Entrepreneurship and SME in the UK: A Comprehensive Analysis

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ENTREPRENEURSHIP AND SME IN THE UK
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ENTREPRENEURSHIP AND SME IN THE UK
Table of Contents
Introduction......................................................................................................................................3
LO2: Assess the impact of small business on the economy............................................................4
Small and medium sized business (SME)...................................................................................4
Number and types of SME in the UK market..............................................................................5
SME affecting the economy........................................................................................................7
National scale...........................................................................................................................7
Regional scale..........................................................................................................................8
Local scale...............................................................................................................................8
Importance of SMEs and start-ups in the growth of social economy..........................................9
LO3: Determine and Assess the Key Aspects of an Entrepreneurial Mind Set............................10
Determine the characteristic traits and skills of successful entrepreneurs that differentiate them
from other business managers...................................................................................................10
Aspects of the entrepreneurial personality that reflects entrepreneurial motivation and mind set
...................................................................................................................................................11
Explore and examine the various lines of argument relating to entrepreneurial characteristics
...................................................................................................................................................12
Analysis of the characteristic skills, traits and motivational drivers of successful entrepreneurs
along with suitable examples.....................................................................................................13
Conclusion.....................................................................................................................................14
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ENTREPRENEURSHIP AND SME IN THE UK
References......................................................................................................................................15
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ENTREPRENEURSHIP AND SME IN THE UK
Introduction
In the modern business environment, the developments of the small and medium sized
enterprises enhance the competitiveness of the business market. In this report, the effects of
small and medium sized enterprises on the economy of the UK will be discussed, and the various
aspects of entrepreneurial characteristics has also been evaluated.
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ENTREPRENEURSHIP AND SME IN THE UK
LO2: Assess the impact of small business on the economy
Small and medium sized business (SME)
The small and medium sized enterprises, or commonly known as SMEs, are a particular category
of business organisations that have significantly lesser turnover rate than most large
corporations. Choudhary et al. (2019) opined that in the UK, an SME is defined as an
organisation that has less than 250 employees. However, this indicates that the SMEs are not
categorised according to their annual turnover, which means that an SME can earn business
profits on the same level of a large organisation. As for their starts, SMEs are usually funded,
launched and run by ambitious entrepreneurs who prefer innovation to systematic business
processes. This evidently increases the chances of innovation to exist in the business process in
the UK market.
According to Galbraith et al. (2017), approximately 87.3% of all the SMEs in the UK market has
designed their business processes in innovative ways, which has set them apart from the
conventional business owners. Furthermore, one of the most significant characteristics of an
SME is their flexibility in terms of organisational structure and hierarchy. Usually, it has been
seen that in the UK, approximately 65.3% of the SMEs has their entrepreneur owner as their
managing director, and these owners usually focus only on delivering their products or service to
their customers in their finest conditions (Loader, 2015). In other words, the processes of
preparing these products or services are not considered important.
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ENTREPRENEURSHIP AND SME IN THE UK
Figure 1: Number of SME in the UK
(Source: Loader, 2015)
Number and types of SME in the UK market
In the UK market, there are different types of SMEs and their natures and business operations
significantly differ as well. Based on the size of the organisation and the scope of business,
SMEs in the UK market can be categorised in three types, which are lifestyle SMEs, start-up
SMEs and social SMEs. All these three categories are present among the SMEs in the UK
market, and their business developments are also quite different.
 The lifestyle SMEs are usually the small organistaions whose managers or founders are
not very keen about expanding their organisations and earning as much profit as possible.
In fact, these organisations usually aim to serve their products or services to a limited size
of customer segment, and they are content with just that amount of profit that they earn in
the market. Afrifa and Padachi (2016) argued that in the UK, approximately 34.2% of the
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ENTREPRENEURSHIP AND SME IN THE UK
SMEs belong to this category, and their owners simply aim to earn enough profit to
sustain their lifestyle. Examples of this category include Doham's Store in London.
 The start-up SMEs are founded and run by ambitious entrepreneurs who aim to expand
their business quickly to new and fresh customer segments, and develop their business in
the larger market. These SMEs are run by hardcore businessperson entrepreneurs, and
they aim to become large business conglomerate in future. In the UK, approximately
41.2% of the SMEs are start-up SMEs, and they are the ones who enhance the
competitiveness of the business market in the UK (Loader and Norton, 2015). Examples
of this category include A W Holdings in London.
