You are a senior member of the Federation of Small Businesses (FSB) and you have been asked by your peers to consider ways in which the FSB could positively promote entrepreneurship in the local area. As a result you have been asked to create a report aimed at encouraging and supporting potential entrepreneurs to start a new business. The overall aim of the report is to explore the range of business ventures available to entrepreneurs, assess the impact small businesses have on the economy, assess the ‘entrepreneurial mindset’ and examine different environments that foster and hinder entrepreneurship.
Evidence: Written Report
Pass: This task provides you with the opportunity to achieve: P1, P2, P3 and P4.
Your report should include the following:
P1: Provide an introduction to the report by examining different types of entrepreneurial ventures and explaining how they relate to the typology (different types) of entrepreneurship. Your introduction should aim to define entrepreneurship and explore entrepreneurship scope and typology.
P2: Building on the different types of entrepreneurial ventures explored in P1, you are now required to explore the similarities and differences between each. You could consider the roles, characteristics and objectives of different types of ventures: private; public; social enterprises - as well as different sized ventures: micro; small; medium.
P3: Present, interpret and assess relevant data and statistic to illustrate the impact micro and small business have on the economy. You should consider local, regional, national and international economic impacts.
P4: Building on the information you provided for P3, you must explain the importance that small businesses and business start-ups on the growth of the social economy.
For this part of the assignment you are encouraged to attend The Business Show 2017 which will be held at London Excel Centre on the 17th and 18th May. You will have the opportunity to meet, listen and speak to many high profile entrepreneurs and business speakers. This give you an insight into different ‘entrepreneurial mindset’, personalities, traits, understanding of what makes them successful and why others fail and also knowledge of their background and how it fosters entrepreneurship.
Written Report Pass: This task provides you with the opportunity to achieve: P5, P6 and P7.
Your report should include the following:
P5: Determine what makes a successful entrepreneur. You could consider examples of successful entrepreneurs and determine the characteristic traits and skills they possess. Similarly, you could explore whether entrepreneurs are born or made and whether entrepreneurship skills can be learned over time.
P6: Assess how aspects of the entrepreneurial personality reflect entrepreneurial motivation and mindset. You may wish to consider how personality is shaped by family upbringing, lifestyle, cultural differences and personal motivation and drivers amongst other factors.
P7: Examine, using relevant examples, how a person’s background and past experiences can hinder or foster entrepreneurship. Factors to consider may include level and type of education, national culture, economic circumstances and character traits. The risks and rewards of starting a business should also be considered.
ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT
In this post-globalisation era, the total economic development of any country is wholly dependent upon the capability of the entrepreneurs. Entrepreneurs help any society to improve the standard of the living and help any country to facilitate economic development by generating more organisation and employment. Entrepreneurship is the process by which opportunity can be identified and the it converts into the marketable services or products by utilising different creative and innovative products. This assignment is intended to describe the entrepreneurship and small business management. This assignment mainly generates a report by which federation of the small business can understand the impact of the small as well as medium sized businesses so that they can assist different entrepreneurs with different opportunities available to them.
As stated by Bhatia (2011), entrepreneurship is the process by which any entrepreneurs takes their action regarding searching new things and explore innovative ideas so that an effective opportunities can be gained. Any entrepreneurs must have the capability to facilitate different dynamic and economic activity, capability to take risks and facilitated innovations. For the conduction of the business with more effectiveness, business ventures are very much important. There are mainly three different types of the business ventures such as lifestyle ventures, high growth ventures and the smaller profit ventures, which must be involved in the report of the FSB.
Lifestyle ventures are the small organisation that mainly provides autonomy, control and the independence to its owner. Lifestyle ventures align the hobbies as well as the personal interests of the entrepreneur with the desire to make profit (Gorman et al. 2012). The lifestyle entrepreneur who starts their new business by aligning their passion rather than achieving profit mainly maintains these kinds of entrepreneurial ventures. This kind of entrepreneurs mainly merges their talents as well as personal interests for the achievement of the wealth. Lifestyle venture provides effective autonomy and independent to the entrepreneurs that are very important for them because they conduct their business for achieving their passion.
