance the
quality and features of their products and services (Fouzdar and Sachdev, 2017). Examples of the
conglomerate entrepreneurial ventures in the UK include Tesco and Unilever. Naturally, it can
be understood that the conglomerate entrepreneurial ventures can be related to mainly the public
sector entrepreneurship typology, as these are all public limited companies and sell their shares
to public through stock exchanges.
Social entrepreneurial ventures:
The social entrepreneurial ventures are usually known for developing and delivering products or
services that are specifically designed to meet social needs of people. Wallmeroth, Wirtz and
Groh (2018) opined that just like any business organisation, the social entrepreneurial ventures
do make profit, but they also make sure they leave a positive impact on the society. An example
of social entrepreneurial venture is Gravity Light, where their founders Jim Reeves and Martin
Riddiford developed a lantern using a special type of battery that self-recharges using gravity,
replacing the existing Kerosene lamps that cause air pollution. The social entrepreneurial
ventures can be related to the social entrepreneurship typology.
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ENTREPRENEURSHIP AND SME IN THE UK
Figure 2: Entrepreneurship typology
(Source: Wallmeroth, Wirtz and Groh, 2018)
Comparison between entrepreneurial venture types
The similarities and differences between the various entrepreneurial ventures are explained
below:
Lifestyle
Entrepreneurial
Ventures
Start-up
Entrepreneurial
Ventures
Conglomerate
Entrepreneurial
Ventures
Social
Entrepreneurial
Ventures
These ventures do not
experience any
substantial business
growth beyond a
certain limit.
These ventures
experience an
extremely high
business growth rate
due to their innovative
business processes.
Allen (2015) opined
that these ventures
experience moderate
business growth along
with a high brand
reputation.
These ventures serve
the needs of the
society by delivering
customised and
innovative products
and services.
These ventures earn a
limited rate of profit.
These ventures earn a
high rate of profit, but
it depends on the
market demand and
customer satisfaction
of their products and
services.
These ventures are
well-established
businesses, and hence
they earn the highest
rate of profit.
However, it depends
on their release of
new products and
These ventures do not
prioritise their rate of
profit, thus they
usually earn a low to
moderate amount of
profit.
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ENTREPRENEURSHIP AND SME IN THE UK
services as well.
These ventures are
funded by the
personal savings of
the owner.
According to Bertoni,
D’Adda and Grilli
(2016), these ventures
are funded by
business loans and the
investments by the
venture capitalists.
These ventures are
funded by their
shareholders.
These ventures are
usually funded by
private savings and
business loans.
However, grants
sanctioned by the
governments are also
important sources for
funds for them.
These ventures can be
related to the private
sector
entrepreneurship
typology.
These ventures can be
related to the private
and public sector
entrepreneurship
typology.
These ventures can be
related to the public
sector
entrepreneurship
typology.
These ventures can be
related to the social
entrepreneurship
typology.
Table 1: Comparison of entrepreneurial venture types
(Source: Learner)
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ENTREPRENEURSHIP AND SME IN THE UK
LO2: Impact of small business (P3 & P4)
Impact of Micro and Small Business on the Economy
It is found from the research work of Mamabolo, Kerrin and Kele, (2017) that the impact of
micro and small business is huge for the UK’s overall growth. It can be seen that 99.8% of
business are SME based out of 5.8 million businesses in the UK. This is leading to 16.4 million
jobs all around the region of the UK, which is helping to generate an annual turnover of around
£2.0 trillion. This is quite equivalent to 52% of the opportunities that private sector is generating.
Thus, the growth of this sector is helping in the overall growth of the economy in many manners
during BREXIT. This has helped in the emergence of the micro and small business, which is
generally occupying a large portion of the UK market. It has also helped in the increase of
overall turnover by 18%, which is approximately around £673 billion. However, the employee
turnover is around 15.3% for micro business and 12% for the SME business in the UK. Thus, it
is found that the role of the SME’s and micro business is very prominent. It is helping in the
overall growth of the GDP and increasing the employment after the financial disaster and the
BREXIT that has taken place recently.
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ENTREPRENEURSHIP AND SME IN THE UK
Figure 3: Company incorporation
Source: (Priestley, 2018)
Importance of Business Startups and small businesses
It can be seen that small business will be leading the change in the economy of the UK post
BREXIT. It is very much prominent in the electronic sector, which remains unfazed by any
result of BREXIT. Thus, after the BREXIT SME’s are showing a massive growth rate and as of
2017, there are nearly 342,927 new businesses has emerged which is leading to 70 businesses
being registered per hour across the region of the UK. This is happening as the feel good factor
of doing business in the region of the UK has increased drastically and the insolvency rate has
drastically reduced by 3.6% from the previous years. For instance, the region of London
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ENTREPRENEURSHIP AND SME IN THE UK
recorded a massive registration of new business while Manchester and Edinburgh saw an
increase of 4000 new business being registered after the event of BREXIT.
Obschonka, Fisch and Boyd, (2017) opines that post BREXIT, the SME’s and the startups have
tightened their working styles and started to focus on various business factors which could help
them to control their business during the time of uncertainty. Further, Su, Xie and Wang, (2015)
opines that due to vast number of recruitment agencies are of SME types, they are still
flourishing despite the uncertainty raised by BREXIT. There has been a significant rise of 10%
growth in the recruitment sector and as many as 5110 new agencies emerged during this period.
The rise of new technology post BREXIT has played a major role in their growth. It has helped
the SME’s to keep their overheads as low as possible and eradicate incurring unnecessary cost
which could decrease the profit rate drastically. For instance, the use of online platforms has
risen sharply to attract customers towards them. Thus, the SME’s has been able to reach the
customers easily and provide them with the service in accordance to their taste and preference.
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