Entrepreneurship and Small Business Management Report

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Entrepreneurship and Small Business Management
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Table of Contents
Introduction................................................................................................................................2
Task 2 (LO2)- Report.................................................................................................................3
Introduction................................................................................................................................3
a. Concept of SME. Evaluate the growth and financial contribution of micro, small and
medium private organisations to the UK Economy...............................................................3
b. Role of SME’s and their contribution towards national economy.....................................6
Conclusion..............................................................................................................................7
Task 3 (LO3 and LO4)- Essay...................................................................................................8
Introduction................................................................................................................................8
1. Difference between an entrepreneur and a manager.......................................................8
2. Explain entrepreneurial characteristics and skills an entrepreneur needs to have in order
to achieve success..................................................................................................................9
3. Utilise the Big-5 Model and analyse Croft-Simon’s entrepreneurial personality............10
4. Utilize Maslow’s Pyramid and analyse if there is a correlation between entrepreneurial
characteristics and entrepreneurial success..........................................................................10
5. Analyse other factors that can foster or hinder entrepreneurial success..........................11
6. Critically evaluate the influence of background and experience on entrepreneurs..........12
Conclusion................................................................................................................................13
Conclusion................................................................................................................................14
Reference List..........................................................................................................................15
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Introduction
The report will throw light on micro, small and medium sized organisations and their impact
on UK economy. These organisations play a pivotal role in improving the GDP of the
country. The objective of this report is to figure out the roles of entrepreneurs and mangers in
any firm. Entrepreneurial skills and characteristics for handling different entrepreneurial
activities in order to achieve success will also be highlighted in the discussion. The impact of
background and experiences on the career life of the entrepreneurs will also be analysed by
taking into account some of the real world entrepreneurship cases.
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Task 2 (LO2) - Report
Introduction
The report will focus on different entrepreneurship approaches that can be considered of
utmost importance for the growth of the organisation. It must be chosen carefully by
analysing the scope, size, domain and range of the firm. This discussion will further analyse
the impact of the micro, small and medium sized organisation on UK economy.
a. Concept of SME. Evaluate the growth and financial contribution of micro, small and
medium private organisations to the UK Economy
SMEs have contributed a lot in the growth and the development of the UK economy. For this
reason, the UK government is focusing on SMEs and start-ups. Till yet, UK government not
made any attempt to define SMEs. HMRC has defined SMEs as an organisation not
possessing more than 500 employees with annual turnover less than 10 million Pound. This
definition has been given for having research and development tax relief. As stated by Afrifa
(2016), the Department of business defines it as a company not having more than 250
employees. These definitions have not been taken into account by the UK government.
However, other branches of the UK government accept the EU definition on SMEs in the
way to conveniently handle the related matters. According to EU definition, micro business
employs less than 10 employees with annual turnover of 2 million Pound. Small business
employs 50 employees with annual turnover of 10 million Pound. It is 250 employees with
annual turnover less than 50 million Pound for medium businesses.
SMEs accounts 99% of all businesses in UK and it will be around 5.7m SMEs. Further, it
accounts 60% in terms providing jobs in private sector. SMEs have produced around 2
million jobs since 2015. The Brexit-effect has negatively affected the business processes of
SMEs. Michael Gove, pro-Brexit UK politician, has declared that there might be economic
damage but it can be controlled with the help of economists and financial experts. Effect on
SMEs implies that there will be notable decrease in the employment rate. Even more, the
financial condition of the country will be affected in terms of GDP and GDI.
Differences between small, medium and large business
Focus point Small business Medium business Large business
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(Xiros Ltd.) (The Ginger Pig) (Morrison)
Differences This type of business
focuses on the short
term planning for
making profits. A
family generally
handles small
businesses. The owner
of the business is the
sole decision maker.
The customers’ base is
not huge. Personal
financing and bank
loan are the sources of
funding.
The hierarchy of a family
with sometimes in
partnership also handles
this business with
stakeholders. Owners
and stakeholders are the
key decision makers. The
personal development
plan is offered to few
staff-members. The
stakeholders make
investment in the
business.
Public investors are
the equity owners in
such businesses.
Strategies making
process is handled
professionally by
developing a
management system.
It focuses on the
long-term goals and
infrastructure
development of the
firm. Funds are
collected from
different sources.
