Entrepreneurial Ventures: A Study of UK SMEs and Their Economic Impact

Desklib provides past papers and solved assignments for students. This report analyzes entrepreneurship and small businesses in the UK.

Entrepreneurship
Name of the student
Name of the University:
Student’s ID:
Page 0 of 22

ENTREPRENEURSHIP
Table of Contents
Introduction:....................................................................................................................................3
Task: 1.............................................................................................................................................3
Definition of Entrepreneurship:...................................................................................................3
Entrepreneurial Activities and Entrepreneurial Enterprise:.........................................................4
Different Entrepreneurial Ventures:............................................................................................4
Typology of entrepreneurship......................................................................................................5
Similarities and differences between entrepreneurial ventures:..................................................8
Similarities:..................................................................................................................................8
 All entrepreneurial ventures require innovation, industriousness and the determination to
execute ideas................................................................................................................................8
 Every business model incorporates a tendency to facilitate growth and a propensity to
identify opportunities of the new venture....................................................................................8
Task 2:.............................................................................................................................................8
Small and micro business:...........................................................................................................8
The contribution of two small type firms in the United Kingdom's economy: local, regional
and national impact......................................................................................................................9
Impact of micro and small businesses in the UK economy.......................................................10
Importance of small business and start-ups in the growth of social economy..........................12
Impact of small, medium and large businesses on different levels of economy...........................12
Page 1 of 22

ENTREPRENEURSHIP
Task 3.............................................................................................................................................13
3. How factors like family upbringing, lifestyle differences, and personal motivational drivers
could influence entrepreneurial characteristics.............................................................................15
Task 4:...........................................................................................................................................17
Conclusion:....................................................................................................................................19
References......................................................................................................................................20
Page 2 of 22

ENTREPRENEURSHIP
Introduction:
The ability to perceive things differently than the general way is creativity. On the other hand,
innovation implements that creativity to make something that has never been done before. In
entrepreneurship, creativity and innovation both are applied in the process of starting something
to capitalize on market opportunities. Entrepreneurs come up with new ideas and find a way to
work them out for satisfying the market’s need or for solving a problem as the world, and its
needs are changing. Entrepreneurs caton imagine the world differently. It is all about
implementing new ideas or perceptions in the work process so that it helps in the development of
society. Entrepreneurs create new job opportunities and in the process help the unemployed.
They design, establish and run new business which often starts with a small set-up.
Further, in this study, the implementation of new ideas and contributions to develop the
resources of the company will be explored
Task: 1
Definition of Entrepreneurship:
An entrepreneur can be defined as a person who sets up business by talking about small financial
risks in the hope of generating profit. The entrepreneurs pursue their dreams, passion or hobbies
to make their careers. They perceive things differently and make out new ways. An entrepreneur
must be imaginative and has the power to lead or guide people, find ways to utilize the available
resources and yield better outcome (Daskalaki, Hjorth and Mair, 2015). An entrepreneur must be
open-minded to accept the new ways and changes and confident in his approach. Not all
Page 3 of 22

ENTREPRENEURSHIP
entrepreneurs are successful; they must know how to take an appropriate approach while setting
up a new venture. He must create or provide the services that the clients or the customers would
buy or be interested in.
Entrepreneurial Activities and Entrepreneurial Enterprise:
The entrepreneurial activity involves enterprising human activity to pursue a yield of value by
creating or expanding economic activity through the identification and utilization of new
products, procedures or markets. As a phenomenon, entrepreneurship is related to the
entrepreneurial activity (Chell et al. 2016).
Entrepreneurial enterprise, on the other hand, is the intrinsic relationship among ownership,
operational competence, and accountability. An entrepreneurial enterprise needs to locate a
balance between intrepid innovation and sturdy risk management procedures, agility and
scalability.
Different Entrepreneurial Ventures:
Different types of entrepreneurial ventures in considering the context of the corporate and public
sector are:
 Small or micro ventures: small or micro-enterprises are independently owned by an
individual. It is small in size and has less number of employees (Durkin and Gunn, 2016).
They have a small number of clients and earn less revenue compared to other
entrepreneurial enterprises. In a small or micro enterprise, immediate customers are the
friends, neighbors and members of the immediate local market. A small or micro
enterprise can survive through the economic crisis.
Page 4 of 22

