Unit 9: Entrepreneurship and Small Business Management Report

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Unit 9: Entrepreneurship and Small
Business Management
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Table of Contents
Introduction......................................................................................................................................3
a. Define the concept of an SME, and evaluate the growth and financial contribution of micro,
small and medium private organisations to the UK Economy. Your analysis needs to be based
on the last 5 years and must include potential political and economic factors that might have
either stimulated or halted the development of SME’s in the country........................................3
b. Examine the role of SME’s and analyse how they contribute to the national economy. Your
analysis must contrast the following:..........................................................................................6
A) Compare the impact of SME’s for two UK regions;..............................................................6
B) Compare the impact of SME’s for the UK utilising two different industries (for example,
retail and construction)................................................................................................................8
C) Compare the impact of SME’s for two EU countries;............................................................9
Conclusion.....................................................................................................................................10
Reference list.................................................................................................................................11
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Introduction
The SMEs or the smalls and medium-sized organisation play a vital role in influencing the
growth of a business. In this description or report, the notion of SMEs has been explained along
with the illustration of the influence of SMEs on the financial system of a nation. The political,
along with economic factors of SMEs, have been described in the report with respect to the last 5
years in the United Kingdom. The influence that the SMEs have on two regions in the UK has
been compared along with the influence of SMEs on two industries in the country has been
compared.
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a. Define the concept of an SME, and evaluate the growth and financial contribution of
micro, small and medium private organisations to the UK Economy. Your analysis needs to
be based on the last 5 years and must include potential political and economic factors that
might have either stimulated or halted the development of SME’s in the country.
Concept of SME
SME is the abbreviation of small and medium-sized enterprises. Based on the size of the country
or nation the size of an organisation can be segmented based on the numeral of workers it has
assets, and the volume of sales it makes in a year or the combination of all the factors as
mentioned. The organisations that have less than 250 staffs working in it are termed to be SMEs.
In the UK, there are approximately 5.2 million SMEs (Ward and Rhodes, 2019). SMEs have
been categorised into several parts that have been explained below with respect to the way the
government of UK defines it:
Figure 1: Organisations by Category in the UK
(Source: Rhodes, 2019)
 Micro organisations: The businesses that have nine or less number of workers are termed as
micro organisations. The income rate and balance sheet of the micro organisations go up to
two European million pounds. As per reports, in the year 2014, 96% of the companies in the
UK were micro organisations that are approximately 5 million in number. The employment
generated is 33% of the entire employment in the country.
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 Small organisations: The organisations that have 10 to 50 staffs working in it are termed as
small organisations. The turnover rate and balance sheet of the small organisations go up to
100 million European pounds. In the UK, 15% of the organisations are small organisations.
The employment generated is 15% of the whole employment in the country.
 Medium organisations: The businesses that have 50 to 250 staffs working in it are termed as
medium businesses. The turnover rate and balance sheet of the medium organisations go up
to 48 million European pounds. In the UK, 1% of organisations are medium organisations.
The employment generated is 13% of the total employment in the country.
 Large organisations: The organisations that have more than 250 employees are termed as
large organisations. The income rate of large organisations accounts for 53% of the turnover
of the country. Less than 0.1% of the organisations in the UK are large organisations. The
employment generated is 40% of the total service in the nation.
Growth and financial contribution of micro, small and medium private organisations to the
UK Economy
The small, medium and micro organisations have made a huge involvement to the augmentation
of the financial system of a country. With respect to the UK, the contribution made by the SMEs
is immense. As per reports, the SMEs have contributed manifold in the development and
intensification of the UK by generating opportunities for employment and increasing the GDP of
the country. The withdrawal of the country from the European Union Law has disturbed the
financial stability of the UK. The SMEs have grown up largely in the last few years in the
country with the support of the government thus contributing greatly in the financial system of
the nation.
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Figure 2: Growth of small, medium, large, and micro organisations in the UK from 2000 to
2018
(Source: Merchantsavvy.co.uk, 2018)
In the figure above, it can be seen that the organisations that do not have any staff have grown
the most in the last 18 years. The non-employer organisations are followed by the small
organisations in terms of rate of growth, which is then followed, by the medium-sized businesses
in terms of development and growth. The micro organisations follow the small organisations in
terms of growth while the large organisations are the last in terms of growth and development in
the country between 2000 and 2018.
Figure 3: Contribution of the small, medium, large, and micro organisations in the UK in
2018
(Source: Rhodes, 2019)
The table above implies that the micro businesses employees about 8802 employees and its
turnover rate are 1994 billion European pounds. The micro businesses produce about 33% of the
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total service in the nation. The income rate of the micro organisation is 21% of the total turnover
of private organisations in the country. The small businesses employ about 4083 employees
while the turnover rate of the organisations is 590 billion European pounds. The employment
generated by small businesses in the nation is approximately 15%. The turnover rate of small
organisations is approximately 15% of the total income rate of the nation. The medium
organisations employ approximately 3399 employees and the turnover rate of the medium
organisations is about 595 billion European pounds. The rate of employment generated by
medium organisations is about 13% of the total employment while the income rate of medium
companies is about 15%. Thus, it can be stated that the involvement made by the micro
organisations in the financial growth of the UK is the most that are followed by the small
organisations and then the medium organisations follow.
b. Examine the role of SME’s and analyse how they contribute to the national economy.