Impact on economy The small business
like Xiros Ltd. Has
played a pivotal role in
creating employment
in UK. Xiros Ltd
employs more than 10
staff members to carry
out the business
processes. In this way,
combined contribution
of small businesses in
UK’s economy is
about 20.4%.
The Ginger Pig has also
created a significant
number of jobs in their
operating area. From this
fact, the contribution of
the small organisation
can be understood. Small
business has contributed
28% in national income
and 36% in job creations.
Therefore, organisations
like the Ginger Pig
should be encouraged to
carry out their business
processes.
Large businesses like
Morrison have
contributed in the
economic growth of
the UK. Large
business firms have
uplifted the GDP
growth of the
company by 0.6% in
last six months. They
employ a big part of
the UK’s population
(Lyee and Cowling,
2015).
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Table 1: Different business types and its impact on economy
(Source: Inspired by Lyee and Cowling, 2015)
From 2014 onwards, Brexit-effect has negatively affected the businesses processes of the
organisation. However, government of UK has brought some of the new trading policies that
might be the driving force for carrying out the businesses processes of the organisation, as it
will help the company to grow economically. Since 2014, the UK government has
significantly focused on the growth of the SMEs this might be because the productivity level
of the UK is lower than the other countries of the European Union. SMEs have played a
pivotal role in overcoming this situation by creating the employability and product9ivity at
their level.
b. Role of SME’s and their contribution towards national economy
Impact of SME’s for two EU regions
Small and medium enterprises contribute in the GDP of the country like UK. In accordance
with the surveys made in 2018, turnover of the SMEs was noted to be of 2.0 trillion Pound.
This will be more surprising to note that, it amounts to 52% of the private sector’s turnover.
When it comes to employment, SMEs contribute a lot in creating employment in UK. More
than 16.3 million people have been employed in the small and medium enterprises (Jones et
al., 2016). This implies the contribution of SMEs on creating employability in UK and it is
60% of all private sector employment. SMEs are doing well on the development side in
comparison to other sectors. Even more, 50% of the SMEs are claiming to enhance the
business operations and this is the positive sign for making improvement in UK’s economical
growth. Thus, there is a need to promote these SMEs. They should be encouraged and
rewarded on regular basis in the way to promote their business processes. The UK
government has decided to invest 725 million Pound on Research and Development of the
SMEs (Lam et al., 2017).
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Impact of SME’s for two UK regions
As opined by Cowling (2016), implementation of Brexit law in UK has affected the business
processes of the and therefore it can be thought as a big obstacle in business success. Concern
level in term of percentage is 26% in Scotland whereas it becomes 42% in Northern Ireland.
This data shows that Brexit- effect has been the major concern for SMEs to get success in the
business in Northern Ireland (Lee and Brown, 2016). This might be due to the highly
complex and embedded social and political factors in the region. SMEs in peripheral regions
like Northern Ireland have been more concerned about the Brexit-factor in comparison to
non-peripheral regions. The production and construction industries of peripheral regions get
largely affected due to this. Considering the case of Urban SMEs and Rural SMEs, it can be
said that the success rate of the business in urban areas is less in comparison to rural areas.
Brexit-factor is the main obstacle in the way of urban SMEs. In addition, it has been the
major concern for the service industries in urban areas than non-urban areas.
Figure 1: Contribution of European countries in SMEs
(Source: Lee and Brown, 2016)
Statistical data given above imply that UK has secured second highest position when it comes
to number of projects preselected for funding in SMEs. This might be due to the role and
contribution of the SMEs towards the growth of the UK’s economy. However, the value
added development in terms of Euros has been disturbing between the year 2014 and 2016.
The main reason behind this was substantial exchange rate fluctuations. Netherland another
country of the European Union has allocated lesser number of projects for funding in SMEs.
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However, development of SMEs in Netherland has played a pivotal role in improving the
economic situation of the country. From 2016 onwards, number of person employed in SMEs
in United Kingdom is comparatively higher than the number of person being employed in
Netherland (Degryse et al., 2018). Valued added of SMEs in UK has been at its peak point in
the year 2015 and thereafter a gradual increase has been noted out. The UK government has
laid emphasis five key areas to accelerate the UK’s economy and these are infrastructure,
people, ideas, places and business environment.