ENTREPRENEURSHIP
Small scale ventures can be distinguished into both corporate and public sectors. A small or
micro corporate enterprise can be a consultancy firm. A small scale public ventures are the
independent businesses that provide public service like hair dressing businesses
 Medium scale enterprises: it is generally bigger than in small or micro-enterprises.
The employees here are directly managed by the owner. They carry out more business
operations daily and have a significant number of 9f customers or clients.
A small or micro venture can also turn into a medium sized enterprise.
The corporate example of medium-sized enterprise is a Small manufacturing company
And a medium size enterprise in the public sector can be a rent-a-car provider.
 Large scale enterprise: The large scale businesses have a greater number of
employees to work for them. They provide a better infrastructure for the enterprise.
They have more a complex hierarchy system in the organization. A large scale
organization needs more investment or capital. The turnovers may or may not be
profitable at times. Large scale enterprises contain more risk and cannot withstand the
economic crisis.
Example of a large scale enterprise in the corporate sector is- car manufacturing
companies
Typology of entrepreneurship
Typology of entrepreneurship has been into popular discussions and academic discourses with
the growing opportunities and innovativeness of the entrepreneurs in the recent history of the
world market. The classification of various businesses has become necessary with the expansion
of business opportunities both in the corporate and the private sectors. The discussion of small
Page 5 of 22

ENTREPRENEURSHIP
scale, medium scale, and large scale ventures in corporate and public sectors done previously
clearly demonstrate the relation to the typology of entrepreneurship. The reference to hair
dressing business is an example of the ‘low growth potential new venture’ under the subdivision
of individual entrepreneurship because there is no possibility of rapid growth in employment or
revenue in this venture yet it involves the opportunity of growth (Durkin and Gunn, 2016). A car
manufacturing company, on the other hand, can be held as a corporate entrepreneurial model and
can be further subdivided under business level entrepreneurship into New Business Unit
(Corporate Venturing) or Existing Business Unit (Business Turnaround) or Functional Level
Entrepreneurship owing to the prevalent business model or the current state of the company.
Various Venture Types
Independently Owned Venture: An independent business refers to a business which is beyond
the control or interference of external phenomena. It is generally an establishment which is
privately owned, unlike a public limited company. Such a privately owned company differs from
a publicly traded company in the fact that its stocks are not sold in public exchanges.
Lifestyle Businesses: A freelancer is a commonly used terminology referring to a person who is
self-employed and is not usually committed on a long term basis to a particular employer or
establishment. Another category of Lifestyle Business model is microenterprises. A
Microenterprise is a business in a much smaller scale usually employing lesser than nine persons
and having an annual turnover below a particular amount which is €2 million.
Social Good Organization: A good social organization or an enterprise is a commercial
organization whose objectives are particularly social and also its primary agenda. Such
Page 6 of 22

ENTREPRENEURSHIP
enterprises work to maximize profits while maximization of social and environmental benefits.
Their profits are generally used to fund programs of social wellbeing and awareness.
Large Enterprises: The large scale enterprises have a greater number of employees working
under them. They provide a better infrastructure for the enterprise to function and develop. The
hierarchy system in the organization is far more complex. Bigger investments or capital are
needed for the initiation and functioning of a large enterprise. There is no surety of such
enterprise’s turnovers to be profitable every time. Running large enterprises involve more risk
and they cannot withstand an economic crisis.
Scalable startup: A scalable startup can be defined as a newly formed business venture which
aims to create a viable business model to meet a need of the market or problems related to it.
Scalable startups particularly aim to locate a business model that can be repeated and has low
marginal costs. Low marginal costs assure that the total return on investment is not reduced with
the growth of the business.
Second Stage Company: Companies which have grown beyond the threshold of a startup and yet
not attained the maturity of a large scale enterprise can be suitably defined as a second stage
company. The velocity of revenue growth needs to be maximized by the second stage companies
to achieve a particular maturity in business.
Page 7 of 22

ENTREPRENEURSHIP
Similarities and differences between entrepreneurial ventures:
Similarities:
 All entrepreneurial ventures require innovation, industriousness and the determination
to execute ideas.
 Every business model incorporates a tendency to facilitate growth and a propensity to
identify opportunities of the new venture.
Differences:
 Small business entrepreneurship differs from others on the ground that though being
independently owned, they do not rely upon a huge capital or investment.
 The employment in such businesses is limited and much less in comparison to large
business enterprises and more than startups or microenterprises.
 Large enterprises do not have the power to withstand an economic crisis whereas
other ventures can be partially impervious to such extremities.
 A second stage company has more means to augment the velocity of revenue
generation to achieve business maturity, unlike any other business venture.
Task 2:
Small and micro business:
Micro and small scale industries are the business entrepreneurship which is independently owned
by an individual. The number of employees is very less and requires less investment or capital.
The customers or clients in this business style are friends, neighbors and locals (Kenney and
Page 8 of 22

