Entrepreneurship and Small Business Management

CONTENTS
Introduction ..................................................................................................................................... 2

LO1: Ranges of venture types that might be considered entrepreneurial ....................................... 3

Examining different types of entrepreneurial ventures and explaining how they relate to the
typology of entrepreneurship ...................................................................................................... 3

Exploring the similarities and differences between entrepreneurial ventures ............................ 4

LO2: Assess the impact of small business on the economy ........................................................... 0

Interpreting and assessing relevant data and statistics to illustrate how micro and small
businesses impact on the economy ............................................................................................. 0

Explaining the importance of small businesses and business starts-ups to the growth of social
economy ...................................................................................................................................... 0

LO3 Key aspect of an entrepreneurial mind-set ............................................................................. 0

Determining the characteristics traits and skills of successful entrepreneurs that differentiate
them from other business managers ............................................................................................ 0

Assessing how aspects of the entrepreneurial personality reflect entrepreneurial motivation and
mindset ........................................................................................................................................ 0

LO 4: Different environments that foster or hinder the entrepreneurship ...................................... 0

Examining how background and experience can hinder or foster entrepreneurship .................. 0

Conclusion and recommendation .................................................................................................... 1

References ....................................................................................................................................... 2

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INTRODUCTION
This report is about entrepreneurship and small business management. A client approached
whether to open a business in London or not. To counsel that client, firstly different types of
entrepreneurial ventures will be discussed by indicating their belongingness to entrepreneurship
typology. Then the similarities and differences between different types of ventures will be
illustrated before moving into the contribution of small and micro businesses to the economy. After
that a relevant topic will be discussed about the effects of small and micro businesses on the social
economy. Concept of social enterprise and corporate social responsibility will be brought into this
section. Then in the next two sections personality traits, skills, characteristics, mindset and
motivation of entrepreneurs will be discussed. Finally, the effect of background and experience on
entrepreneurship will be discussed before concluding the report.

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LO1: RANGES OF VENTURE TYPES THAT MIGHT BE CONSIDERED
ENTREPRENEURIAL
Examining different types of entrepreneurial ventures and explaining how they relate
to the typology of entrepreneurship
When entrepreneurs start a business with a new or unique idea that is called entrepreneurship.
Entrepreneurs are important for an economy since they work to solve the problems of the people
and also contribute to the economy at the same time (Balderson, and Balderson, 2010). Below are
some types of entrepreneurial ventures discussed along with their relation to entrepreneurial
typology.

The typology measures the types of entrepreneurship like individual, corporate, public sector
entrepreneurship etc. Types of entrepreneurial ventures fall into different categories are discussed
below.

Start-up entrepreneurships: The entrepreneurs who observes social, economic, legal,

demographic and other trends then bring out new ideas to initiate a new business are known as
dynamic entrepreneurs. They keep observing the revolutions that are happening all around
especially technological revolution (Bennett, 2014). With the new trends, new opportunity arises
and the entrepreneurs come with completely new ideas which is known as start-up. For example,
currently internet of things (IoT) is a very widely discussed technology. If an entrepreneur comes
with a new idea to capitalise from IoT, he will be starting a start-up. They are ‘risk accepting,
activity seeking’. These are individual entrepreneurship in the typology. The ideas themselves are
very risky in nature and the entrepreneurs search for new activity to make the profit scale high.

Social ventures: Those who tries to solve the social problems with their entrepreneurship are
known as social entrepreneurs. They care about the social interest most and then their business
aspect. For example, those who are promoting jute shopping bags replacing polythene are doing
so in both the motives of promoting green prosperity and to make some profit. These types of
entrepreneurships are becoming popular nowadays since the globe is struggling with climate
change. Into the typology, these types of ventures belong to public sector entrepreneurship.
Because most of the time the governments work with the social issues.

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New development: Some entrepreneurships come into existent from the hands of a person who
takes different new business initiatives from time to time. Those persons are serial entrepreneurs
who love to take risk. They continuously build businesses and sell them. High risk assumption
gives extra profits to them (Bridge, O'Neill, and Cromie, 2011). This category entrepreneurial
ventures are most important because they solve many problems of the society in a short span of
time. Again, the ventures would be adding extra money into flow to the economy. The new
developments of the ventures might fall into any category of entrepreneurial typology. Most often
they fall into corporate entrepreneurship. This category in the typology of entrepreneurship is most
thrilling that assumes the highest financial risk. However, the investors also have the chance to
win more profits from the ventures.

