Entrepreneurship and Small Business Management: A Report on UK Economy

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ENTREPRENEURSHIP AND SMALL
BUSINESS MANAGEMENT

Contents
INTRODUCTION...........................................................................................................................................3
LO1..............................................................................................................................................................3
P1:...........................................................................................................................................................3
P2:...........................................................................................................................................................4
P3:...........................................................................................................................................................5
P4:...........................................................................................................................................................6
LO2..............................................................................................................................................................8
P1.............................................................................................................................................................8
P2.............................................................................................................................................................8
P3.............................................................................................................................................................9
P4.............................................................................................................................................................9
LO3 AND LO4.............................................................................................................................................11
P1...........................................................................................................................................................11
P2...........................................................................................................................................................12
P3...........................................................................................................................................................12
P4...........................................................................................................................................................13
CONCLUSION.............................................................................................................................................14
REFERENCE LIST.........................................................................................................................................15

INTRODUCTION
An entrepreneur is a person who identifies the need in the market and takes the steps to fulfil
their needs. Additionally, he is the one who creates an innovative idea to satisfy the needs of
the customers by supplying those required goods or services are known as an entrepreneur.
The entrepreneur earns a profit either by starting a small or big company by taking the risk. The
entrepreneur is generally known for his creative ideas either for goods, services, ideas or any
other business procedure (Lavoie, 2015).
According to Merriam-Webster, “a person who assumes, organizes and manages the risk of the
business is called entrepreneur ".
On the other hand, entrepreneurship is the activity for setting the business by grasping the
opportunity and taking the risk for the profit. It includes both the activities of creating the idea
of new business and taking the actions for the actual process for starting a new business. The
main characteristics of an entrepreneur are innovative and risk-taking (Kirzner, 2015).
According to Bruce Bachenheimer, “entrepreneurship is only a mindset in which the
entrepreneur thinks and takes the actions. It is finding new ways to solve the problems."
LO1
P1:
Various types of entrepreneurial ventures
• Serial entrepreneur: A serial entrepreneur is the one who regularly comes up with
the new ideas of starting a new business. After starting a new business, the serial
entrepreneur delegates the responsibility to others and then switches in creating a
new idea or new venture. This is suitable when the mind of the entrepreneur is
creative and has lots of unique ideas. The main disadvantage of this
entrepreneurship is that the individual does not help the company or venture when
they need his help (Wise, and Raffi, 2016).
• Intrapreneurs: Intrapreneurs are the employees who take the responsibility for
creating innovative ideas, product or service within the company. The intrapreneurs
do not face any risk and even he did not get a reward from the company (Smith et
al., 2016). Although, he has the right to use the resources and assets of a company.
• Owner-manager: An individual who owns and manages a business. The primary goal
of an individual who owns and manages a business is to achieve his personal goals.

This is the only source of revenue for the entrepreneur and he consumes the
majority of time and resources to achieve his goals (Kevill et al., 2017).
• Small business entrepreneurship: Small business entrepreneurship is the small
shops which are owned by single individuals and may employ local employees or
family member to help them. Their aim is not to convert their shops in big
companies but its aim is to earn the profit and to feed their family members (Burns
and Dewhurst, 2016).
Typology of entrepreneurship
• Lifestyle entrepreneur: When an individual creates a business to change his lifestyle
rather than with the aim of earning a profit is known as a lifestyle entrepreneur.
Many people develop business according to their passion or interest.
• Serial entrepreneur: A serial entrepreneur is one who continuously comes up with
the new idea and then sells the business for creating another new business. His
responsibility ends when he finds the person who can purchase his business.
• Corporate and organization entrepreneur: A corporate entrepreneur is one who
develops products or services inside the existing business and generates revenue
through his innovative and creative thoughts (Chen et al., 2015).
An organization entrepreneur is the group of the owner and they meet regularly to
share ideas and information with each other with the aim of improving their
business.
• Social entrepreneur: A social entrepreneur is one who develops his business to solve
social problems. These are the individuals who take a lot of risk for bringing change
in the society through his efforts.
P2:
Key differences between serial entrepreneurs, intrapreneurs and owner managers
Basis Entrepreneurship Serial
entrepreneurship
Intrapreneurs Owner-
manager

