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Unit 3 Small Business Management Assignment Level 6

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Entrepreneurship And Small Business Management

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Introduction:

In this present era, entrepreneurs are considered as the national assets that need to be motivated, cultivated along with remunerated. Entrepreneurship is highly important fact for any economy because it changes the way any person live as well as work so that standard of living can be improved. Therefore, economic development if any country is entirely dependent upon the entrepreneurial venture's development. Development of entrepreneurial ventures not only improves the economy of any country but it also reduces the unemployment. This assignment is intended to describe the importance of entrepreneurship and small businesses enterprises.

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P1) Different types of entrepreneurial ventures and its relationship with the entrepreneurship typology:

According to Morris et al. (2016), entrepreneurship refers to the willingness for developing; managing along with organising business ventures so that profitability can be achieved. Therefore, entrepreneurship is all about starting a new business. Any new business is generally formed as the small and start-up businesses and then strategies are developed so that the organisation can be maintained on long run basis. Most of the entrepreneurial ventures are developed for gaining profitability, though there are some entrepreneurial ventures that are developed for creating some social wellness for the societies (Morris, 2015). An entrepreneurial can be run or maintained by a single people or it can be initiated and maintained by two or more people. Various entrepreneurial ventures are there such as high growth, low growth along with the lifestyle ventures.

It has been observed that a high growth entrepreneurial venture is mainly formed for the creation of huge profit and expansion of the businesses into various areas so that it can help the organisation in maintaining sustainability in both the international and national locations (Bruton et al. 2015). Any high growth organisations are generally technology-based and innovation based organisation so that they can achieve competitive advantage over their competitors. However, it is really difficult for any entrepreneur in developing high growth ventures in the initial stage because lots of process needs to be completed here. It has been observed that mainly first generation entrepreneurs are there that are associated with the development of this kind of ventures (Alvedalen and Boschma, 2017). These kinds of ventures are mainly formed with the help of the innovative skills of the entrepreneurs so that a superior quality unique product can be generated to create the huge amount of profitability.

On the contrary, small profit organisations are not developed for the generation of profitability or huge expansion of the businesses (Alvedalen and Boschma, 2017). The main intention of the small profit entrepreneurs is leading a decent life rather than becoming a profitable entrepreneur in their newer future. One of the effective examples of this kind of businesses is the Mom and Pop stores which have the presence in only one location that is London (Bruton et al. 2015). This business is one of the sole proprietorship businesses that is the business is run and maintained by the only owner. As mom and Pop store is one of the family-owned business so the owner gains the entire sets of risks as well as income. Mainly small-scale entrepreneurs are those entrepreneurs that are associated with running and maintaining the small profit entrepreneurial businesses where the owner is wholly related to making every type of decision and strategies for developing markets (Alvedalen and Boschma, 2017). This kind of companies mainly hires fewer numbers of employees for performing common kinds of tasks, and they are not involved in developing a massive volume of sales.

Lifestyle ventures are the entrepreneurial ventures that are associated with setting up any business and running the company by the founders with the particular aim to achieve a sufficient level of income and provide any foundation for the achievement of any active lifestyle (Bruton et al. 2015). Attain huge profit is not the primary aim of the lifestyle entrepreneurship because attaining the tremendous amount of growth may destroy the primary motive for the lifestyle ventures for which the organisation has been formed. In any lifestyle ventures, there are not any kinds of strict rule for arranging the meeting, specific dress codes of particular hours for working. Pure entrepreneurs are those entrepreneurs that are associated with organizing this kind of business ventures (Alvedalen and Boschma, 2017). This kind of entrepreneurs do not run and maintain businesses for the achievement of the financial profit, and they mainly run any business for satisfying their contentment. Pure entrepreneurs are effectively encouraged in assessing their expertise along with their businesses performances.

P2) Similarities and differences among different entrepreneurial ventures:

There are various types of entrepreneurial ventures that have the distinct level of characteristics based on the roles as well as responsibilities. Though along with the differences, there are some similarities among the features as well (Autio et al. 2014). The below-mentioned table effectively describes the similarities along with the discrepancies between different types of organisations that are public, social and private organisation. The next table describes the similarities and differences among differently sized organisation that are medium, micro and small enterprises.

