Entrepreneurship and Small Business Management

Contents
Introduction........................................................................................................................3
LO1 Explore and illustrate the range of venture types that might be considered
entrepreneurial...................................................................................................................4
P1 Examine different types of entrepreneurial ventures and explain how they relate to
the typology of entrepreneurship....................................................................................4
P2 Explore the similarities and differences between entrepreneurial ventures.............5
LO2 Assess the impact of small businesses on the economy..........................................7
P3 Interpret and assess relevant data and statistics to illustrate how micro and small
businesses impact on the economy...............................................................................7
P4 Explain the importance of small businesses and business start-ups to the growth
of the social economy...................................................................................................10
LO3 Determine and assess the key aspects of an entrepreneurial mindset..................11
P5 Determine the characteristic traits and skills of successful entrepreneurs that
differentiate them from other business managers........................................................11
P6 Assess how aspects of the entrepreneurial personality reflect entrepreneurial
motivation and mindset................................................................................................12
LO4 Examine the different environments that foster or hinder entrepreneurship...........13
P7 Examine, using relevant examples, how background and experience can hinder or
foster entrepreneurship................................................................................................13
Conclusion.......................................................................................................................15
References.......................................................................................................................16

Table of figures
Figure 1: small business in UK..........................................................................................7
Figure 2: number of business............................................................................................7
Figure 3: growth of small business....................................................................................8
Figure 4: location of business............................................................................................9
Figure 5: business based on industry................................................................................9
Introduction
Entrepreneurship is the ability of a person to start and manage a new business while
accepting the risk of failure. There many sector for entrepreneurs such as private
sector, public sector, and social sector. Each sector has their own feature and each is
different from other. Entrepreneurs mainly start small business. It is a blessing form an
economy because it creates employments and increase the national income. However,
it is more vital for UK as they have decided to go out of the European union. It will have
a negative impact on their economy and only the domestic entrepreneurs can save UK
economy. But, not everybody can become an entrepreneur, to be an entrepreneur a
person must have some specific skills such as determination, self-confidence and risk
taking mentality. These traits also reflect the entrepreneurial motivation and mindset.
Many people believe that, apart from this traits, family background, education
experience is also necessary to become an entrepreneur. But in the final section of the
report it has been discussed that these factor might add some benefit but these are not
at all necessary to become an entrepreneur.
LO1 Explore and illustrate the range of venture types that might be considered
entrepreneurial
P1 Examine different types of entrepreneurial ventures and explain how they relate to
the typology of entrepreneurship.
Entrepreneurship is a personal trait of an individual which helps him to take the risk of
starting and managing a new business with a view to make profit. It also means the
ability to create a bundle of resource which will be used to earn profit. Entrepreneurial
activates comprises a lot of activities but in short it mainly refers to the to the activity of
starting a new business and managing it to exploit a new economic opportunity.
Entrepreneurial venture refers to a newly created business which uses innovation to
capitalize profit making opportunity. According to the research, there are also different
types of entrepreneurs.
Private entrepreneur: these sorts of entrepreneurs love to take continuous challenges.
They start with establishing one business. But as that business is fully established, they
start to build another business.
Social entrepreneur: this type of entrepreneurs manages organization with a view to
achieve a social goal or to enhance the development of society (Radcliffe, 2017).
Intrapreneurs: it refers to the people who are willing to practice entrepreneurship
inside an organization as an employee. Mainly high level CEO or COO gets such kind of
opportunity. They can acquire or merge with new business. Or they can modify the
strategy of the existing business to exploit new economic opportunity.
Public entrepreneurs: these sorts of entrepreneurs are mainly created when
government are privatizing some of their resources. This sort of entrepreneur helps to
proliferate innovation and implementation of new procedures to capitalize economic
opportunity.
The research also shows there are four kind of entrepreneurial business. These
business are briefly described in the following section.
Private enterprises: this type of business has only one primary object which is to
maximize their profit. There are two types of private enterprises. These are
1. Lifestyle businesses: this is the business which is build based on the lifestyle of
the entrepreneur. The initial target of these sort of business is to earn profit by
doing something which the entrepreneur enjoys to do. These venture is most
suitable for lifestyle private entrepreneurs who are willing to follow their passion.
2. Growth firms: it refers to the company which tends to grow very fast in its
industry. The reason behind this rapid growth is mainly the effective use of tactic
and strategy. It can be found in almost every sector. In the initial stage, any firm
with a distinguish innovation can achieve high growth due to low competition in
the market. If the firm is managed privately, then private entrepreneurs would be
preferred (Davidsson, Delmar and Wiklund, 2012).
Social enterprises: these of business organization are different than most traditional
organizations. The primary objective of these organization is to achieve a social goal by
selling products or services. Unlike, other organizations, they are not solely focused on
maximizing profit. The social entrepreneurs are the best fit for this type of venture.
Public enterprise: public enterprises are mainly controlled by the government. Their
primary focus is to provide quality services to the population of a country. However, to
enhance efficiency, the government has been privatizing some of its enterprises. These
is the best opportunity for public entrepreneurs to capitalize. They can practice
entrepreneurship within the control of government.
P2 Explore the similarities and differences between entrepreneurial ventures
As stated in the earlier section, the entrepreneurial venture can be three types based on
the purpose and control of the organization. The similarities among these ventures is
that all venture is established to capitalize newly spotted economic opportunity. The
second similarity is that all sorts of ventures requires entrepreneurial knowledge and a
mentality of risk taking. The third similarity of between the private and social sector is
that they both operate in the same market(Onlinempadegree.usfca.edu, 2017).
However, there are some difference this are shown on the following table.
Basis for
Public venture Private venture
comparison Social venture