As stated by Scarborough et al. (2011), high growth ventures are the entrepreneurial ventures that is intended to achieve the maximum growth as well as profit. High growth ventures mainly pushing the envelope and the growth of the organisation with more focus. This kin d of ventures provides their focus on the innovation so that they can attract their customers with their unique products. Different types of entrepreneurs follow this kind of business ventures such as corporate entrepreneurs, and technopreneurs. These kinds of entrepreneurs generally maintain a big organisation with different types of risks and invent different types of new products to attract customers.
In case of the smaller profit ventures, generating million-dollar money is not necessary and this kind if organisations do not concentrated on the growth of the organisation. Example of this kind of business venture is the Mom and Pop stores, which is one of the independent, controlled, family owned and small companies that has minimum number of employees. Mainly independent entrepreneurs maintain and own this kind of business ventures. Independent entrepreneurs are those who take risks that are involved in the decision made by them and they have the total control over the company.
The above-mentioned ventures that are briefly discussed in the P1 have some similarities as well as differences. Mentioning the similarities and differences among those entrepreneurial ventures can help the new entrepreneurs to evaluate the most appropriate business ventures for them. In the following two tables the differences and similarities among public, private and social entrepreneurship as well as different sized ventures such as the small, micro and medium sized organisation.
|Attributes||Private ventures||Public ventures||Social ventures|
|Main aim||Main aim behind this kind of entrepreneurial ventures is achieving huge amount of profit ||Main aim behind this kind of venture is to deliver excellent services to the customers||Main aim of this kind of company is providing greater social value to the society.|
|Value||Mainly generates corporate value||Creates social value||Creates both the social as well as corporate value|
|Sources of money||Issuing debentures as well as shares or taking loans||Different types of public revenue such as duty, tax or penalty||Donations from different organisation or individuals|
|Distribution of the profit||Distributed among the shareholders or investors of the company||Distributed among the society as well as shareholders of the company||Distribution of the profit mainly circulated among the shareholders and societies|
|Reason behind the development of strategies||Strategies are mainly developed for maximising profit and growing the market shares||Strategies are developed for the development of the society||Strategy must be developed so that social objectives can be achieved.|
Table 1: Differences and similarities among public, private and social ventures
(Source: Storey and Greene, 2010)
|Attributes||Small|| Micro ||medium|
|Management of the company||Managed by the owner of businesses||Managed by the professionals||Managed by the owner as well as professions |
|Planning||Planning is required in this kind of enterprises in the short-term basis and it is mainly generated by the owner||Extensive and effective long-term planning is required that are generated by the dedicated team||Some long term planning and some short-term planning is required, which is created by the key executives or owners|
|Decision making process||Decision making mainly one by the owner||Owner makes the decision ||Owner and some professional make the decisions.|
|Customer base||Customer base mainly involved the local market||Customer base involved the native market||Customer base for this enterprise mainly involved industry niche|
|Utilised process||Mainly informal process is utilised||Informal process is used||Both the formal as well as informal process is utilised|
|Opportunities regarding personal development||Small opportunities for facilitating personal development||Very small opportunities for personal development||For medium sized organisation, personal development is only limited to some particular professionals|
Table 2: Differences and similarities among small, medium and micro organisations
(Source: Gibb, 2013)
Small businesses are the backbones of the economy of the UK and they comprise 99% of the total number of organisations in the UK. Small or micro businesses provides different opportunities to the economy of the UK such as it facilitates the growth, creates more employment opportunity in the market and opens more market, therefore the contribution of the small or micro organisations are vital (Burns, 2010). The main reason behind the huge contribution of the small and micro enterprise is they are most of the organisation of the UK. According to the recent research, the number of small and micro organisations is the 5.2 million and the number is continuously growing. It has been observed that 55% small and micro organisations do not survive more than five years. The main reason behind that is they operates locally and do not expand their organisation globally. Based on the record that was recorded during the time of 2013 and 2014, it has been observed that small and micro organisations contributed a total of 1.6 trillion euro (Jamjoom, 2017).
Figure 1: Contribution of small and micro organisation of the unemployment
(Source: Jamjoom, 2017)
Figure 2: impact of small and micro organisations
(Source: Rodrigo Valdivia Lefort, 2017)
Small and micro organisations highly contributed in the creation of the job. It has been observed that the small businesses are employing more than the 24.3 million individual in the UK that mainly contributes a total of the 60% employment in the UK that are generated by the private sectors. It has been observed that more than 37% small and micro organisations have involved them in the innovative activities (Rodrigo Valdivia Lefort, 2017). According to a recent statistics, it has been observed that 47% organisations have been increased during the era of 2009 and 2013. Therefore, due to this tremendous increment in the number of small and micro organisation, rate of unemployment in the UK has been reduced (Stokes et al. 2010). In the present time only 4.8%, people are unemployed according to a current report. Present report describes that international trade will increased by the 25% for the small and micro organisation in the UK that will increase more employment opportunity in the other country also. According to the World Bank’s report, within the year of 2020, more than 600 million jobs will be generated in worldwide basis.
