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Impact of Small & Micro Business Over The Economy | Entrepreneurship

833 Downloads1 I Published: 15 Nov ,2019

Introduction

Entrepreneurship refers to the process of developing, organising and managing a new venture by bringing up new or innovative approach in the marketplace by taking up all the risk with the hope of making profit (Baum, Frese and Baron, 2014). This project focuses on identifying the importance of small businesses in development of economical and social development of a country. This assignment includes a detail description about the Type of entrepreneurial venture, their similarities and differences and their relation with typologies. Further it talks about impact of small and micro business over the economy of a country. It also includes the explanation of how entrepreneurial personality make up the mindset of a person which act as motivational driver toward its success. At last it explains about different factors that are present in environment that foster or hinder the entrepreneurial activities.

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Task 1

P1. Different types of entrepreneurial venture, their relation with typology and similarity & difference between them

Entrepreneurship refers to the process of creating, scaling and managing the business with an aim to generate profit. An entrepreneur refers to a person who has the ability to come up with fresh and innovative idea for scaling up business with an aim to convert their idea into reality. In a business environment there are various type of entrepreneurial venture present which are as given below:

  • Large scale enterprise:- It is defines as a organisation which have a finite life cycle and are generally grown up through sustainable innovation, acquiring the innovative company and by offering innovative product or services. Large scale enterprises have to face a huge competition within marketplace and always remain under pressure of bringing new innovation in product or services they offers (Blackburn, Hart and Wainwright, 2013).
  • Small scale enterprise:-It refers to the companies which is generally owned and operated by a sole proprietor for earning their livelihood or fulfilling the basic requirement of their family. Small entrepreneurs only hire local people or their relatives.
  • Social enterprise:-These type of organisation generally offers product or services for solving the problem of society. Social enterprise perform their operations with an aim to serve for the welfare of society. These can be profit, not for profit or hybrid enterprises.
  • Scalable start-ups:-It refers to the type of entrepreneurs who bring their innovative idea for scaling up business with a vision to change the world. These entrepreneur always search for an opportunity and act over them by scaling up their business with some innovative approach (Carsrud and Brännback, 2011). After becoming successfully in establishing business, they it over to another person and move to search for new opportunity.

These all are type of entrepreneurial venture which operates in business environment and these are belong to different typology which affect the way entrepreneur operate their business. These typologies are explained below:

  • Copycat entrepreneur:-It refer to the person who after seeing the success and profit of other businessmen copy their idea for scaling up own business with an aim to achieve the same. Small business enterprises belongs to this typology as their main objective behind scaling business is not achieve market share or profit rather they aim toward create a source of regular income for satisfying basic need.
  • Researcher entrepreneur:- It refers to the type of entrepreneur who search in depth about each and every factor before performing their business operations (Chrisman and et. al., 2012). Large scale and scalable start-ups are belongs to this category as they always analysis the market for identifying scope and opportunity for offering product.

Differences:-

Scalable start ups

Small business enterprises

·Scalable start-ups always bring some unique idea to scale up their business.

·These businesses are generally operated with a vision to change the world by brining innovative product or services.

·Small business enterprises is generally setup by copying idea of some another business.

·These enterprises are set-up with an aim to maintain a source of regular income for satisfying the basic need.

 

Large scale

Social enterprise

·These businesses are operated with an aim to earn maximum profit by providing the product or services according to the demand of target market.

·Social enterprises are basically operated with an aim to offer product or services for the welfare of society and to solve the problems faced by community.

Similarities:-

Similarities between Scalable start-ups and social enterprises:- Both the enterprises work with an aim to offer product or services that contribute toward improving the standard of living (Dennis 2011).

Similarities between large scale and social enterprises:- Both of these organisations offers product or services with an aim to satisfy the need of people where large enterprises offer products as per the demand of customer. Social enterprises offer product for fulfilling the basic need or problem of customers.

Similarities between small business and social enterprises:- Both the organisations doesn't aim toward earning profit or gaining a larger market share rather small scale business operates their operations to fulfil their basic need. On the other hand social enterprise operates business for the betterment of society (Drucker, 2014).

Difference between serial entrepreneurs, intrapreneurs and owner managers

Basis

Entrepreneur

Intrapreneur

Manager

Objective

Main aim of entrepreneurs is to exploit various opportunities present in market for generating money.

They aim to enhance their ability to advance in corporate reward.