Meaning Is a person who
initiated the business
with his own idea
Is the one who
creates an innovative
venture and sell it to
someone else
Is an employee in
the company
who brings
innovative and
creative ideas,
products and
services
Is a person who
takes the
responsibility of
owning and
managing a
business
Resources Uses own resources May or may not use
own resources
Use the
company's
resources
Uses own
resources
Capital Own capital Own capital or can be
financed by
institutions
Financed by
company
Owner's capital
and may
manage from
external sources
Dependency Independent Independent Dependent Independent
Risk and profit Borne by individual Limited risk and
higher profit
Borne by
company
Borne by
individual
P3:
Define public and corporate sectors
A public sector is that sector of the economy which is controlled by the government of the
country and the products and services are provided by the government such as public
transportation, infrastructure, military services, police, healthcare etc. The government did not
provide the rights to the private sector to produce such services (Bouckaert et al., 2016).
A corporate sector is the private sector of the economy where the activities of entrepreneur
are carried out by supplying or manufacturing the goods or services to earn a profit. It is that
part of an economy that is made up of companies (Freeman et al., 2015).
Variety of entrepreneurial ventures within the context of public and corporate industry
Intrapreneurship in public sector: In the large public sectors, the intrapreneurs bring the
innovative product and services for fulfilling the unmet needs of the people. They are highly

skilled, motivated and action-oriented. They make the organizations more profitable where an
imaginative and creative employee thinks like an entrepreneur. Intrapreneurs often become
entrepreneurs.
Entrepreneurship in the corporate and public sector: The entrepreneurship is not only used in
the corporate sector but it is also used in the public sector as well.
Corporate entrepreneurship is used for developing innovative and creative ideas in a large
organization to increase productivity and increasing the competitive position in the market.
Public sector entrepreneurship is a person that brings innovative public policy for creating
economic prosperity in the country. An entrepreneur takes the risk of the business and
independently performs his business.
P4:
Scope, development and growth of entrepreneurial ventures
The scope of entrepreneurial venture
The scope of entrepreneurship is very tremendous in both the developing and developed
countries. Entrepreneurs provide a lot of opportunities for unemployed people. The scope of
entrepreneurial ventures is as follows:
1. The scope of profit: There is a direct relationship between the efforts of an
entrepreneur and the profit. This factor motivates the entrepreneur to take more risk
and put extra efforts to achieve more profits. Profits are more in the low-risk enterprise
while it is less in the high-risk enterprise (Manish and Sutter, 2016.).
2. The government encourages entrepreneurship: The government encourages the
concept of entrepreneurship because of many reasons such as to protect the small
entrepreneurs from the competition, for bringing employment opportunity and so forth.
The government policies such as Intellectual Property rights, funding to small medium
enterprise and start-ups etc. encourage the entrepreneurship in the country.
3. Provide employment opportunity: Different types of entrepreneurial ventures provide
different types of employment opportunity such as public and corporate sector,
educational institutions, development sector, contract venture and others (van et al.,
2016).
Development of entrepreneurial ventures
Currently, the venture of serial entrepreneurship is increasing because they have the
knowledge of different types of industries and they also spend their time in acquiring
knowledge of different business and sectors. The concept of intrapreneur is currently rising in

the public sector where the employees contribute their innovative ideas for the growth of the
economy. The owner-manager entrepreneurship is increasing in the UK economy for increasing
the scope of self-employment.
The growth of an entrepreneurial venture
There is an increase in the number of private entrepreneurs in the UK by 97,000 from 2015 to
2016. The number of private sector businesses in the year 2016 was 5.5 million. The reason for
these increases in number is ease in business startup loan and grants. The majority of the
business in the UK is due to a small business enterprise with less than 250 employees, according
to European Union Standards. Such small companies either in the initial stage or in the middle
stage of their journey that often requires the funds for smooth functioning (Market inspector,
2019).
Since the last three years, 60% of these companies look for some external funding for their
operations. This is the reason why these small enterprises turned to the government for
business loan and grants. The chart shows the number of employment generated by the small
business enterprise that shows the importance of small business enterprise in the UK economy.
Figure 1: number of small entrepreneurs in the UK economy
[Source: Market inspector, 2019]