Definition A venture A venture controlled A venture

established to by individuals or a controlled by
provide quality group of individuals individuals or a
services to people in order to group of individuals
and controlled by capitalize economic in order to
the government. opportunity and capitalize
maximize profit. opportunity and
proliferate social
development.
Primary objective Serve citizens of a Maximize profit Ensure social
particular country. earning development

Sources of fund Tax, public Private equity, bank Private equity, bank
revenue, duty, loan, share market loan, donation.
foreign loan and etc.
donations, penalty

Scale of business Large Large, medium and Mostly small

small

Basis of promotion Seniority Merit Participation

The entrepreneurial venture can also be differentiated based on their sizes such as
small, medium, micro and large sized business. The following table shows their
difference.
Basis for Micro Small business Medium Large business
comparison business business
Employee Less than More than 10 More than 50 More than 250
10 but less than but less than
50 250
Capital Maximum 2 Between 2 to Between 10 to More than 50
million 10 million 50 million million
LO2 Assess the impact of small businesses on the economy
P3 Interpret and assess relevant data and statistics to illustrate how micro and small
businesses impact on the economy.
The research has shown several vital impact of micro and small business in the
economy of UK. But before discussing the impact, first the current situation of the micro
and small business sector should be demonstrated. In 2017, almost 197,000 new
business has started operating in different sectors and accumulated number of private
business now stands at 5.7 million. The most number of business had 5-4 employee. In
other words, most of the business were small business.

Figure 1: small business in UK

Source: (Gov.uk, 2017)

Another major statistic can reveal how important the small business is for the economy
is. The following statistics shows the number different types of businesses in the
economy of UK in 2017.

Figure 2: number of business

Source: (Distribution of businesses in the United Kingdom (UK) in 2017 (per 10, 2017)
As we can see the number of sole proprietaries are nearly double compared to the
number of companies. The light blue proportion of the chart shows the that has
employees other than the owners. It is clear that the most of the sole proprietaries have
no employees while most of the companies has employees other than the owners. The
number of sole proprietary accounted for nearly 3.4 million which is almost 60% of the
total business population of the country (Fsb.org.uk, 2017). To illustrate more accurately
how the small business sector has been growing in the economy of UK, the next section
will show a growth chart considering the year 2000 as the base year.

As we can see in the chart that the number of business with no employee increased by
nearly 84%. This is the highest increase compared to all other business. In second, the
medium sized business has seen an increase of nearly 26% and the small size
business had increased by 23%. Since 2000, the number of smes has increased by 2.2
million while the number of employees in this sector has increased by 256,000.
However, the business is not evenly spread among the UK. The major city, London, and
the south east region of England has been accounted for the most number of business.
The research showed that there are 4,972,000 small businesses in England, 207,500 in
wales, 343,300 in Scotland, and 130,600 in Northern Ireland. The following graph
shows the statistics.
 Figure 4: location of business

Source: (Ons.gov.uk, 2017)

The following graph shows the share of SME business based on different sectors along
with the share of employment and turnover. The construction business had the highest
share of SME followed by the technical activities. However, the highest share based on
the employment was in the wholesale and retail trade area.