There might be other formats of ventures like local ventures, social ventures, global ventures, joint
ventures, acquisition, franchise, Public-private-partnership (PPP) etc. The ventures are defined
according to the area they are serving as a business. For example, global ventures are those that
intend to expand globally in the future and they fall into highest risk taking and profit seeking
venture category in the entrepreneurial typology presented above.

Exploring the similarities and differences between entrepreneurial ventures

In this section of the report, the similarities and differences between different kind of ventures will
be discussed. The types of discussed venture will be lifestyle, high growth, and smaller profit
venture. Firstly, the differences will be discussed then the similarities.

Differences

Definition: Lifestyle ventures are those that provide the owner with a particular profit scale for a
sustainable time period. The high-growth ventures are the start-ups those grow very swiftly and
have potential to become giant companies in the near future. Smaller profit ventures are the
personal businesses that the owner runs to make a very limited profit and to keep the business like
that over time (Burns, 2009).

Scalability: The concept of scalability is that when a business can take the advantage of economies
of scale to bring down the fixed cost with increased sales (Mariotti, and Glackin, 2012). The
scalability concept is applicable to the high grown ventures or the start-ups. But in case of lifestyle

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and limited profit ventures the scalability doesn’t exist. The start-ups’ growth rate presents this
opportunity of scalability.

Funding: The lifestyle or small profit ventures can start with the personal funding by the owner,
small business loans, borrowing from friends and relatives. But the high growth ventures, having
very high possibility of growth, start with venture capital. The strategic investors very often invest
large amount in these firms which has very high potential of return.

Structure: The lifestyle ventures are owned by the owner himself completely whereas the small
profit ventures might be owned by the family members. But the high growth ventures have a more
complex nature of ownership like partnership, strategic alliance, corporations etc.

Future condition: The lifestyle businesses are supposed to be owned by the owners for the
foreseeable future. Because they are running that business to earn the independence and autonomy
in their life. Small profits businesses might be or might not be sold. But the high growth businesses
might be sold off if the proposed price is right (Parnes and Harding, 2012). Because this type of
business always searches for good opportunities and when the proposed price becomes higher than
calculated value of the start-up, the business is sold.

Similarities

There are many similarities among these three types of businesses. Both businesses are begun from
scratch is the best similarity. The lifestyle businesses are initiated to earn a decent profit from its
operation. Similarly, other two types of ventures also seek profit. All the businesses carry risks
though the scale of assumed risk is different but given the nature of business and scale of
investment, a 5% risk of lifestyle venture would feel as risky as 10% of a start-up. Again, all the
three types of businesses try to innovate the products so that they can gain more customers by
providing some kind of differentiations to them. All forms of businesses can be social ventures i.e.
social entrepreneurship might be applied in these business contexts. Different types of social
problems can be solved using these types of venture. Again, intrapreneurship is another concept
that might be found in all types of ventures. Intrapreneurship refers to focusing on the employees
of an organisation those who have some entrepreneurial qualities, those who take innovative
approaches to solve problems. The lifestyle ventures and small profit ventures try to solve different

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local problems of different area while high growth firms might focus on intrapreneurship to solve
greater national problems.

The similarities of the three types of organisations are less than the differences. However, the
similarities and differences provide a very good idea about the nature of the businesses, their
operation and contribution to the society.

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LO2: ASSESS THE IMPACT OF SMALL BUSINESS ON THE ECONOMY
Interpreting and assessing relevant data and statistics to illustrate how micro and
small businesses impact on the economy
This section of the report will discuss the contribution of micro and small businesses to the
economy. Firstly, the condition of the mentioned businesses worldwide will be considered and it
will be brought down to the UK and then possibly to are region in the UK.

The micro and small businesses contribute to the economy with its employment creation, product
offering, GDP contribution, and self-employment. The small and micro businesses are defined as
those having employees less than 50 and an annual turnover of £2 million. The small businesses
create self-employment and loosen the pressure on government to create more jobs.

Figure 1 Small business condition in world economy

Source: (World Bank, 2019)

The statistics shows that in the world stage around 95% businesses are running as small business
while only 5% are big corporations. Of total private-sector employment, 60% come from the small
businesses and the rest from other types of businesses. The number of entities being so high is the
reason of this high-end employment creation. Contribution to world gross value add is about 50%
of total. Again, the growth of job creation is at least 63% in 2013 decade on decade (World Bank,
2019). The small businesses are leaving impact on the income, employment and economic output.