Attributes

Public enterprise

Private enterprise

Social enterprise

Purposes

Public organisations are mainly formed in order to serve the public of any country for their wellness

in the contrary, the private organisations are mainly formed in order to achieve profitability and expansion

Social enterprise is mainly formed in order to create the social wellness

Value

Both the social along with the corporate value are created

Only corporate value are associated with private enterprises

Only social value is associated with the social enterprise

Distribution of profit

Shareholders of the company along with the societies are benefitted with the profit

The profit are distributed among financiers and the shareholders of a company

mainly societies are benefitted with the profitability of this kind of enterprises

Financial sources

different types of taxes along with excise duty charge by the government

Money of shareholders and the financers along with various loans from the bank is the sources of money

receiving donations are the sources of money

Reason for developing strategy

Distribution of the earning of the government equally for developing health and infrastructure is the main causes for the strategy development

Generating profitability and securing a better market share is the reason behind strategy development

Improving society and distribution of the donation among the society is the reason behind the strategy development

Challenges

the challenges faced by the public based organisations are related to facing the economic downturn condition in the UK

Biggest challenges faced by private organisations are regarding handling the human resources of the company with efficiency so that better profitability can be generated

Gaining donations from the donors is the main challenges

Table 1: Similarities and differences among different types of companies

(Source: Brooks et al. 2014)

Attributes

Small

Medium

Micro

Responsible person to manage the organisation

Owners

Owners and the other person involved in the top level management

Owners

Decision making process

Owners made every types of decision

The personnel involved in the top level management makes the decision

Owners made decision

various processes that are utilised

The processes that are utilised here is the informal processes

Informal and formal processes are used in the medium businesses

Mainly informal processes are utilised

Types of planning used

Short-term planning

Short along with the long-term planning are used

short-term planning are used

Opportunities for development

Fewer opportunity

Medium level of opportunity

Very fewer level of opportunity available

Challenges

The main challenges associated with the small business enterprises are attracting and retaining the talented pool

Increasing customer base fire developing productivity is the main issues associated with the medium organisation

Arranging operating money is the main issues associated with the micro organisation

Table 1: Similarities and differences among different sized organisation

(Source: Alvarez‐Garrido and Dushnitsky, 2016)

P3) Impact of micro and small businesses on the economy:

In the present era, small as well as the micro companies are not only contributing towards the development of GDP, but it is also effectual in developing the employment opportunity in the country. Small businesses are valid in opening new markets, creating more new ideas so that a particular economy can be improved (Storey, 2016). Therefore, micro and small businesses can act as the backbone for the creation of job opportunity because there are decidedly fewer organisations that are involved in developing the employment opportunity (Gillespie and Goddard, 2017). In the present time, among the 5.5 million private sector companies, 99.9% are the medium and small businesses, but among these percentage, only .7% organisations are there that are medium-sized company (Cowling et al. 2015). Therefore, it can be said that there is 99.3% organisation that is small and micro-sized organisation. The numbers of small and micro-sized businesses are increasing in the UK, but the number of employees is not increasing proportionally. The main reason behind it is some organisations are non-employing businesses (Storey, 2016). Presently, the names of non-employing companies are growing by 84000, though there are also some of the employing companies that have been increased to 14000.

Due to the growing number of micro and small companies, the employment opportunity is also rising in the UK. A total of 60% employment opportunity has been created by the small and micro businesses which are 15.7 million in numbers (Gillespie and Goddard, 2017). This number of employees has been created by the 1.3 million employing businesses because almost 76% businesses that are 4.2 million in amounts from 5.5 million private sector businesses are non-employing businesses (Cowling et al. 2015). The numbers of employing enterprises are increasing from the earlier years that can create more employment opportunity in the country. in the present time, the number of employment opportunity has been developed because of the 19% development in the employing organisation in the UK.

It is observed that the increasing numbers of small and micro businesses are also creating an opportunity for the government in earning more tax and investing the earning for the development of the country (Burns, 2016). It has been observed that presently the majority of the company does not hire employees and because of their smaller size, these organisations are not the registered companies so that they do not pay tax. However, there are 2.5 million organisations that have recorded them for paying VAT. From the statistics, it has been observed that 53% partnership companies have registered them for paying VAT, though there are only 14% sole proprietorship organisation that has designated them for paying VAT (Cowling et al. 2015).

