Entrepreneurial Ventures and the UK Economy: A Comprehensive Analysis

Desklib provides solved assignments and past papers to help students succeed.

Entrepreneurship and Small Business
Management
1

Contents
INTRODUCTION............................................................................................................................. 4
LO1.................................................................................................................................................5
LO2............................................................................................................................................... 11
LO3............................................................................................................................................... 16
LO4............................................................................................................................................... 20
CONCLUSION............................................................................................................................... 22
REFERENCES.................................................................................................................................23
2

INTRODUCTION
This report is going to cover the different topics that come under entrepreneurs,
entrepreneurship, small business and business startups. The starting section explains the
various types of entrepreneurial ventures and relation with the entrepreneurial topology. The
further sections clearly explain the similarity and dissimilarity among these ventures and their
impact on the country’s economy. This report uses actual statistical data from different sources
to understand the practical impact of small business and startups on the economy of the
nation. The next part is about the entrepreneurial mindset and characteristics. It covers the
different aspects like the explanation, identification and analysis of different factors, theories,
etc. that affects the entrepreneurship and the entrepreneurial mindset and characteristics. The
last section of the report explains all the above factors with a practical example to make the
understandings more clear and keen. Summing up all this report is going to be on the small
business and startups, and entrepreneurial behaviour. The diverse range of topics like the
impact, altering and analysis of these things will be focused in this report and will be explained
clearly and elegantly.
3

LO1
P1
ENTREPRENEURSHIP
The method of starting and running a business by taking calculated risks is called
entrepreneurship. Entrepreneurship can also be defined as the willingness in someone to start
a new business venture that can have a notable impact on the world. The person or individual
who plans to pursue entrepreneurship is called as an entrepreneur. The business or the work
that the entrepreneur launches is called as an “Entrepreneurial Venture” (Drucker, 2014).
TYPES OF ENTREPRENEURIAL VENTURES (Baer, 2016)
There are four main types of entrepreneurial ventures. Their description and relation with the
topology of entrepreneurship are:
This consists of two types of firms:
 Small Business Entrepreneurial Ventures – These are the small business that runs for
earning profits and are owned independently. Such business ventures have little or no
dominance in its area. The examples of such businesses are grocery stores, clothing
stores, restaurants, etc. The main objective of such business ventures is to grow and
earn more profit. The funding of such businesses is done by either friends/family or
small business loans. They lack the ability to scale more but they provide employment to
50% from non-governmental workers. In the UK 99.2 % of businesses is a small business.
4
1)

 Lifestyle Business Entrepreneurial Ventures – These are generally one person firms or
micro businesses that combines the skills of the founder or the owner for earning a
profit. Examples are freelancers, one-person firms, etc. The main objective of such
business ventures is to earn more profit and earn a residual income. Such business
ventures do not need big investments hence the individual working can fund it on its
own self or the funding can be done by friends/family.
Social Entrepreneurial Ventures – Such ventures are found on the basis of innovative solutions
that can add value to the consumer's life and can have a long term positive impact on society.
Examples of such businesses are trusts, a company focusing and solving problems in developing
nation, etc. The main objective of such business ventures is to make the world and the society a
better place and maximize the impact as much as possible. The funding for such businesses is
continuous and totally depends on the type of business and its size. Such entrepreneurial
ventures have enough ability to change the lifestyle of human in a positive manner.
Large Company Entrepreneurial Ventures – Such business ventures are the established firms
that have a minimum of 500 employees and earns a revenue of more than €50 million. They are
highly dominant in their area. Examples of established entrepreneurial ventures are big
corporations like AT & T, Microsoft, etc. The objectives of established entrepreneurial ventures
are generating profit for their company and for their shareholders and making continuous
5
2)
3)

growth and improvements. The funds are gathered from the earned revenue, tax credits and
subsidiaries. Such companies contribute a major part of the economy of a nation.
High Growth companies are also divided into two subparts:
 Scalable Startups – such business firms are newly born firms that possess high potential
and courage to create a new market and make an impact on the world by changing the
existing market through their services or products. The examples of such businesses are
IT companies, product-based companies, etc. The goal of such startups is to become a
public company via an IPO and earn profit for the company. The funding of such
businesses is based on risk capitals like Angel investors and high business loans. Such
startups have a high capability to impact jobs, economy and earn notable revenue.
 2nd Stage Businesses – These are the business ventures that have the potential to scale
and be dominant in their field. The main goal of such entrepreneurial venture is to make
growth by finding new markets and making expansions in any way possible. The
examples of such business ventures are the companies that are more than 3 y/o and
earning revenue in between €2 to 10 million. The funding of such companies is done
from banks, VCs, growth investments, etc. The make growth in their field continuously
by expanding their businesses and the positive impact in the economy of the nation.
6
4)

P2
SIMILARITIES (Schwienbacher and Larralde, 2010)
 Growth – Every single entrepreneurial venture strives for growth and making progress
in the business. The primary objective of every single entrepreneurial venture is to put
enough efforts and make improvements in the business so that they can grow their
business and earn more value for the company or business.
 Risks – Every single entrepreneurial venture includes some amount of risks the only
difference is that some risks are low while the other can be a big matter of concern for
the owner. Every single entrepreneurial venture takes risks in hope for profit and
growth but the ones which choose the right strategies and analyse the risks face the
success.
 Funding – All the entrepreneurial ventures require some initial capital which they can
use to invest in the product or the service they are going to offer. In the case of lifestyle
ventures, the funding may be small like buying the equipment, tools or technology. But
in large business ventures, the initial investments are very high and this increases the
risks of loss.
 Generation of Employment – Entrepreneurial ventures create employment for the
public and help the economy of the nation to grow. Every single venture creates a
different type of employment opportunity by which almost major part of the
unemployed people gets affected (as discussed above that only small scale ventures
provides 50% employment to the non-governmental workers. The rest is divided
accordingly).
7