Figure 5: business based on industry

Source: (Gov.uk, 2017)

P4 Explain the importance of small businesses and business start-ups to the growth of
the social economy.
Social economy has become a buzz word in today’s world. It refers to a situation where,
a large number of organizations and enterprise will operate simultaneously. These
enterprises and organization will have a common goal that is to increase social inclusion
instead of maximizing profit. The increase of social inclusion will reduce inequalities
among the member of societies while creating economic value for all. For this very
reason, the social economics encourages organizations like mutual cooperatives,
foundation and social enterprises. In a social economy the factor of production is not in
control of government. The government has some influence in the overall economy but
has no strict control over economy.
On the other hand, BREXIT refers to the decision of Britain to exit the European union.
A national vote has been conducted. The result of the vote showed that 51.9% of the
population were in favored of Brexit (The Balance, 2017). The Brexit will be formalized
in 2019. The Brexit will have some negative consequence on UK. Firstly, the growth of
economy will slow down and per capita income will also see a reduction due to the
barrier in free trading, decrease of FDI and immigration problems.
The only way UK can defend this blow is by ensuring a strong economy that depends
less on the foreign country. SME is the strongest tool of defense for UK in such
situation. The growth of small business will enhance domestic trade; it will help to fuel
the growth of economy. At the same time, the small business will create employment for
the people of UK it will increase the per capita income. The small business also ensures
a social economic condition. Small business might focus on profit maximization, but
according to the theory of invisible hand of Adam Smith, the achievement of self-interest
can increase the social benefit. For example, when a small business is established, the
income of the overall society increase, people gets new goods and services and the
standard of living also increases. Therefore, the overall society is benefited from
establishment of small business.
LO3 Determine and assess the key aspects of an entrepreneurial mindset
P5 Determine the characteristic traits and skills of successful entrepreneurs that
differentiate them from other business managers.
Entrepreneurs are not like traditional manager. There are many skill factors which
differentiates these two types of people such as technical skill, interpersonal skill,
leadership skill, determination, confidence, planning and organizing skill, risk taking
mentality etc. To illustrates the difference, we will take two well-known entrepreneurs as
example. These people are Bill Gates, the founder of Microsoft, and Mark Zuckerberg,
the founder of Facebook These two people are very well known. They have some
similar characteristics which differentiate them form the other traditional mangers.
These skills are discussed on the following section
Self-Confidence: it is one of the most vital factor that differentiates the entrepreneur
form traditional manager. All the entrepreneur must have this quality. It helps them push
forward when the situation gets tough. For example, bill gates faced a lot of difficulties
during his initial stage of becoming a successful entrepreneur. At student life Bill Gates
had to dropout from Harvard University, after that he also started a business named as
Traf-O-Data which failed drastically. But he still had the confidence that he can do
something big with his computer skill. This self-confidence helped bill gate s to establish
Microsoft company which made him one of the youngest people to become billionaire.
Risk taking mentality: it is another trait of successful entrepreneurs which sets them
apart from traditional manager. Starting a new business or project is a reflection of risk
taking mentality. Traditional manager rarely has this ability. They only follow the order of
entrepreneurs who has that ability to take the risk. For example, Mark Zuckerberg has
recently $2 billion in a virtual reality technology. It has not been in market yet, therefore,
the success of the technology is still in doubt. However, as an entrepreneur he believes
that in near future virtual reality will be the next big thing and to capitalize the
opportunity he has taken the risk of investing in this project (Writer, 2017).
Determination: it is another vital skill that only the entrepreneur tends to own. They are
not only take up a challenge but has the mentality to perform their very best in that task.
For example, Mark Zuckerberg had a dream that he will build a communication system
that will one day bring the whole world together. He started with building a small
platform which connects all the students of Harvard and later connected the whole
world. His determination has been the only reason for which that small work became a
global phenome.
Leadership: leadership skill can also be found in the traditional managers but the
leadership of entrepreneurs are far more wider and more effective. Entrepreneurs
should be able to lead a total organization and its people. For example, Bill gates had to
manage the whole Microsoft corporation by himself at the starting time. He needed a lot
of effective leadership skill to carry out that mammoth task(Info, 2017).
Innovation: at certain time innovation can be the difference between the manager and
entrepreneur. Both Bill gates and Mark Zuckerberg started something small but new
which later become a world changing organizations.
P6 Assess how aspects of the entrepreneurial personality reflect entrepreneurial
motivation and mindset.
Entrepreneurial motivation mainly refers to the process which enables the entrepreneur