In the UK there are around 5.2 million small businesses. The number of businesses in the UK are
growing very rapidly in recent years while most of them small businesses. The total turnover of
the UK includes 46% from the small businesses. The contribution of the small businesses to the
GDP is 59% of total contribution of businesses to the GDP. In the UK, around 62% employment
is being generated from the small businesses (Ons.gov.uk, 2019). The trends of searching for jobs
is turning away towards searching for new business ideas. People are looking to establish a
business, entrepreneurship, venture etc. for making their livelihood and making a change to the
economy. The small businesses are thus creating self-employment also employment for others.
The pressure on the UK government is lowering. Small businesses are contributing to the
employment, income, and GDP output (Soufani, 2012).

There are many other important roles of the small businesses to the economy which are essential
to consider. For example, the small businesses work as the backward suppliers to the big
corporations. The parts of the products of big corporations come from the small and medium
businesses. The big firms often make partnership with the small businesses in different terms. The
small businesses also ensure money circulation into the economy very smoothly. The following
chart shows the number of small businesses, growth in self-employment and in employment.

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 Figure 2 Number of self-employment per year basis

Source: (ONS Labour Force Survey, 2019)

The data shows that there is a very smooth growth in the employment creation by the small
businesses. The number of small businesses is also growing very rapidly.

The contribution of the small businesses to the economy is very important which can be understood
from the above discussion. If the small businesses were taken out of the scene, the world economy
would suffer a lot; many people would be jobless; and world output would be significantly lower.

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Explaining the importance of small businesses and business starts-ups to the growth
of social economy
In this section of the report, the social economy will be defined along with the definition of social
enterprise to lay the ground for assessing the impacts of small businesses on the social economy.
Then the corporate social responsibility will be explained before going into the importance of
SMEs in growth of social economy.

The relationship between social behaviour and economics has come to be known as social
economics. Social economy tries to identify the social norms, philosophies, ethics, emerging
trends, sentiments, and other social phenomena that might influence the customers and their buying
sentiment (Casson, and Buckley, 2010). Social economies can also be defined as the social
activities that are carried for the greater betterment of the society. Social enterprises are those
created for serving both the social aspect and business aspect. A social problem turned into a
business is a social enterprise.

In a discussion on social economy and social enterprise, a topic automatically arises – corporate
social responsibility (CSR). CSR can be defined as the way of doing business of the corporations
so that it leaves a positive impact on the society. The businesses are supposed to serve the causes
of the society to which it belongs to. It is argued that the businesses shall try to bring positive
changes to the society or at least they should not harm the society in the course of doing their
business (Frank, 2015). The businesses undertake many activities as part of their CSR. Nowadays,
the businesses appropriate a particular amount in the name of CSR and some disclose the CSR
undertakings. CSR has an indirect promotion aspect which the businesses use very tactfully to
promote their business.
Below points contain the discussion on importance of SMEs on social economy –

 Implementation of regulations: The social economy involves the effective regulations of

the authorities. The small businesses are the ones through which the government
implements its policies. For example, after Brexit, if it happens, the tax laws will be
shuffled along with other regulations. The UK govt. will be able to implement them easily
on small businesses thus effectively on more than 50% businesses in the UK.
 Niche market: The small businesses contribute to the society by capturing the niche
markets. The businesses search for the underserved population in the market and then
innovate to serve them. Thus, the population overlooked by the big corporations get the
services; at the same time the small businesses do their business (Balderson, and Balderson,
2010). Again, the big corporations might find entering a market not beneficial after doing
cost-benefit analysis. But considering CSR and social economy, that part of the economy
must be served. Thus, SMEs play important role in social economy.

Community-based small businesses are also playing important role in the social economy. The
small businesses are thus going making changes to the society through CSR, social endeavours,
social roles and engagements. The social enterprises are the entities through which the small
businesses make most change.
LO3 KEY ASPECT OF AN ENTREPRENEURIAL MIND-SET
Determining the characteristics traits and skills of successful entrepreneurs that
differentiate them from other business managers
In this section, definition of personal characteristics and skills will be given at first. Then the
characteristics and skills of a successful entrepreneur will be discussed. The section will also
address a myth about entrepreneurs and will put examples of successful entrepreneurs.

Personal characteristics can be defined as the traits that make each person differently identifiable
from other persons. Skills are the set of characteristics that helps a person do his job well and with
expertise. Below are the skills and personal characteristics of successful entrepreneurs.