ENTREPRENEURSHIP
Zysman, 2016). These types of industries are concentrating on providing better service and
believe in building up a relationship between the client and the company. As the revenues are
less, these industries can withstand an economic crisis. They open new opportunities of
employment to the unemployed and hence contribute to the economic growth of the areas with
the development in the small scale industries; the infrastructure of the area also develops.
In the United Kingdom, micro industries have less than ten employees, and the turnover is under
£2 million. However, in small scale industries, there are less than 50 employees and the turnover
is under £10million.
94% of the companies in 2017 have 10 or less than ten employees. The percentage of small
business enterprise in the UK was 99.3% in 2018.
The contribution of two small type firms in the United Kingdom's economy: local, regional
and national impact
SME or small and medium are the two small type enterprises in the UK which act as a backbone
of the UK economy. Small businesses open scopes for employment to the unemployed and
contribute to the economic development of society. Small business grows and turns into medium
size business and can spread in the different region depending upon their profit. They cater to the
immediate need of society and build a relationship between the company and its clients. As
emphasizes on making new or improved products and casts a positive effect on social and
economic growth. For the small business, the local economy is rooted in selling goods or
products to their friends, neighbors and locals. It provides a benefit of shopping locally. A small
business is the only business that can survive while providing products to a small population.
The growth of the industry impacts the infrastructural growth of the region like roads, water
Page 9 of 22

ENTREPRENEURSHIP
supply, electricity facilities, education, and training, etc. in less developed regions. It changes the
lifestyle of people promoting direct and indirect jobs. The area and the facilities around the
business develop making economic stability. Growth in the regional and local economy will
directly affect the increase in the national economy. The small business might not limit itself in
one region and can spread. Once it starts spreading, it opens a broader scope for new
employment. A decrease in the rate of unemployment of a country will automatically boost up its
national economy. More profit the business makes, more it contributes to the socio-economic
development (Hillary, 2017).
The small and medium enterprises contribute towards the positive growth of innovation as they
always try to improve or produce new products to satisfy the customers and their needs. They
urge competition which brings forth new measures of doing businesses. Examples of some
innovative measures taken by small and medium companies are Airbnb, uber or funding circle.
They creature a new level of innovation for their respective industries.
In terms of growth, the SMEs are doing well as 50% of the SMEs are about to extent their
operations this year. The business owners have the most confident approach in their business
than large companies. The small and medium businesses enterprises can sustain in financial
turmoil and hence can sustain in the long run. The entrepreneurs adapt their organization with the
changing needs of the world and its market every day. Hence they r dedicated to yield better
outcome by providing better products or services.
Impact of micro and small businesses in the UK economy
The small and micro business provides job opportunities to the unemployed section of the
society. Micro industries have less than ten employees in the company. A start up opens up a
Page 10 of 22

ENTREPRENEURSHIP
new perspective of innovations that attract people towards them. They believe in solving the
existing problem of society with their solutions and new ideas (Albort and Ribeiro, 2016).
In the UK, over 99% of businesses are small and medium businesses have less than 250
employees.
Their prosperity and productivity include many stakeholders and can be looked at from a more
holistic approach. The start-ups are financed by the banks or governments as they need capital to
start the business. The government determines the opportunities or limitations of an organization
before funding. The small business or start-ups firstly create job opportunities; more the people
employed, more is the economic development. SME's in the UK has 60% of the total
employment in the UK in the private sector. The GDP of the UK's small/micro and medium
enterprises accounted for 1.48 trillion sterling pound in 2007.
Small and micro businesses contribute to the economy by fetching innovation and growth. The
small and micro businesses give monetary independence to the people, encourage their creative
skills and give employment opportunities to support the community. It supports the community
by paying taxes. These taxes, in turn, give support to the public schools, and offices. This way
the government facilities improve. Infrastructural growth like better roads, railways, schools,
electricity services and water supplies are the results of economic development of a place. The
small business is the only type can that survive through an economic crisis and continues to
support the local community.
Page 11 of 22