LO2
P1
The significant impact of micro and small businesses on the UK's economy
According to the Financial Stability Board, there are 5.6 million micro and small businesses in
the UK at the start of 2018. There is a decline in the population of private business sector
business by 0.5% as compared to the previous year. While on the other hand, the employment
of private sector is increased by 2%. The total percentage of small business is 99.3% of all the
private sector business and 99.9% are the small enterprise at the start of 2018. 60% of
employment is due to the private sector and total employment in the small-medium enterprise
was 16.3 million. Also, the combined annual turnover of SMEs was £2.0 trillion (FSB, 2018).
P2
Social economy
The social economy is comprised of two actors i.e. the economic actors and the social actors
that are present in all the sectors of society as well as economic. These include several
enterprises such as non-profit organization, co-operative society, charities and foundation,
volunteer association, social enterprises and credit unions. In other words, then the individuals
or the institution work to satisfy the economic and social needs of the people then it is termed
as the social economy.
For example, there are some small educational institutions which provide the education to low-
income families because they are not able to afford the fees of large educational institutes.
Further, these institutions provide other activities such as sports, dance, music and so on so
that the children come to these institutions regularly.
Importance of small business and business start-up in the growth and development to the
social economy of UK
Due to the declining rate of real income and increasing consumer price inflation (CPI) forces the
consumer to spend less. This is the reason for increasing the importance of the social economy
in the UK.
1. Turnover
The turnover of these social enterprises has increased due to declining the rate of real income
of consumers. According to Social Enterprise UK (2017), the turnover of social enterprise has
increased by 47% from the last year as compared to 34% of the small medium enterprise. These

enterprises also introduced 50% of new products or services in the UK economy (Social
Enterprise UK, 2017).
2. Employment
The research says that there are about 100000 social enterprises giving employment to millions
of people in the UK. Majority of the social enterprise provides employment to the people with
the aim to serve the society by fulfilling their needs. As a result, it creates a job opportunity and
services to the people (Kay, 2018).
P3
Micro and SMEs make the largest contribution in the social economy of the UK. The average
employment rate in the UK employs 5.1 people. The chart divides the enterprises according to
the size-class of employees such as micro firms having 0-9 employees, small firms 10-49
employees, medium-sized firms having 50-249 employees and the large firms having more than
250 employees.
Figure 2: small, medium and large businesses make to the UK’s economy
[Source: Research briefings, 2018]
P4
Impact of small business on the local, regional, national and international
Impact of small entrepreneurs on the local economy
SMEs offer more flexible and responsive products or services according to the needs of the
customers. SMEs decrease the expenditure of training, research, marketing and optimum
utilization of resources. Additionally, the local networks and support system help the SMEs to
meet the challenges of global companies (Policy brief, 2019).
Impact of small entrepreneurs on the regional economy

The government of the UK provides loans and grants to encourage entrepreneurs. Networking
allows small entrepreneurs to combine the advantage of greater flexibility with the economies
of scale for expanding its operations (Policy brief, 2019).
Impact of small entrepreneurs on the national economy
The national government provides the linkages through providing the framework for
public/private and inter-firm partnership. The role of the national government is to build the
cluster which is generally indirect with the aim to provide the supporting skills development
and freeing up the resources to meet the challenges of global companies (Policy brief, 2019).
Impact of small entrepreneurs on the international economy
SMEs are looking up the opportunities in the global market through joint ventures, franchising
and so forth. About 25% of the SMEs are now internationally competitive and is continuously
increasing. The government is continuously providing different services such as financing,
infrastructure and information to promote the micro and small enterprise (Policy brief, 2019).

