Impact of SMEs on the UK Economy: Entrepreneurial Mindset and Skills

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ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT

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INTRODUCTION
In today’s world Entrepreneurship has become an important part for the growth of the economy,
it is a business venture which has been founded on the base of an innovative idea. In
management, entrepreneurship has become an important topic which is growing day by day. In
this short span of time many business ventures have grown through technological advancement
and contributing to the development of the economy. Entrepreneurs are the person who brings
change in the market through his creativity and innovative ideas. This entrepreneurial change is
redefining the traditional business method, introducing new production method and discovering a
change in the market. Entrepreneurs are the individuals who introduce the new product in the
market and bring the change in the taste of the consumers.
According to the business type, there are many types of entrepreneurship starting with small or
home businesses to multilevel businesses that are started from the ground level. The contribution
of entrepreneurship and small businesses are creating a major impact on the economy of the UK.
In this assignment, we would discuss the impact of SMEs on the growth of the economy of UK
and would discuss the major aspects of an entrepreneurial mindset along with entrepreneurial
skills. It will also discuss the influence of personal background and experiences on the
development of entrepreneurship.
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LO1
DIFFERENT TYPES OF ENTREPRENEURIAL VENTURES AND THEIR RELATION
WITH THE TYPOLOGY OF ENTREPRENEURSHIP
Entrepreneurship is building new business by taking new ideas or product. From the last several
decades’ entrepreneurship is playing an important role in the economy of the country and has
become an essential factor of employability (Chen, et al., 2018). Each new business implies a
great impact on the economy and affects the people around it. An entrepreneur is a person who
starts the business and entrepreneurship is the study of how new business can be formed or
operated. To operate a business it is necessary to have the appropriate skills and knowledge.
There are several types of a business venture and entrepreneurial typology some of them are
discussed below:
Small business venture
Small business venture refers to the business started with the small capital by taking a risk and
makes the small amount of profit (Kunkel, 2000). The number of entrepreneurs and startups are
still small businesses in the U.S. There are 5.7 million small businesses in the U.S. and making
99.7% of all companies and giving the employment to the 50% of non-governmental workers.
Large business venture
Large business venture works for the high growth and its main purpose is to achieve maximum
profit. It does the product and promotion strategy in a vast way to achieve the profit and growth.
Large business venture provides higher employability and contributing a maximum in the growth
of the economy. It always tries to maintain its market position and demand among the customers
and focuses on continuous growth and innovation.
Social venture
A social venture is a business which works for the welfare of the society and it does not
emphasis on making the higher profit. These types of ventures facilitate society and work for to
enhance the living standard of the people.
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Lifestyle venture
Lifestyle venture refers to the small venture which is generally operated by an individual to earn
sufficient profit. It focuses on the owner's lifestyle and does not target much on making a profit
and depends on the owner's skill and talent.
The link between Entrepreneurial ventures and Typology of Entrepreneurship
There are different types of entrepreneurship that work for the growth and development of the
economy of the nation. An entrepreneur is a person who comes up with an innovative idea and
uses the limited resources and starts a business and taking all the risks and makes the profit.
THE SIMILARITIES AND DIFFERENCES BETWEEN ENTREPRENEURIAL
VENTURES
There are several kinds of entrepreneurial ventures which are having several differences and
similarities in between which differentiate them from the other ventures. The differences and
similarities are discussed below:
Types of Venture Similarities Differences
Small business venture Small, large and lifestyle all
the venture emphasis on the
development of an employee
in an organization.
The small business focuses on
the improvement of
employees, the large business
focuses on the overall
development of the employees
and lifestyle venture focuses
on the development of an
employee.
Large business venture The main aim of all business
ventures is to provide the b4st
services to the customers.
The aim of a large business
venture is to provide
satisfaction to the customers
whereas small business
venture focuses on providing
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premium services to their
customers and lifestyle
venture focuses on providing
best customer service.
Lifestyle venture All the ventures focus on
continuous growth and
development.
Lifestyle venture focuses on
the development and the
expansion of the business
whereas the small business
venture focuses on the growth
of the business and large
business venture aims for the
growth and development of
the business and in making a
large profit.
ENTREPRENEURSHIP IN BOTH PUBLIC AND PRIVATE SECTOR
There are different types of entrepreneurial ventures which work to provide the best services to
the customers and earning the profit and expanding the business globally (De Los Ríos et al.,
2016). The different type of entrepreneurship venture comes under two sector i.e. public sector
and the private sector.
Public sector venture
Public sector ventures are generally established by the government and work for the welfare of
the general population (Leyden and Link, 2015). These are the venture where the government
holds more than 50% share and all the power and authority are under the government only.
Private sector venture
The private sector ventures are run by the individuals and companies and contribute to the
growth of the economy of the country. The private sectors work with the intention of making
maximum profit.
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Difference between private and public sector ventures
Private Sector Public sector
The basic objective of the private sector is
earning a profit.
The basic objective of public sector venture is
to serve the citizens of the country.
Private sector raises money by issuing shares
and debentures or by taking a loan.
Public sector raises money from public revenue
like a tax, duty, penalty, etc.
Private sector covers the area of finance,
information technology, banking, education,
manufacturing, etc.