Main objective of manager is to get promotion and other rewards like power.

Decision

Take up decision while following their dreams.

Follow up dreams but also influence others with their decision to get support for the fulfilment of their dreams.

Follow the decision passed by higher authority

Operations

Operates from both inside as well as outside depending upon the size of enterprise.

Perform operations from within the organisation.

Involve in various functional operations operated from within the organisation.

P2. Scope, development and growth of entrepreneurial venture

There are various type of entrepreneurial venture that are present in business environment and are different in term of their size, scope and growth perspectives. These are as explained below:

  • Small business enterprises:-It can be defined as the firm which is generally operated by a single individual and not has more than 50 employees. Small business includes carpenters, travel agents, plumber, electrician etc. which operates at very small level hence the scope is also very limited (Fassin, Van Rossem and Buelens, 2011). These people are not much affected by market trend and doesn't have adequate growth or development opportunity due to lack of fund, resources etc. Small business enterprises belongs to copycat entrepreneurial typology as they set up their business over the idea which is prevailing in market.
  • Medium sized enterprises:-It refers to the type of businesses which employ people that are not fewer than 250 and has its annual turnover around but not more than € 50 million. Medium sized enterprises support large scale businesses to perform their operations effectively by providing adequate resources. Hence they have more scope than small scale business because their contacts are very high through which they can create more clients for providing their services. The development opportunities are generally moderated as with the increase in number of client they are able to generate more fund that can be used to expand their operations. Medium sized enterprise belongs to researcher entrepreneurs as they perform a research over the demand of product or services and then offer it in market or their client. This support them in minimizing the risk of loss or failure to business.
  • Large scale enterprises:-These type organisations follow a complex hierarchical management structure which has a capacity to employee around 5000 employees with a annual turnover of more than 1.5 billion euro. The scope of large scale enterprise is generally higher as they can expand their business by acquiring or merging with other companies belong to similar operations (George and Bock, 2011). Development and growth opportunities are also higher for large scale business. Because they perform operations over a larger market share where the demand of customers changes regularly. This provide an opportunity of diversification or expansion to company by offering innovative product or services for satisfying the customers demand. Large scale enterprise belongs to researcher entrepreneurial typology as they continuously perform survey over market to determine current trends and expectation of target market. As this will provide them growth opportunity to expand operations in market.

These are the type of enterprises which are operated in business environment which are different in term of their size and level on which they operates. These enterprises belong to different sector which affect the way in which it operates or decision that are taken by them. This can be better understood using following points:

  • Corporate sector:-It refers to the business sector which is characterised by limited liabilities of its owner and protecting them from being personally liable in the event when company being sued (Goss, 2015). Medium sized as well as large scale enterprises are belongs to this category.
  • Public sector:-It refers to that part of an economic system which is controlled by local, state or national government. Public sector includes large scale enterprises, as they perform their operations at broader scale. Therefore, it is managed by political authority for ensuring that these practices will be beneficial for the society.

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Task 2

P3. Impact of micro and small business over economy

Micro and small businesses defined as a type of businesses which is independently operated by sole proprietorship or in partnership. These businesses are smaller in size and revenue but have an huge impact over the growth of economy by supporting the government toward improving its present situation (Jones and Rowley, 2011). SME's work toward improving the living standard of people by providing employment opportunity.

After the event of Brexit, the UK's economy has almost get destroyed as most of the large scale companies get closed that are operated in EU countries. As a result of which people lost their jobs which leads to decrease in the price of UK's currency. This has affected the economical condition of country to large extent. At that time, citizens take an initiative to start up their own business as a source of their regular income. This supported country to a large extent by contributing in its growth and development through various medium which includes:

  • Establishment of small businesses and start-ups provide employment opportunity which further support in improving the society's standard of living.
  • Start-ups provide an opportunities to people for becoming more financial independent by creating a source of regular income (Karlan and Valdivia, 2011).
  • These businesses also support in promoting innovational practices in business that help in attracting investor. This leads to continuous flow of foreign currency which in turn support in improving the economical condition of UK.
  • Start-ups and small businesses supported in economical development of country by providing a sufficient amount of tax which then used for the development of infrastructure.

Statistical data defining the affect of SME on UK:

  • United Kingdom has around 5.7 million small business enterprises which highly support in development and enhancement of country's economy.
  • Small and micro businesses provided around 67% of UK's private sector job and also contribute around 50% in GDP (The Role of SME's in UK Economy. 2018).
  • Micro businesses covers 96% of market share which contribute around 18% towards employment generation.