LO3 AND LO4
P1
Characteristic traits and skills of successful entrepreneurs
Following are the mental, behavioral and psychological characteristics of a successful
entrepreneur:
• Achievement-oriented: The entrepreneur has the ability to see and act on the
opportunity. They are intrinsically motivated to achieve difficult goals. The
entrepreneur focuses on the way to achieve success rather than evaluating the
impact of failure on the business (Aboal and Veneri, 2016).
• Committed to others: They are not only committed to their vision, mission or
objective but they make the commitment with other members of the business as
well. They keep their promises with others such as supplier, customers, employees
etc.
• High propensity for risk-taking: They are ready to take the risk for achieving the
personal objectives. This characteristic distinguishes the entrepreneurs from others
(Do Paço et al., 2015).
• Calculated risk-taking: The entrepreneur has the ability to calculate the approximate
risk associated with the strategies or actions. The entrepreneur considers the
potential cost and potential benefits associated with the particular product or
services.
• Visionary: An entrepreneur is one who can predict and see the future of his business
that one cannot see. A successful entrepreneur has always set their vision for the
future. They regularly watch future opportunities and the strategies to capitalize on
those opportunities.
• Self-confidence: They believe in themselves, their objectives and mission. This
confidence helps them at the time of difficulties or struggles. A person having the
self-confidence is ready to take the risk for achieving their personal goals (Marques
et al., 2018).
• Flexibility: The entrepreneur is always ready to change the strategies as he receives
new information. A conservative personality is not a trait of an entrepreneur. When
the entrepreneur is flexible he is ready to take the uncertainties and challenges of
the future (Khosla and Gupta, 2017).
• High energy: The successful entrepreneur is highly energetic to create new ideas,
products or services as well as he has the power to observe and imagine the

uncertainties of the market. Even after the venture becomes successful, he needs
lots of energy and motivation to sustain the venture.
• Creative and innovative ability: The entrepreneur is innovative to add or discover
unique utility with the existing product. Further, he possesses the skills required to
discover things of absolutely new phenomena.
P2
Entrepreneurial personality reflects his entrepreneurial motivation and mindset
Entrepreneurship is both a rewarding and challenging task depends on the efforts of the entrepreneur.
Following are the personality traits that reflect his entrepreneurial motivation and mindset.
• Passion: The aim of entrepreneurship is not only to earn the profit but the
satisfaction they get from doing what they like to do. To make the business
successful, the entrepreneur invests lots of time and efforts in order to achieve what
he wants to achieve. The entrepreneur doesn’t give up easily (Obschonka et al.,
2018).
• Motivation: The entrepreneurs are intrinsically motivated to put extra effort into
their business. They do not require any manager or the boss to motivate him to get
their work done. In fact, he is the one who motivates others to perform well.
Entrepreneur very well knows their dream and communicates and motivates others
for helping him in the journey of achieving the goal (Carsrud et al., 2017).
• Optimistic: The entrepreneur does not easily give up on any task before trying to
achieve it. The entrepreneur always remains optimistic and looks ahead. The
entrepreneur set short term and long term goals and plan and prepare the strategies
to achieve those goals.
• Creativity: Every time the entrepreneur thinks in a different way. They have
different look out for the world and thinks out of the box. They are always looking
for different ways of doing the same thing and search the ways to make it better. By
being creative and innovative, they continuously come up with new ideas to bring
change in the world (Weinberger et al., 2018).
P3
The characteristic traits, skills and motivational drivers of successful entrepreneurs
• Need for autonomy: An entrepreneur always wants to have control over the use of
his talent and skills and to control their own destiny. His autonomy is the best factor
of motivation (Kaburi et al., 2017).