Your analysis must contrast the following:
A) Compare the impact of SME’s for two UK regions;
Figure 4: Effect of SMEs based on UK regions
(Source: Merchantsavvy.co.uk, 2018)
The table above implies that in the UK the number of businesses is approximately 56945151.
The turnover if the SMEs in the UK are 3739171. The numbers of employees in the SMEs is
76% of the total employees while in the micro organisations the number of employees is
approximately 21.1%. In the small organisations, the number of employees is approximately
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0.6% while in the large businesses the employment rate is 0.1%. It can be stated that the
involvement made by the small and micro businesses in the UK is more as compared to the
contribution made by the large organisations in the country.
Figure 5: SMEs in several regions of the UK
(Source: Rhodes, 2019)
North East: In the Northeastern part of the UK, the number of micro organisations is
approximately 27% while the number of small organisations is approximately 0.7%. The large
companies constitute approximately 0.25% of the private companies in the country.
North West: In the Northwestern part of the UK, the micro companies account for 24.9% of the
total companies in the regions. The small businesses contribute about 0.7% of the whole private
organisations in the nation.
Thus, it can be stated that the North East supports the establishment and expansion of SMEs
more as evaluated to the North West based on the data that has been obtained.
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B) Compare the impact of SME’s for the UK utilising two different industries (for example,
retail and construction)
Figure 6: SMEs in various industries in the United Kingdom
(Source: Rhodes, 2019)
The SMEs contribute manifold in any industry where it is allowed to flourish. The influence of
the SMEs in a variety of businesses of the UK has been discussed below:
Retail Industry: The figure of SMEs in the retail industry is about 556000 that accounts for 10%
of the entire SMEs in the UK. The service produced by the SMEs in the UK is 19% of the entire
service produced by the SMEs and the turnover rate of SMEs in the business is 34%.
Construction Industry: The figure of SMEs in the construction business is about 992000 that
accounts for approximately 17% of the total numeral of SMEs in the UK. The service produced
by the construction business is about 8% of the total service produced by the SMEs in total while
the turnover rate of the SMEs in the construction business is 8%.
Thus, it can be stated that the figure of SMEs in the construction industry in the UK is more as
evaluated to the retail industry yet the employment opportunities produced in the retail business
is more as evaluated to the construction business.
C) Compare the impact of SME’s for two EU countries;
The influence that the SMEs have made on the two nations of the EY has been described below:
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Cyprus: As per reports, the figure of micro businesses in Cyprus is 47480, the numeral of small
businesses in the country is 2802, and the number of medium-sized organisations is 427. Thus,
the total figure of SMEs in the nation is 51069 (Statista.com, 2019).
Denmark: The SMEs account for 99.4% of the organisations in Denmark that is approximately
136803. The figure of micro businesses in the country is 107243, the figure of small businesses
is 25480 while the number of medium-sized organisations is 4080 (Apcz.umk.pl, 2019).
Thus, it can be stated that the government of Denmark supports the establishment and
development of the SMEs more as compared to the government of Cyprus based on the numbers
that have been obtained.
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Conclusion
If the UK is measured, then it can be stated that the government of the country used various
statistics in order to distinguish between the micro, small, medium, and large organisations. The
government of the country has always supported the establishment and growth of SMEs in it and
has formulated as well as implemented several policies related to the development of the
organisations in the country. It has been found that the contribution of the SMEs in the
intensification of a nation by increasing its GDP is more as compared to the large organisations.
The recommendations that can be provided to the UK are:
 The establishment and growth of the SMEs must be supported in every industry.
 The SMEs must be underpinned in their expansion to increase the GDP of the country.
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Reference list
Afrifa, G.A., 2016. Net working capital, cash flow and performance of UK SMEs. Review of
Accounting and Finance, 15(1), pp.21-44.
Apcz.umk.pl. (2019). [online] Available at:
https://apcz.umk.pl/czasopisma/index.php/AUNC_ZARZ/article/viewFile/9986/9082 [Accessed
21 Aug. 2019].
Brown, R., Liñares-Zegarra, J.M. and Wilson, J.O., 2018. What happens if the rules change? The
impact of Brexit on the future strategic intentions of UK SMEs. The Impact of Brexit on the
Future Strategic Intentions of UK SMEs (March 1, 2018).
Cowling, M., 2016. You can lead a firm to R&D but can you make it innovate? UK evidence
from SMEs. Small Business Economics, 46(4), pp.565-577.
Love, J.H., Roper, S. and Zhou, Y., 2016. Experience, age and exporting performance in UK
SMEs. International Business Review, 25(4), pp.806-819.
Merchantsavvy.co.uk (2018). UK SME Data, Statistics & Brilliant Charts (2019 Update).
[online] Available at: https://www.merchantsavvy.co.uk/uk-sme-data-stats-charts/ [Accessed 23
Jul. 2019].
Rhodes, C., 2019. Business statistics. House of Commons Library, 06152.
Statista.com (2019). Number of SMEs in Cyprus 2017 | Statista. [online] Available at:
https://www.statista.com/statistics/878752/number-of-smes-in-cyprus/ [Accessed 21 Aug. 2019].
Ward, M. and Rhodes, C. (2019). Economic Policy and Statistics. Small businesses and the UK
economy.
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