As stated by d'Amboise and Muldowney (2012), social entrepreneurship can be defined as the utilisation of the techniques by different start up businesses as well as other entrepreneurs for the development, funding and implementation of the solutions regarding the cultural, social as well as environmental related issues. Social economies mainly include different types of nonprofits organisations, cooperative organisations, charities as well as social enterprises. Social economy is the third sector after the private as well as public sector organisation. Small businesses are growing and hundreds of the businesses are opening in every month. The organisations that are mainly involved in the social economy are not always big in size because this kind of organisation does not have sufficient revenue to create a big organisation. Small businesses contributes more to the social economy and helps more number of people by increasing more number of jobs, contributing more economic development of the country and it also reducing the rate of crime by engaging more number of young individuals (Stevenson and Jarillo, 2015). Along with that, small and micro organisations also provides a sources of the income to the owner of businesses and it also provides the sources of the maintaining the lifestyle for the employed person. There are mainly two millions social economic organisations, which provide huge contribution to the economy of the UK.
Entrepreneurship in the public sector organisation is mainly conducted in order to provide services that are more effective to the publics. On the other hand, privately owned organisation is intended to increase the profit margin as well as level of competitiveness. Public sector organisations are mainly maintains their activities by facilitating joint ventures, equity contribution as well as mergers of the management (Stokes et al.2010). Public sector organisation is mainly belonging from the smaller profit venture because they work for the betterment of the society not fort gaining profit from the society. On the other hand, private sector organisations are belonging from the high growth ventures because they conducts their business in order to generate huge amount of return by investing their revenue.
Different types of organisations contribute different types of facilities to the economy of the UK. It has been observed that medium and the small sized organisations mainly include 99.9% organisation in the UK but this sort of businesses accounts for 48% of the total employment in the UK. However, this kind of organisation have 33% employee turnover. On the other hand, large businesses accounted for the 0.1% businesses but they mainly involve 40% of the total employments but this kind of organisation have 53% of the total turnover (Stevenson and Jarillo, 2015). In case of the medium sized organisation, they only hire 12% of the employees but they have 14% turnover rates. Large sized business provides more salary to the people but they are very few in size.
It is not easy to be a successful entrepreneurs, huge range of skills as well as attributes are required among a entrepreneurs to be successful. For being a successful entrepreneur, any person must have the desire for achieving the excellence or succeeding in the highly competitive business environment. Along with that, for being a successful entrepreneur, a person must have the desire for independence. Moreover, quality of having self-confidence or self-sacrifice is important. Self-independent is important because of the involvement of high risks in the competitive marketplace (Katz and Green, 2011). Along with that, proficiency of technical skills and capability to perform challenging skills is necessary for being a successful entrepreneur. The business show 2017 that will be held at the London excel centre will provide opportunity to understand the skills, attributes, traits and personalities by conducting conversation with them. John Paul Dejoria is one of the successful and famous entrepreneurs who is famous for his hair care products. He was working in the Redken laboratories but he fired from the position. After that, in the year of 1980, he formed John Paul Mitchell systems and in the present time, his net worth is US$2.8 billion. J.K. Rowling is another successful entrepreneur who was rejected by 12 publishers and became frustrated in her life (Lee-Ross and Lashley, 2010). However, in the present time, she became mostly successful woman for her Harry potter series for which she has earned almost $400 million.
By consulting with the successful entrepreneurs, one thing is clear that is entrepreneurs do not born with entrepreneurship skills but they achieved skills, traits and personality with the time by facing different incidents. Entrepreneurship skills could be learned and if any people have the capacity to work hard with honesty then they can easily get success as a entrepreneurs.
Personality of any entrepreneurs are mainly shaped with the below mentioned factors that helped them to achieve motivation for entrepreneurships.
Entrepreneurs get their motivation from their family or environment in which they grow up. For this reason, a child that is belonging from a entrepreneur family became an entrepreneur in their near future.