DIFFERENCES (Schwienbacher and Larralde, 2010)
 Rate of Scalability – The scalability of business ventures is not always the same.
Business ventures like lifestyle ventures and small scale ventures make slow progress
due to the improper planning and innovation. On the other have innovation startups
and social ventures make drastic progress and can bring a sleek curve in the economy.
 Core Objectives – The core objectives of business ventures other than growth is
different from each other. Social ventures aim to make the world and the society a
better place while the small business ventures aim to earn residual income only and on
the other hand the established industries and large companies aim to grow more an
earn more profit and make improvements in the company.
 Investment Sources – Every single entrepreneurial venture needs a different amount of
investment and the sources of investments for these ventures are always different. The
main investments through which lifestyle ventures run are personal investments but the
social ventures and small scale ventures may require bank loans and support from
families/friends. On the other hand, the highly scalable innovative startups get their
investments through angel investors.
 The measure of Profitability – The measure of profitability for different ventures differs
for different entrepreneurial ventures. Small scale businesses measure profitability as
the expansion of their business. The large scale businesses measure it by comparing the
revenue they have earned to the previous year revenue and the fast scaling startups as
the recognition they have earned and the shares the cost they have earned through
IPO’s.
8

M1
PUBLIC SECTOR ENTREPRENEURSHIP
Public sector entrepreneurship is the promotion of innovative and creative public initiatives
that evaluates the greater economic value by changing the existing state of affairs of economy
of the nation in to another one that can be more fluent and can increase the engaging them in
creative activities and techniques in the face of uncertainty (Klein et al., 2010).
In simpler terms, public entrepreneurship is a kind of entrepreneurship that is designed for the
public leaders and private entrepreneurs that can develop new ventures which will be working
in the public sectors. During the last few years, there have been a lot of public
entrepreneurship ventures that are sold to the governments or the citizens directly.
Analyzing the above entrepreneurship ventures is can be clearly seen that Social ventures are
kind of public ventures and are examples of public sector entrepreneurship. This generally leads
to the development and the offering of the services and products that impact the world and the
lifestyle positively.
PRIVATE ENTREPRENEURSHIP
Private entrepreneurship generally leads to the entrepreneurial ventures that operate
independently without the interaction of government or its agencies. Private entrepreneurship
often encourages business ventures that are operated for personal and business profit and
growth. All the above entrepreneurial ventures like small scale ventures, highly scalable
startups. In the beginning, all the business ventures start as private entrepreneurial ventures
but as soon as they grow after the IPO they became a public entrepreneurial venture in which
government will also interact. That is why a private entrepreneur has to invest a lot of money in
his business. Private entrepreneurship is included with more risk factors and greater efforts for
investments (Lerner et al., 2012).
9

LO2
P3
Small Business and Micro-business impact the economy in many different ways like
employment, tourism, development, education, etc. But SMEs mainly affects the economy by
altering the employment rate. SME is the main source that contributes to the GDP of the nation
by altering employment only. Countries like the UK have shifted their policies and they are
emerging towards the ways through which they can encourage more entrepreneurial startups
in the country (Burns, 2016).
Figure 1: Small Businesses in the UK
Source: Europa, 2018
10

Analyzing the above statistical data this becomes clear that the entrepreneurial ventures are
continuously increasing in the UK. This is actually helping the country to increase its economy
and improve the nation's condition. The aforementioned information shows that until 2016 the
UK had 5.4M SME and 5.3M micro businesses. As the country started encouraging these
ventures, a drastic increase in these ventures is observed (Burns, 2016).
Almost 99.2% of businesses in the UK are SMEs and these businesses generate over 50% of the
nation's total employment for the non-governmental workers.
Figure 2: Contribution of SMEs in the UK's employment
Source: SB, 2017
What is meant by the above statistical data? It means that SMEs produces 24.3M jobs in the
country eradicating the issues for unemployment and raising the total economy. The SMEs
11

covers almost 80% of the UK’s total workloads. The above data also states that SME products
25,000 different job opportunities annually.
P4
The social economy of the nation can be thought of as the combination and the relation of
social behaviour of the citizens and the economy of the country. In other words how the social
change, trends, education mentality, ethics, employment level and other factors affect
consumer behaviour and its impact on the economy.
Small business and business startups and other ventures play crucial role in contributing to the
social economy of the county. These ventures do affect the social and the cultural factors of the
nation or a small area and hence affecting the country's economy. The key role of business
startups and small business in the improvement of the social economy are:
 The increase in business startups and small business ventures affect foreign trade and
the relationship of the country with the other countries. This affects the economy in a
wider context (Ackermann, 2012).
 Business Startups generates employment opportunities for the individuals of the
country. This affects the GDP of the country and the economy too.
 The small businesses which are generally based on social activities help in improving the
lifestyle of the country and take it towards the improvement. According to the statistical
data mentioned in the previous sections, social ventures have created 41% of the total
job opportunities in the UK too.
 Business startups are generally based on providing the solution to the problems that the
people are suffering from or the need that they cannot identify. In this way, small
business and the business startup improves the lifestyle of the consumers which add up
to a better nation.
 New business startups demand high skills which help in increasing the quality education
in the nation (Ackermann, 2012).
12