 Vision: The first characteristic of the successful entrepreneurs is vision. This refers to the
ability to see the future aligning it with the highly ambitions of a person. Vision is what
makes the difference between entrepreneurs and managers. The entrepreneurs can see into
the far future and they have a target after which they continuously run achieve it. On the
other hand, the managers are the person who might have a vision but their visions are
defined with the alignment of the vision of the entrepreneur.
 Self-confidence: The entrepreneurs have the trait of self-confidence which refers to
believing in whatever you do. This train means that one has the believe in his abilities,
qualities and judgements (Burns, 2009). This is what makes the difference. Because the
entrepreneurs take very risky decisions. If they fail to keep believing their abilities, there
will be troubles in handling what comes after the decisions are made.
 Competitive: The entrepreneurs have the mindset of being competitive. They truly want
to do as good as their competitors do; even better wherever possible. But they don’t just sit
idle to see what happens next and to see things happen by. The entrepreneurs continuously
plan to surpass their competitors and if fail, they take lessons and come again with
alternative plans.
 Openness to change: One of the most important characteristics of the entrepreneurs is this.
The changes come without any signal. But the leaders need to identify them yet. Resistance
to break status quo might be very suboptimum for the entrepreneurs. Therefore, they are
open to changes at any time.
  Below are some skills of the entrepreneurs –
 Leadership skills: Good entrepreneurs are good leaders. The entrepreneurs possess very
top-level leadership skills. They lead people not manage them. They tell what to do, and
show how to do before making other do the work. They maintain relationships with top to
bottom-level personnel. And people love to talk with them and to get their acquaintances.
 Communication skills: Communication is very essential for every sphere of life.
Corporate communication at all level is important and the successful entrepreneurs are
successful communicators. They can convey their directions, suggestions,
recommendations etc. in a very effective way. Also, the successful entrepreneurs are very
good at negotiation table (Shadforth, 2010).
 Decision-making skills: Making prompt decision at crisis moment is the key to being able
to handle the worst situation that might lead to a loss. The entrepreneurs can assess a
rushing situation and can make decisions promptly. Also, such high-voltage situations
require correct decisions. The entrepreneurs have that instincts to make best decisions.
 Technical skills: The entrepreneurs also have some technical skills on the types of business
they are pursuing. They are not master of that field, but they at least have some ideas about
the business area. Because while making decisions they need to understand the technical
aspects. The technical skills help them make decisions on spot without any intervention
from experts.

The entrepreneurs thus possess these qualities of which some are possessed by born and some are
developed. So, it can be said that the entrepreneurs are born as well as can be made. But most of
the time, some qualities cannot be developed whatsoever for example, instinct to think correctly
or to identify opportunities or the intelligence quotient. However, one cannot say that managers
don’t possess the qualities at all but the extent of possession is different.

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Assessing how aspects of the entrepreneurial personality reflect entrepreneurial
motivation and mindset
Some aspects of personality of people reflect entrepreneurial motivation and mindset. The
motivations come from different factors along with some sort of mindset. In this section, the
entrepreneurial mindset will be defined and then mindset of successful entrepreneurs will be
analysed then some situational factors will be analysed.

Mindset can be defined as the set of attitudes that influences the way of thinking of somebody. It
is opined that the entrepreneurs have a different way of thinking, different perspective about things
than other people. Below are some mindsets of successful entrepreneurs –

 Positive thoughts: The entrepreneurs have positive thoughts about everything. It refers to
a way of thinking in which a person expects positive or favourable results even from very
unfavourable conditions. The entrepreneurs have this kind of thinking capacity which make
them successful in pursuing their goals (Dahlstrand and Stevenson, 2010). For example,
when a big deal gets cancelled, the entrepreneurs do not become disappointed, they do not
blame anybody but the situation, they think that some better opportunity would come in
the future.
 Taking responsibility: The entrepreneurs have the quality to take responsibility. That is,
they do not avoid tasks and challenges, rather they take on the challenge and want to see
the end results. This mindset of the entrepreneurs keeps them on the track and their network
also expands with this attitude.
 Not missing opportunities: The entrepreneurs wouldn’t miss a single opportunity
whatsoever. The opportunities can be defined as a set of favourable circumstances that
someone can utilize to bring results of his desire. The entrepreneurs search for
opportunities and don’t miss them either that be starting the business or anything else after
starting the business.
 Staying motivated: The entrepreneurs themselves need to stay motivated to keep others
motivated. They need to learn the ways of staying motivated. Because if being leader they
become unmotivated, the whole team and enterprise shall collapse (Frederick et al., 2012).
So, the entrepreneurs have the mindset to stay motivated.
  Now, not all entrepreneurs took an oath immediately after their birth to become
entrepreneurs during their life but situations make them so. Below are some situations that
shape entrepreneurial mindset –
 Access to resources: This is the most basic and most widely utilized situation that makes
many entrepreneurs. For example, if somebody has a relative working in garments
merchandise, he might become educated about the systems of garments merchandising and
gain access to garments through that relative thus become entrepreneur. Access to
resources spark ideas about new businesses.
 Unemployment: This is another form of entrepreneurship situation that made many big
businessmen. For example, the founder of online based B2B business platform Alibaba
was established by Jack Ma after years of his unemployment, failure and depression. There
are thousands of examples in the world where the entrepreneurs were unemployed and they
managed to become self-employed and employ some other persons (Mariotti and Glackin,
2012).
 Family upbringing: The family background of business-minded people might make
entrepreneurs. A child growing up in a family seeing his family members doing business
will be business minded automatically. Then he just would need a little push from any other
external factor to become entrepreneur.
 Entrepreneurial education: This situation might help forging entrepreneurs by education.
The people who have the desire to be entrepreneurs are trained and provided with enough
resources for them to become entrepreneurs.