Illustration 1: impact on small businesses

Source: impact on small businesses,2018

This image depict about the contribution of SMEs in the growth and development of UK's economy in which micro businesses contribute around 18.9% and small businesses contribute up to 23.4%. Hence it can be said that small and micro businesses are consider as the backbone of UK's economy.

P4. Impact of small, medium and large organisation over local, regional and national level of economy

Small, medium or large organisations plays an essential role toward the development of country's economy by enhancing the level of GDP, FDI and through generating employment. Following points describe about the impact of these organisation over economy at different levels:

  • Local level:-Under this level, small business enterprises perform their operations which are generally limited in term of their size, scope and operations but also have an impact over the economical development (Kirzner, 2015). Small businesses includes artists, carpenters, travel agency etc. which does not provide much employment opportunities to local people but provide a chance to setup their own business to maintain a regular source of income. This support in improving the living standard of people that further contribute toward economical growth through taxes and other sources.
  • Regional level:- Under regional level, medium sized enterprises operates their business which supported toward the growth of economy up to a large extent. These businesses work toward providing the product or services for the fulfilment of market demand and income generated through are extended to government in form of taxes (Landes, Mokyr and Baumol, 2012). This support in development of infrastructure of regions and country at large. In addition to this it also provide employment opportunity to people that further support in enhancing their living standard.
  • National level:- At this level large scale enterprises operates their business and contribute to a large extend in the social as well as economical development of the country. These organisations provide an opportunity to increase the customer base and market reach up to an international level by starting import-export operations. These businesses support in economical development by providing employment opportunity, satisfying financial need, encouraging innovation and bring foreign investors.

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Task 3

P5. How entrepreneurial personality reflect entrepreneurial motivation and mindset

A successful entrepreneur is one who has the ability to bring an innovative idea or product in market by take up all the risk presented in market and perform their operations for achieving their goals. There are two successful entrepreneurs who became successful in their life and now motivate other to bring up their innovative idea to setup their business and achieve success in life. Bill gates is a founder of Microsoft and most richest people in world. He belongs to a well educated family where his mother was an executive at major bank and father was a lawyer (Martin, McNally and Kay, 2013). On the other hand, Steve Jobs who was the founder of Apple Incorporation also has a great history of achievement that always encourage people to work toward achieving something in their life.

The personality that a entrepreneur have also affect the success or failure of a business. As the personality factor affect the decision making style of a person as well as actions taken by them, hence it support in developing a mindset of an individual. Following points describe about various entrepreneurial tendency which make up a entrepreneur's personality that support them in achieving success in marketplace:

  • The improver:-It refers to the type of entrepreneurial personality where an individual is a great learner and always focuses on improving their mistakes so that it will not affect work in next attempt. This personality trait help in making up a mindset of entrepreneurs to perform its operation in a more effective way which always motivate them in bringing new or innovative idea for improving its current performance (Neck and Greene, 2011). Steve Jobs was a improver who always try to bring up a new or more improved gadgets after launching one which was the main reason behind the success of Apple incorporation.
  • The Advisor:-It refers to the entrepreneurial personality where entrepreneur always advise the people involve in their businesses for improving their performance that support in success of business. This personality skill make up a mindset of leading and guiding employees for keeping them connected with pre specified goals.
  • The Artist:- These are type of entrepreneurs who are more creative and always willing to bring up new method or procedures for innovating their services. This setup a mindset of regularly improving the existing operations to achieving success and competitive advantage at market place.
  • The Visionary:-This entrepreneurial personality refers to a individual who have an ability to make up a plan by imagining the future. Visionary personality make up a mindset of an entrepreneur where they always try to predict future and then formulate an action plan. This provide them an opportunity to achieve greater success in marketplace. Bill Gates has a Visionary personality where he always try to predict the future and develop a strategic plan. Through this they take up actions like merging with competitors which support them in maintaining their market position.