Public sector refers to army, police, mining,
health, education, banking, etc.
Benefits which private sector gives are good
salary package, competitive environment,
incentives, etc.
Benefits in the public sector are job security,
retirement benefits, allowances, perquisites,
etc.
There is no job stability. In public sector employees get the stability in
the job.
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LO2
THE IMPACT OF MICRO AND SMALL BUSINESS ON THE ECONOMY WITH
RELEVANT DATA
The small and medium-sized enterprises are the backbone of the UK economy. It can be
analyzed by the number of openings of new business and new jobs as well. It is getting success
because of the favourable and open business policies of the government of UK. According to the
figures published by the Department of Innovation Business and Skills, there are 5.2 million
businesses are running in the UK. In the UK the small businesses are responsible for 15.2 million
jobs said by the forum of private business. The growth of SMEs in the UK is related to the
innovation and creativity in business ideas which is the essential part of the growth and success
of the business (Cowling et al., 2015).
The government is supporting and granting the loans for the business ideas which seems
promising it can say that this is one of the main reason for the growth of micro and small
businesses. There was yearly growth of 5.5 million of private sector businesses by the end of
2015. In the UK the majority is of small and micro businesses which are running successfully
and contributing to the growth of the economy of the country. It was found that 60% of UK
SMEs with the high growth rate is generating many of the new jobs in the UK.
Micro and small businesses may not generate much revenue as compare to large businesses but
they have become the integral and the most important part in the contribution of the growth of
the economy. Small businesses are creating the positive influence in the community as well as in
the economy of the country. The small businesses are supporting the community by giving
employability and paying taxes and these activities and growth of small business are helping a
lot in the overall growth of the economy.
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IMPORTANCE OF SMALL BUSINESSES AND BUSINESS STARTUPS TO THE
GROWTH OF SOCIAL ECONOMY
In today's economy, we cannot underestimate the importance of small businesses and startups in
the growth of the social economy (Herte, 2017). It plays an important role in the success of the
economy as it works for to meet the demand and supply of the market. When it comes to starting
a business-government determines what are the opportunities and limits and getting a fund for
small businesses. It is contributing as a major source of providing employability in an economy
and around 2.5 million people are now self-employed. And all the small businesses are
contributing the most in it as they are the major source of productivity in an economy. If any
business is operating with the essential and effective planning will definitely get the success in
the market. The social enterprises create employability and aim to serve the best to the society.
Social enterprises also work for charity and try to improve productivity in a country. It also helps
to improve the standard of living of the people and contributes to the development of the
country.
The small businesses and startups come with an innovative idea in the market and contribute to
giving the employment which increases the living standard of the people (Ribeiro-Soriano and
Mas-Verdú, 2015). As it is discussed before also that SMEs are the backbone of any economy
because it creates new opportunities for the jobs helps in the growth of the economy and raises
the living standard of the people of any country. Hence, it can say that small businesses and
startups are playing the important role in the growth of the social economy.
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THE DIFFERENCES SMALL MEDIUM AND LARGE BUSINESSES MAKE TO THE
ECONOMY, WITH RESPECT TO RELEVANT DATA AND STATISTICS
In UK cities the numbers of firms are growing day by day. Since 2000, firms are grown by 43%
and contributing to the growth of the economy (Sainidis and Robson, 2016). The small and
medium-sized firms have generated 59.1% jobs in the private sector of UK.
Figure 1: Contribution of Industries
(Source- Office for National Statistics)
The reported figure on net job growth has observed that small and medium size businesses are
the important source of business in UK. The small businesses in UK are creating the most new
jobs. The potential contribution of small and medium size firms in the economy are increasing
very fast. It has been reported that from last some years the SMEs are developing rapidly and
creating the employability in the country and contributing a lot in the growth of the economy.
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LO3
THE CHARACTERISTICS TRAITS AND SKILLS OF ENTREPRENEUR THAT
DIFFERENTIATE THEM FROM OTHER BUSINESS MANAGERS
A person who is having an idea of a new product or improved services called an entrepreneur.
He is having the vision that how to fulfill the needs of that idea and how he can generate the
funds and build his own company. The ideas generated by the entrepreneur are putting into
actions which are operated by the managers. The entrepreneurs are visionaries and future-
oriented who works in an idea and generate the profit (Kozubíková et al., 2015). The
characteristics, traits and skills of the entrepreneur are discussed below:
Motivated
Hard working and successful entrepreneur are self-motivated. They create an idea and work hard
on that and get the success from that. Their creativity and the willingness of doing something
new motivated them towards success. They also inspire the others with their self-motivation.
Creativity
The creative thinking of the entrepreneurs makes them different from the others. It is necessary
to be creative and to come up with the new ideas in business. It is important for the entrepreneur
to think something out of the box.
Vision
A successful entrepreneur always has a clear vision and set his eye on the big picture. It is
necessary to be clear about your plan and strategies and move forward with a clear vision to
attain the goals and objectives of an organization.
Risk taker
Every business involves risk and changes and to get the success in the business it is necessary to
take some risk. If the one is having the ability to take the risk and innovations then he can
become a successful entrepreneur.
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