 The social SMEs, on the other hand, are sometimes non-profit, and they mainly carry on
various charitable activities within a smaller region. However, there is another type,
where they deliver products or services that are highly customised and suitable for a
social cause. An example for this is The Holy Light in London.
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ENTREPRENEURSHIP AND SME IN THE UK
Figure 2: SME profit in the UK
(Source: Harrison and Baldock, 2015)
SME affecting the economy
The SMEs affect the economy of the UK in terms of their national scale, regional scale and local
scale.
National scale
Harrison and Baldock (2015) argued that in the national scale, it can be seen that the SMEs
occupy approximately 51.4% of the entire business market of the UK. This indicates that the
SMEs actually contribute to the economy more than the large business conglomerate, and they
heavily contribute to the domestic productions of various products and services, such as tourism.
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ENTREPRENEURSHIP AND SME IN THE UK
Regional scale
In the regional scale, the SMEs in the UK mainly operate in the tourism sector, the garments
production sector and the various service sectors in the UK. This allows the SMEs to have quite
a strong grip on the regional business markets, enhancing the regional economy. As opined by
McAdam et al. (2016), approximately 54% of the SMEs in the UK has their own loyal customers
segments in the regional markets.
Local scale
At the local scale, the SMEs are operating the best in the UK, and they often hold a large
segment of the entire business market in the UK. Stevenson and Pond (2016) opined that
approximately 72.5% of the local markets are occupied by the SMEs, and they produce various
types of retail products and services like maintenance, security and others. This allows them to
enhence the local market and develops the local economy as well.
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Figure 3: Business sectors occupied by SMEs in the UK
(Source: Arshed and Carter, 2016)
Importance of SMEs and start-ups in the growth of social economy
In the UK market, the SMEs hold a large share of their market. In fact, it has been seen that
approximately 98.6% of all the commercial companies operating in the UK market are SMEs,
and they hold approximately 51.4% share of the entire business market of the UK (Arshed and
Carter, 2016). This signifies that the UK market is heavily influenced by the SMEs, and the
growth and competitiveness of social economy is enhanced by them as well.
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LO3: Determine and Assess the Key Aspects of an Entrepreneurial Mind Set
Determine the characteristic traits and skills of successful entrepreneurs that differentiate
them from other business managers
There are several traits and skills of a successful entrepreneur that makes them different from the
various other existing managers in a business. These traits and skills make them successful in
their ventures and make them unique from others. Millennial entrepreneurs are very optimistic
and confident (Bird, 2019). The different traits and skills that successful entrepreneurs have are –
 Discipline – Discipline is the key skill and trait an entrepreneur should possess in order
to be successful. They should be highly focused towards their work and get rid of all the
obstacles in between them and their success and goals (He et al., 2017).
 Strong Communication Skills – It is very important for an entrepreneur to have strong
communication skills in order to become successful. This is because they should be
efficient and convincing while establishing their idea and venture to various people.
Moreover, it is important to make their motives clear to the team workers.
 Confidence – The main key to become successful is becoming confident. It is important
to believe in oneself in order to build the trust of others on them. Entrepreneurs should
never doubt their ideas and capabilities.
 Determination – It is very important for an entrepreneur to have determination in order
to become successful. They should be very determined in achieving their goals and
objectives. Determination drives them towards achieving them and become successful.
Lack odd termination does not let them give their 100% towards their ventures and ideas.
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 Open Minded Nature – An entrepreneur should always be open minded towards
everything. This is a major aspect that makes many successful. There are various
opportunities life provides in order to grab success that cannot be seen if one is not open
mind. They should be welcoming towards new ideas, trends and technologies of the
world.
 Creativity – It is of utmost importance for an entrepreneur to become very creative in his
actions, ideas and implementation method. This distinguishes them from others and
makes them successful in their ventures. The ideas and ventures they come up with
should be new and unique in order to attract the market and customers towards it
(Mooradian et al., 2016). Moreover, different styles of working help them achieve
difficult task and also engage the team workers in the venture.
 Self Starter – An entrepreneur should always be a self starter and not dependent on
others. They should take the initiative of doing things first and setting an example for
others. Moreover, they should perform their own task and not wait for others to do the
same for him. He should also take responsibility of his mistakes without blaming others.
This nature makes them successful in life.
Aspects of the entrepreneurial personality that reflects entrepreneurial motivation and
mind set
It is very challenging as well as rewarding to become an entrepreneur and run a new venture and
idea. The personality and mindset of an individual plays contributes a lot to this challenges and
rewards. These help making the ventures successful in the market. Various personality traits and
mindset common in successful entrepreneurs are –
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