Entrepreneurship is directly linked with the drive to achieve the excellence, risk taking capabilities, integrity and reliability and concern regarding the achievement of the high quality work (Merz et al. 2013). However, cultural diversity also helps any entrepreneur to be motivated by enhancing the skill level with diversified skills. Cultural differences help any entrepreneur to understand the need of different religion, race and ethnicity that helps to achieve huge amount of customers and increase the competition level.
Lifestyles of any individual provide them motivation towards entrepreneurship. If it has been observed that any individual is confident, adventurous and takes risks in their personal life then they are more prone to start their own businesses.
As stated by Kuratko et al. (2013), personal motivation of any individual also comes from the society. People who are self confident, have risk taking capabilities and have an effective commitment towards their work become more motivated towards entrepreneurship. Personal motivation helps any individual to become more persistent towards chasing their dream to be a entrepreneur.
As stated by Rosa et al. (2012), background of any person or their past-experiences always fosters entrepreneurship because it helps any individual to develop their confidence level or risk taking capabilities. After the birth of a baby, they started to learn so many things from the surrounding environment. Education provides them appropriate and technical skills to be independent and start a new venture of their own. Therefore, education fosters the entrepreneurial capability of any person. It has been observed that any people who is educated are more prone to start own business. According to Lee-Ross and Lashley (2010), culture of any country always play a vital role in the formation of the values, attitudes as well as behaviours. Cultural values are different in every culture so that national culture of any country affects the entrepreneurship capabilities of any individual.
Different types of traits such as self-sacrifice, self-confidents, capabilities to take responsibilities and face risk helps any entrepreneurs to be successful. Economic circumstances of any country also affect the growth of the entrepreneurship. In this modern as well as competitive world, survival of any entrepreneur is not possible without effective economic growth of the country. Poor economic condition always creates obstruction to generate successful entrepreneurships (Lee-Ross and Lashley, 2010). Along with that, saturation of any market also hinders the development of the successful entrepreneurships. Past-experience of any entrepreneur helps them to achieve more success because it helps them to find proper resources and apply the most appropriate techniques that increase the effectiveness. Support of family members is also necessary to develop successful entrepreneurships because less amount of support always creates less amount of confident among the entrepreneurs.
The main characteristics behind the entrepreneurial success are the risk taking capabilities and the excellent level of creativity as well as the persuasiveness. As stated by d'Amboise and Muldowney (2012), versatility as well as the superior business oriented skills is the main characteristics of any entrepreneurs that helps them to become successful. On the other hand, Lee-Ross and Lashley (2010) demonstrated that, only versatility and business oriented skills are not sufficient to crate excellent entrepreneurship. It is also important to have a clear knowledge regarding the vision that needs to be achieved. However, always taking huge financial risks cannot provide an entrepreneurial success, for getting success it is important to invest small amount of money and properly aligning the money so that it can be effectively utilised. High level of flexibility, decisiveness and the open mindedness is necessary to generate extensive results.
Knowledge as well as past-experiences helps any entrepreneurs to understand a business with more effectiveness and helps them to achieve more business related goals, excellent level of creativity and risk taking capabilities. It has been observed that if any child grew up from a family that has one or more entrepreneurs then they learn the entrepreneurship more effectiveness (Gibb, 2013). People belonging from the educated background can conduct their business more effectively by becoming more open minded and achieving more technical skills related to any business. For example, Dylan Lauren owner of the Dylan’s Candy bar are belonging from the entrepreneur family that helps her to make her business more strong by learning different effective entrepreneurship skills.
Figure 1: sales turnover rates of medium, large and small-scale organisation for different industry
(Source: Definitions, 2017)
From the above image, it has been observed that the turnover rate of the medium sized organisation is the 15 million to 50 million. On the other hand, for the small and large-scale organisation in case of the manufacturing based companies are the up to 15 million and the greater than 300000. In case of the services and other sector the sales turnover for the small, medium and large scale organisations are 300000 to 3 million, 3 million to 20 million and greater than the 300000.
It can be concluded from the above discussion that small and medium sized organisation provides huge contribution national, local as well as global economy. These organisations enhance the lifestyle of the customers and help the country to achieve more employment so that a good economic growth can be secured. From the above discussion, it can be concluded that small sized organisation needs less amount of money and human resources, therefore, it will be more effective if any entrepreneur can start their business from the small sized organisations.