One of the present issues that strike the UK is the Brexit issues that have badly impact the economy of the UK, but the country has saved them from complete disruption because of the small and micro businesses. The main reason behind it is small, and micro businesses do not operate outside of the UK which has helped them in saving during the Brexit issues (Kitching et al. 2015). For working in various countries of Europe, the big organisation has faced problems.

P4) Importance of the small businesses and business start-up for developing social economy:

Small and start-up companies are the backbones of the economy of the UK, and there are a total of 99.5% micro and small businesses in the UK that contributes a lot in facilitating an active growth in the social economy. With the growing percentage of the small and start-up companies, they are not only developing the economy, but they are also involved in developing the society (Flynn et al. 2015). It has been observed that these vast numbers of small businesses are hiring the considerable number of employees in their organisation that are helping the employees in maintaining their lifestyle. Along with that, this employment opportunity is effective in engaging the young generation with work that also reduces the number of crime in the country (Blankson et al. 2018). Moreover, it is also seen that startup and small businesses are also helpful for the owner in achieving some level of profitability and maintaining their lifestyle.

It has been observed that the number of the registered organisation is continually developing in the UK. Therefore, the small and start-up businesses can be one of the sources of the income for the government (Flynn et al. 2015). This income can help the government in investing the money for the development of the infrastructure of the country. Along with the infrastructure development, this money is also helpful for the government in maintaining various types of function of the government.

P5) Skills and the characteristic traits that create successful entrepreneur:

For being a successful entrepreneur, various types of skills along with characteristics are essential. The first characteristics traits that are required among any entrepreneur has the desire in running the individual and independent businesses and the desire to gain the practical level of profitability (Klotz and Neubaum, 2016). For targeting any independent and new companies, making active business decision is always essential, otherwise, there are vast possibilities that the business may fail. Therefore, giving self-independence is one of the essential characteristic traits is essential for making success entrepreneur. Additionally, an excellent technical and the management skills are always crucial for making any person a successful entrepreneur (Klotz and Neubaum, 2016). The case study shows the fact that in the excel centre, the business show 2017 will be conducted that is effective for a different new entrepreneur in gaining a practical knowledge regarding the skills, experiences and the characteristic traits so that they can be a successful entrepreneur in the near future. There is a variously established entrepreneur who will share their secret to be a successful entrepreneur.

J.K Rowling is one of the entrepreneurs who were rejected by numerous publishers but she did not lose the hope. After struggling so many years, she has now achieved the worth of $400 million for her famous Harry Potter series (Caliendo et al. 2014). On the other hand, the example of John Paul Deja can be mentioned here who have currently achieved the property worth of $2.8 billion by establishing his hair care brand. However, in the initial stage, achievement of this amount of capital was not achieved, in the earlier life; he was just a worker in a laboratory who was sacked. However, after sometimes, John has slowly developed his own company and achieved that much property (Caliendo et al. 2014). Therefore, from this discussion, it can be said that no entrepreneur was born with the skills for developing their own venture. Facing struggle and situation helped them in developing their enterprise.

P6) Assessment of how entrepreneurial personality may reflect the mindset and motivation of entrepreneur:

Various entrepreneurial personalities are there that are associated with the development of motivation and mindset of entrepreneur are describing below:

Cultures:

The culture of any person has an enormous impact on their mindset and motivation to form entrepreneurship. It has been observed that if any person belongs to any religion that creates a narrow-minded soul, then it is tough for those people in becoming an entrepreneur (Fang et al. 2015). This is because for becoming an entrepreneur, being open minded is necessary as it involves several sacrifices. On the contrary, people belonging from a positive culture always affect the highly motivated people to become an entrepreneur.

The lifestyle of various individual:

It is observed that the people who have adventurous lifestyle are more prone to be an entrepreneur because they have the capacity in taking risks (Kuratko, 2016). On the other hand, people with less risk-taking capabilities are not effectual to be a successful entrepreneur.

Motivation achieved from families:

It is observed that the people who are belonging to an educated family are becoming more open-minded so that they can quickly start their wn venture. Moreover, people residing in the entrepreneur families are becoming more self-dependent so that they became more efficient in being an entrepreneur (Ibrahim and Mas’ud, 2016). On the contrary, people who are belonging to an entrepreneur family are more prone to be an entrepreneur because they get necessary support as well as financial assistance from their families to start a new venture.

Own level of motivation:

People who have a better sense of the self-efficiency, risks and the responsibility taking capacities are becoming an entrepreneur because they have several capabilities in getting the motivation to be a successful entrepreneur (Ibrahim and Mas’ud, 2016).