These all are the entrepreneurial personalities that contribute toward making up a mindset of an entrepreneur and motivate them toward the accomplishment of their goals (Sarasvathy and Venkataraman, 2011). But in addition to this there are certain skills and characteristics which always foster them to perform well in their operations and be able to convert its dream into reality. These are as explained below:

Characteristics:-

  • Risk taker:- An entrepreneur is a one who take up all the risk for setting up its business with an aim to achieve success in its set objectives (Schaper and et. al., 2014). Bill gates was a person who take up a risk of setting up Microsoft company with an vision to provide a software that can change the way a computer operates.
  • Innovative:-An entrepreneur with such characteristics always focuses on enhancing the policies and procedure followed by company to enhance its services. Steve Jobs was an innovator who always tries to innovate its existing gadget or product by adding on new features that support them in achieving success.

Trait:-

  • Visionary:-Bill gates was a great visionary person who take up a step to establish Microsoft corporation which supported them to achieve a greater success and sustainability in marketplace.
  • Hard working:- Steve Jobs was a person who always work harder with an aim to bring new or innovative product to the market that provide a tough competition to other players.

Skills:-

  • Technical:-Bill Gates has a strong technical knowledge due to his educational background which always supported them in enhancing and improving the their offered software to make it more effective.
  • Leadership:-Steve Jobs was a great leader who always motivate its employees or persons belong to their company to perform well and achieve success in their life.

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P6. Argument related to the entrepreneurial characteristics

Entrepreneurs are the one who have an ability to bring up a new or innovative product or services to the market with a vision to change the world. They poses certain characteristics or traits which make them different from others. Entrepreneur are not born rather they are made up through their knowledge, education and experience. The entrepreneurial skills are not in born instead a person learn them by working regularly over their dream or passion. Apart from this entrepreneurial skills are also developed from the culture, lifestyle or family to which they belongs (Storey, 2016). As the background of a person make up the personality and mind set of an entrepreneurs which always motivate a person move ahead and achieve their targets. Therefore, it is possible to learn characteristics by an individual which always foster them to achieve success. Because these characteristics act as a motivational driver which support an entrepreneur to move ahead.

Bill gates was a successful entrepreneurs with a better upbringing as he belong to a well educated family which always motivate them to explore new things and knowledge to performing something unique in there life. This act as a personal motivation for him and he started learning programming language (Wheelen and Hunger, 2011). Hence from his life history it can be assumed that characteristics can be learnt from experience as well as culture in which a person grown up. Another example that can be take up for this statement is Steve Jobs who was a great personality and a founder of Apple Incorporation. He faces several family issues in his life, but always work toward learning new things that motivate them in brining some innovational product to market for fulfilling the expectation of people. From this it can be state that entrepreneurial skills are in born which makes a person more successful.

Conclusion

From the above given information it can be concluded that an entrepreneur is a person who have an ability to bring up new or innovative product in a marketplace for fulfilling the expectation of people. But in order to achieve success in their innovational approaches it is very essential for a person to learn up from their past experiences as it support them in sharpening up their skills. An entrepreneurs poses certain skills and characteristics that make them different from other and also foster them to bring something new to market and achieve success in marketplace. Apart from this there are certain entrepreneurial personalities which contribute toward making up the mindset of a person to perform their operations more effectively.

References

Books & Journals

  • Baum, J. R., Frese, M. and Baron, R. A. Eds., 2014. The psychology of entrepreneurship. Psychology Press.
  • Blackburn, R. A., Hart, M. and Wainwright, T., 2013. Small business performance: business, strategy and owner-manager characteristics. Journal of small business and enterprise development. 20(1). pp.8-27.
  • Carsrud, A. and Brännback, M., 2011. Entrepreneurial motivations: what do we still need to know?. Journal of Small Business Management. 49(1). pp.9-26.
  • Chrisman, J. J. and et. al., 2012. Family involvement, family influence, and family‐centered non‐economic goals in small firms. Entrepreneurship theory and practice. 36(2). pp.267-293.
  • Dennis Jr, W. J., 2011. Entrepreneurship, small business and public policy levers. Journal of Small Business Management. 49(1). pp.92-106.
  • Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
  • Fassin, Y., Van Rossem, A. and Buelens, M., 2011. Small-business owner-managers’ perceptions of business ethics and CSR-related concepts. Journal of Business ethics. 98(3). pp.425-453.
  • George, G. and Bock, A. J., 2011. The business model in practice and its implications for entrepreneurship research. Entrepreneurship theory and practice. 35(1). pp.83-111.
  • Goss, D., 2015. Small Business and Society (Routledge Revivals). Routledge.
  • Jones, R. and Rowley, J., 2011. Entrepreneurial marketing in small businesses: A conceptual exploration. International Small Business Journal. 29(1), pp.25-36.
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