So, it can be seen that the correct situation and correct mindset would make entrepreneurial
personality. The entrepreneurs grow inside our community but with a different point of views
about different things.

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LO 4: DIFFERENT ENVIRONMENTS THAT FOSTER OR HINDER THE
ENTREPRENEURSHIP
Examining how background and experience can hinder or foster entrepreneurship
In this section of the report, the ways background and experience affect entrepreneurship will be
discussed and analysed. The characteristics and background of an entrepreneur will be linked up
to so a better picture of the issue.

 Experience and educational background: It help making better entrepreneurs. The

persons with proper education and experience can become more successful entrepreneurs.
But unfortunately, some of the entrepreneurs might have only experience and some only
educational background or some with family background or some with only entrepreneurial
mindset (Stokes et al., 2010). However, combination of these things is always best. But
some people argue that not necessarily you have to possess everything at the beginning;
you can learn things in course of time. There are many examples of entrepreneurs who had
nothings sort of experience or background.

For example, Jack Ma had no education or experience on entrepreneurship. But he

completed his graduation in English; wanted to study more in Harvard Business School
(HBS); applied there 10 times to get rejected every time. Then he applied for jobs in
different places like 30 times but got rejected each time. In 1994, he heard about internet
and initiated his first business – a translation agency.

 Family background: Strong economic background from family helps the entrepreneurs.
For example, Richard Branson expressed his entrepreneurial desires at an early age and
tried to sell Christmas trees and budgerigars but he failed. With a strong family background
and financial support from family, he became successful with a magazine called student at
the age of only 16 years. Then he came to establish Virgin Group which controls about 400
companies in different fields.
 Technical knowledge: It is the knowledge about the business’s technical aspects. It makes
undertaking the business activities easier for them. Jack Welch, the two-decade-CEO of
General Electric has the educational background that helped him become successful in his
endeavours. He studied University of Massachusetts Amherst in chemical engineering. He
 also studied University of Illinois, did his masters and PhD. All these things helped him
become the most successful CEO of all-time giving GE 4,000% growth in two decades.
 Employment and economic circumstances: Employment and economic histories help a
person modify his personal characteristics. Personal characteristics of the entrepreneurs are
linked with background. Like, the characteristics are evolved based on the background of
the entrepreneur. For example, if the entrepreneur has a background of being football
player, he might have the characteristic of being very competitive and he might be very
good at snatching deals in highly competitive environment (Blanchflower and Shadforth,
2010).

So, the background and other factors described above of the entrepreneurs are important in a sense
that these help them to become successful and develop characteristics those wouldn’t be developed
otherwise. The examples above are the illustration of the statement.

CONCLUSION AND RECOMMENDATION

It can be concluded that running a small business requires an entrepreneur. Being an entrepreneur
is matter of many things. The characteristics of entrepreneurs, the mindset, personality,
background, experience etc. all the contributory to someone being entrepreneur. The successful
small businesses contribute to the economy and to the global life standard of people. These
businesses generate very high contribution to the GDP of a country. However, being successful in
entrepreneur brings fruit for every entity in a society. Like, the entrepreneur benefits himself, he
can employ some other people, a new business got established, a problem of the people gets solved
and many more like this. So, being able to identify the entrepreneurial mindsets, and educating
them, sharing resources with them would help making more entrepreneurs. Now, in London
everyday there are many businesses being established. Some are coming to compete in saturated
market, some are taking franchise, and some are acquiring other firms. But since technological
revolution is an ongoing process the client shall consider opening a tech-based start-up. Because
it will create a new venture; solving new problems; creating new markets.

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