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P7) Importance of the past experiences and background of personnel on fostering or hindering the entrepreneurship:

It is observed that the skills of any person along with the history of any person is always useful in promoting the entrepreneurship because past experiences of any people increase the confidence level or capabilities of taking risks. It has been observed that any person mainly gains knowledge regarding various things from the past experiences which are proved from the Erickson’s life stage theory (Sevä et al. 2016). As an example, it can be said that education is one of the useful things that can help many people in getting more success in their life to start their new venture. It is seen that for starting a new venture proper management, leadership and technical skills are essential that is one possible with the help of education. Along with that, training is also useful in taking responsibilities. According to Ismail et al. (2016), any child belonging from the educated family are prone to have more knowledge to start new venture because it helps them in getting some theoretical knowledge in launching the new venture. On the contrary, a child belonging from the entrepreneur family gets more effective experiences to start a new venture because they get sufficient knowledge to start a venture.

In this present era, the development of the entrepreneurship among any individual is also dependent upon the financial condition of any country from which the person is belonging. This is because; any entrepreneur gets the financial assistance only then when belonging from any country that has a better GDP. This is because; a weak financial condition of any nation destroys the mentality to be a successful entrepreneur because it shifts the mindset towards earning for maintaining a lifestyle (Sevä et al. 2016). Moreover, a weak financial condition of any country also reduces the access to financial resources. Past experiences are beneficial for any entrepreneur in identifying resources with efficiencies so that effective success can be achieved in any business. Past experiences are also useful in aligning the resources as well as expertise with the objective so that it can help companies in achieving success. Culture posses a crucial role in either fostering or hindering entrepreneurship (Ismail et al. 2016). If it has been observed that any person belongs to any culture that can create the positive attitude with the help of open-mindedness, then it fosters entrepreneurship. On the contrary, if it is seen that people belong from any country that has the culture that can form the negative attitude, then it can hinder entrepreneurship.

Conclusions:

It can be concluded from the above discussion that large-sized organisations are associated with gaining more turnover, and they involved the highest number of employees in their organisation. However, due to the lesser amount of organisations, it is difficult for lathe organisation in hiring the vast number of staff. In that consequence, small and micro businesses are necessary because they are higher in numbers. For this purposes, this kind of organisations can hire a considerable amount of employees and creates good revenue along with newer market opportunity in the market.

Reference list:

  • Alvarez‐Garrido, E. and Dushnitsky, G., 2016. Are entrepreneurial venture's innovation rates sensitive to investor complementary assets? Comparing biotech ventures backed by corporate and independent VCs.Strategic Management Journal,37(5), pp.819-834.
  • Alvedalen, J. and Boschma, R., 2017. A critical review of entrepreneurial ecosystems research: towards a future research agenda.European Planning Studies,25(6), pp.887-903.
  • Autio, E., Kenney, M., Mustar, P., Siegel, D. and Wright, M., 2014. Entrepreneurial innovation: The importance of context.Research Policy,43(7), pp.1097-1108.
  • Blankson, C., Cowan, K. and Darley, W.K., 2018. Marketing Practices of Rural Micro and Small Businesses in Ghana: The Role of Public Policy.Journal of Macromarketing,38(1), pp.29-56.
  • Brooks, A.W., Huang, L., Kearney, S.W. and Murray, F.E., 2014. Investors prefer entrepreneurial ventures pitched by attractive men.Proceedings of the National Academy of Sciences,111(12), pp.4427-4431.
  • Bruton, G., Khavul, S., Siegel, D. and Wright, M., 2015. New financial alternatives in seeding entrepreneurship: Microfinance, crowdfunding, and peer‐to‐peer innovations.Entrepreneurship Theory and Practice,39(1), pp.9-26.
  • Burns, P., 2016.Entrepreneurship and small business. Palgrave Macmillan Limited.
  • Caliendo, M., Fossen, F. and Kritikos, A.S., 2014. Personality characteristics and the decisions to become and stay self-employed.Small Business Economics,42(4), pp.787-814.
  • Cowling, M., Liu, W., Ledger, A. and Zhang, N., 2015. What happens to small and medium-sized enterprises in a global economic recession? UK evidence on sales and job dynamics. International Small Business Journal, 33(5), pp.488-513.
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