In accordance with the research from International Trade Centre, the small and mid-sized
firms can support country’s economy. Thus, there is a need to develop combined strategies in
the way to proceed for encouraging suitable business environment for them. SMEs have
played a vital role in creating employment at the global level. It has contributed 70% in
creating jobs globally (Sainidis and Robson, 2016). SMEs can help to improve the
distribution system of the country. Less privileged sections are much benefited from these
small and medium-sized enterprises.
Impact of SME’s for the UK utilising two different industries
SMEs have affected the retailing as well as manufacturing industries of the UK. The growth
of SMEs has provided options to the customers and consumers. This lowers the profitability
and productivity of the company like Sainsbury’s and Rolls-Royce. The Sainsbury’s is one of
the leading retailing industries in UK. Rolls Royce is a famous automobile manufacturing
company in UK. The growth of SMEs has been the root cause for decreasing products rate of
the Sainsbury’s. However, manufacturing industries like Rolls Royce has not been affected
much due the growth of the SME’s. SME’s have boosted the economic condition of the
country by creating more number of jobs and more trading activities. This might have been
the reason behind amalgation of Sainsbury’s and ASDA. Due to this reason, Sainsbury’s and
ASDA has minimised the number of employers by 2,500 in order to compete with these
SMEs in terms of reducing the price of the products by 10%. However, no major reduction in
sales rate of the Rolls Royce has been observed and this might be due to the reason that
SMEs can’t afford such infrastructure for making cars.
Importance of small businesses and business start-ups
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It will be a profit-making deal for any country to encourage business start-ups and small
businesses, as it will help the government in creating jobs. Furthermore, small businesses at
regional and local level improve the distribution channel of the products especially among the
less privileged sections of the society. According to Rostami (2016), small businesses are
more open to maintain personal relationship with suppliers, customers and employees. This
might be due to the reason that they operate in limited locations with limited number of
employees and this becomes more manageable. Small businesses are more capable in
accepting changes because of few chains of commands and less complex management
structure. This shows their flexibility to get adaptable with the changing situation of the
marketing environment. Therefore, the management of the small businesses can respond
quickly to the problems and challenges. The owners of these businesses have to deal with low
overhead expenses and management costs. Small businesses can be beneficial for the growth
of the social economy as there is low possibility of having losses in the business (Baldock
and North, 2015).
Conclusion
The discussion has focused on the concept of SMEs and their contribution in the economic
growth. Contribution of small, medium-sized and lager businesses in UK’s economy have
also been highlighted in detailed. This discussion has also pointed out the major differences
between small, medium and large businesses
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Task 3 (LO3 and LO4)- Essay
Introduction
Entrepreneurs have multiple talents including decision making negotiation,problem-solving
and have knowledge of managing a firm entirely. They are intelligent and confident enough
to handle the worst situation in the business. Entrepreneurs are said to be born enthusiastic.
In this study, the differences between entrepreneur and manager are going to be defined.
Further, the characteristics of entrepreneur and skills needed to achieve success in the
business are going to be elaborated. Besides this, the utilisation of the Big-5 model to analyze
the Croft-Simon entrepreneurial personality is going to be discussed.
1. Difference between an entrepreneur and a manager
There is a vast difference between an entrepreneur and a manager. With reference to the view
of Powells et al. (2016), an entrepreneur is a responsible person who is accountable for the
success and failure of their own venture. On the other hand, a manager is a person responsible
for managing all the functions of the business. Entrepreneurs are the owner of a business
whereas managers are not the owner of the business rather they are considered only as senior
manager in a business. Apart from this, the entrepreneur is visionary and bears all financial
risk occurring in the business. On the other side, the manager works for salary and does not
have to bear any risk. Entrepreneur focuses on the starting and expanding of their business
ideas in different region, area or country whereas manager focuses on smooth functioning of
the business in an organisation (Velu and Jacob, 2016). Achievements in a business motivate
the entrepreneur whereas power and position in the business motivate the managers.
Entrepreneurs earn rewards through earning huge profits and expansion of their business
whereas managers reward through remuneration and incentive he receives from their senior
authorities. Entrepreneur can be informal and casual when in need of any business whereas a
manager’s approach to everyone is very formal.
Entrepreneur brings out the idea that benefits both employees and customers. On the
contrary, to this, managers mainly focus on the profit of the business. Managers are least
responsible for expanding the business rather they focus on the guidance of entrepreneur
(Mathias and Williams, 2017). For example, Croft-Simon decided to manufacture healthy
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food products for consumers. Now it is a responsibility of her manager to achieve the set
goals of manufacturing the best quality products named Popcorn.