to set high goals and to exert higher level of efforts with a view to achieve those difficult
goals. In simple words, it the fuel that drives the entrepreneur to reach his target. The
motivation can come from different sources. One of the vital source is the personality of
an entrepreneur. Entrepreneur personality has many components some of which are
self-confidence, risk taking mentality, determination and leadership skills. These
components reflect the sources of motivation of an entrepreneur.
Firstly, the self-confidence and risk taking mentality motivates the entrepreneur to take
the risk of starting something new. It is never easy to start something new, because,
there is a huge probability that the project might not be successful. However, as
entrepreneur, a person must take as well as accept the risk of failure in order to start
something new. The high self-confidence of entrepreneur adds fuel to that fire.
Secondly, determination is one of the biggest factor of motivation for entrepreneur. It
motivates him to complete the most difficult task. This is also the reason behind the
“never-give-up” mindset of entrepreneur (Roy, 2011).
Finally, leadership skill is the vital characteristic of an entrepreneur and also reflects the
mindset of an entrepreneur. Leadership skills can help the entrepreneur to manage a
group of people and conquer many uphill task. It also helps him to manage the whole
organization quite effective and efficiently.
There are also some other factors that might reflect entrepreneurial motivation and
mindset. These are mentioned in the following graph.
LO4 Examine the different environments that foster or hinder entrepreneurship
P7 Examine, using relevant examples, how background and experience can hinder or
foster entrepreneurship.
Entrepreneurship is mainly the characteristic helps him to identify an economic
opportunity and capitalize it while accepting the underlying risk. In the past it was
believed that entrepreneurs were born not made. This believe was based on the
hypothesis that only a son or daughter of an entrepreneur can become an entrepreneur.
In other words, only those who had entrepreneurial background should be able to start
and manage a new business. This statement is not at all false. It is partially true. It
cannot be denied that and entrepreneurial background certainly helps a person. In
some cases, it can be seen that if the father is self-employed than the children are more
probable to also be self-employed but not necessarily on the same business. This
occurs because at the primary stage of life all the children learn from their parents and
they also prefer to follow their parent’s footstep.
For example, Dylan Lauren is the daughter of Ralph Lauren who is a well-known
American fashion designer. She is owner of fantasy-themed Dylan’s Candy Bar. It is a
retail business and their main products is candy’s and sweets. She was inspired by her
father business and decided to start a business of her own and she has also become
owner of a successful business.
In contrast, Steve Jobs father was a professor and his family was a low and middle
income family. But still he made to the top of the business world. Therefore, it is not
necessary to have a business family background to become a successful entrepreneur
(Proctor and Bicknell, 2014).
Another factor which can foster the entrepreneurship is education. An entrepreneur
doesn’t require a formal education degree, but having one will certainly give him an
advantage in the field of business. The success of a business mainly depends on how
effectively a person can make decisions. There are several factors that must be
considered such as opportunity cost, financing cost, resource allocation etc. Education
can provide knowledge which will help him to make better decisions.
For example, Fred Smith is the owner and founder of the FedEx. It is an organization
which provides courier delivery services both home and abroad. However, the owner
had attended Yale University o receive bachelor’s degree in economics. This degree
has certainly help to be more effective in business (Counsel at Ford Motor Company,
2010).
In contrast, Steve Jobs, who has built the Apple empire, is a dropout of Reed college.
He could not even finish his studies but was one of the biggest entrepreneur of this era.
So it cannot be said that only education is required to become an entrepreneur.
Finally, experience can be vital issue in case of entrepreneurship but never is a
mandatory for becoming an entrepreneur.
Henry Ford, is one of the best example of the importance of experience in case of
entrepreneurship. Henry Ford is the founder of Ford Motor, one of the largest
automobile factory of world. He started off as a worker in Detroit and later build the ford
empire.
However, Colonel Sanders has showed that experience is not mandatory. He had
worked is several jobs but never in a restaurant. But still he was able to build the brand
currently known as Kentucky Fried Chicken, one of the best brand in the world
(Forbes.com, 2017).
So the above discussion, Cleary shows that background, education or previous
experience can foster entrepreneurship but there are also many example which shows
that none of this is necessary to become an entrepreneur.
Conclusion
The aim of the report is to learn more about entrepreneurship. This report has shown
many style of entrepreneurships as well as the sector in which the entrepreneurs must
work. For example, private, public and social. This report has also made the difference
among these sector quite clear. Additionally, it has also distinguished venture based on
their sized followed by the importance of small business in the growth of economy with
relevant data. This report has also showed the traits and characteristics of an
entrepreneur and how they can reflect the entrepreneurial motivation.
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