2. Explain entrepreneurial characteristics and skills an entrepreneur needs to have in
order to achieve success
In order to be a successful entrepreneur, there are several characteristics including self-
motivation, understanding the offers, having knowledge of network, flexibility, and passion.
With the help of these features, entrepreneurs are able to establish their business in successful
way. From the guidance of Evanschitzky et al. (2016), entrepreneurs are intelligent enough to
understand the situation of the market taking into consideration of both customers and
employees. They do not take the steps that benefit the customers and become risky for
employees. As per the view of Kusmintarti et al. (2016), it can be understood that
entrepreneur has an in-built passion to achieve something higher in a way that they stand out
in the market as a good personality. For example, Mark Zuckerberg is an entrepreneur not
only helped people to connect together but later came to be one of the most renowned
personalities by connecting people around the world through Facebook. Another entrepreneur
is Stephen Croft-Simon who has opened Nom Foods with the view of providing healthy
eating to consumers. Nom Foods Bar is made with superfood ingredients like coconut, palm
sugar, oat bran and Cacao, which help in keeping the sugar level low (dailymail.co.uk, 2016).
The idea of starting this food product by Croft-Simon helps people to eat healthily and
remain fit. This gives a view that craft Simon is intelligent and smart enough expand their
business in a way that improves the health of consumers as well maintain a wide gap in the
highly competitive market.
In terms of skill, entrepreneur has high skill. According to the view of DeYoung et al. (2016),
entrepreneurs have negotiation skill, which helps to tackle all problems including workforce
and consumers. On the other side, they also have proper management skill, which helps them
to tackle with both external and internal changes in business environment. It can be
understood that entrepreneurs have proper decision-making skill, which helps them expand
their business as well earn huge profitability from it.
In supplementary to this, presence of effective communication skill has also been observed
among entrepreneur. This skill helps them to share their ideas with both internal and external
stakeholders including employees, government, consultant and many others (Omerzel et al.,
2016). Apart from this, entrepreneurs have good problem-solving skill, which helps them to
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avoid conflict situation among employees for a longer period. Hence, throughout this
discussion, it can be viewed that entrepreneurs have effective skill and characteristics, which
help them to become a renowned personality in the Global market.
3. Utilise the Big-5 Model and analyse Croft-Simon’s entrepreneurial personality
Big-5 model is a personality recognising model deals with viewing the personality of an
individual. The big 5 personality traits are openness, conscientiousness, extraversion,
agreeableness, and neuroticism. With reference to the personality of Stephen Croft-Simon, it
can be seen that she has openness personality in-built herself. This is because; it has been
found that she has the ability to bring something new for the people living in society. For this,
she made diet and nutritional food that is popcorn as healthy eating food for the people
(theguardian.com, 2015).
With a continuation of this, the presence of agreeableness has also been found in her as she is
compassionate and cooperative enough to understand the situation of individual suffering
from health issues. Apart from this, with reference to the view of Anglim and Grant (2016),
it can be understood that neuroticism is a personality where emotional stability is present. In
context of Stephan, it can be seen that she has emotional stability due to which she made a
decision to manufacture healthy popcorn for people living in the society. Hence, from overall
recognition, it can be seen that Stephan Croft-Simon has an inbuilt personality similar to 5
personality traits of the Big-5 Model.
4. Utilize Maslow’s Pyramid and analyse if there is a correlation between
entrepreneurial characteristics and entrepreneurial success
Maslow’s Hierarchy of Entrepreneurial needs can be used to understand the correlation
between entrepreneurial success and entrepreneurial characteristics. In the way to understand
the entrepreneurial needs, different stages of the Maslow’s pyramid has been described
below. The first stage is the physiological stage. This stage talks on being paid for the work
accomplished for achieving the objectives of the business (Resnick et al., 2016). It depends
on the success of the entrepreneurship. The second stage deals with safety in the sense of job
security of the entrepreneurs. It can be considered as the motivational force for implementing
better strategies for the growth of the organisation and this will lead to entrepreneurial
success. The third stage of Maslow’s theory talks on maintaining a good relationship with the
people who are associated with business activities. It becomes important for entrepreneurs to
maintain a good relationship with associates and business partners. Graafland (2018) stated
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