An entrepreneur is an individual who has the ability to generate new and innovative ideas that can easily meet market needs and demands. It establishes a small and medium scale sized organization that contributes maximum towards the growth of GDP. In the present report, the Federation of small (FSB) decides to promote entrepreneurship in different regions due to which the report covers distinct points such as the entrepreneurial mindset and kinds of business ventures.
- Describe different types of an entrepreneurial venture and their critical analysis of the relationship with different typology of entrepreneurship.
- Differentiation between different kinds of entrepreneurial ventures along with some similarities.
- Examine the impact of SME on the social economy of the UK
- List of traits, skills and characteristics of successful entrepreneurs.
- Discuss the past experiences of successful entrepreneurs who drive or hinder them to achieve growth and success in their professional career.
Entrepreneur refers to an individual who bears the capacity and willingness to develop and manage a business venture. These entrepreneurs have innovative minds and are ready for bearing risk and profit. This report discusses about different types of entrepreneurial ventures and differences/ similarities between them. It discusses about the impact of small businesses on the economy. The report determines and assesses the key aspects of an entrepreneurial mindset.
P1. Types Of Entrepreneurial Ventures and how they relate to typology of entrepreneurship
The term Entrepreneurship refers to the capacity and willingness to develop, organise and manage a business venture along with risk and profit associated with it. Entrepreneurship is both the study of how new businesses are created as well the actual process of starting a new business.
Different types of Entrepreneurial Ventures are as follows:
- Small Business Entrepreneurship: It refers to an independently owned and operated for profit that enterprises make to fulfil the needs and demands of their family members. The goals and objectives of this entrepreneurship are to grow into a long-term business which should be profitable and sustainable, with possibility of eventual sales. Examples are Restaurants, retail stores, hairdresser, beauty parlour, etc. Capital providers for small businesses are: Bank and Micro loans, revenue generation within business, loan from friends or family members and personal funds.
- Scalable Start-up: This refers to Lifestyle businesses that include innovation-led or high growth Tech Company where innovation-focused firms with potential to create new market place or dramatically change the current market. They attract investments from passionate Venture Capitalist and non-dilutive capital like government grants, subsidies and personal funds (Sahut and Peris-Ortiz, 2014).
- Social Entrepreneurship: It refers to those entrepreneurs who focus on creating products and services that solve social needs and problems. Unlike, scalable Entrepreneur lays emphasis on maximizing the sustainable development. Examples of Social Entrepreneurship are Company working to solve global health issues. These organisations can be non-profit, profit or Hybrid.
- Large Company: The definition of large business entities refer to establish firms that grows through sustaining innovation, offering new products and employing large number of employees. The main aim of such companies is to generate substantial revenue and profit for the company and its shareholders. Examples General Motors, Tesco, H&M, etc
Typologies of Entrepreneurship
- Social: It refers to use of start-ups companies and other entrepreneurs to develop, fund and implement solutions to social, cultural or environmental issues.
- Serial Entrepreneurship: It refers to the entrepreneurship where an entrepreneur continuously comes up with new ideas and starts new businesses. Once a particular business is established, an entrepreneur delegates responsibility of running its operations and move on to other ventures.
- Lifestyle Entrepreneurship: It refers to an individual that creates a business with the purpose of altering personal lifestyle. Their aim is to earn a long-term, residual income through a self- directed business that engages the founder's passion and expertise.
- Female/ Women Entrepreneurship: It is the process where women organise the factors of production, provide employment to others and undertake risks (Ramdani and et. al., 2012).
P2 Similarities and differences between Types of Entrepreneurship
Similarities- Whether it is social or small-scale business, objective for customer satisfaction remains the same. It is important for both types of entrepreneurship ventures to serve the best to their customers in order to enhance and keep the existing customer base.
Similarly, in large companies and scalable start-ups, the point of similarity is that in both businesses, entrepreneurs and managers aim to make and maximise profits. The main aim of running the business is profit margin (Gehman and Corley 2017).
Differences- There is a vast difference in both forms of entrepreneurship. Firstly, financial goal of small business is to earn maximum profits by creating profitable businesses that can yield the regular income, whereas there is no kind of financial goal for social enterprises as they just need to cover the costs incurred to run the business.
Point of differentiation between start-ups and large companies is the growth pace. Scalable start-ups have the fast pace of growth of the business and time is the most precious resource for this kind of business. Whereas in large companies, the growth pace is steady. In large business, predictability and control have positive impact.
P3 How micro and Small Business impact on the economy
Small Business enterprises are critical to UK economic growth since they contribute to large job creations. Most people know about the impact they create on economy as they are the seedbeds for new ideas and innovation that encourages healthy competition and bring fresh ideas for setting up new business. UK has shown a massive growth record of small business and start-ups in the past few decades and this trend is still going on.
The impact created by Start-ups is:
- Employment: Small Scale enterprises play a key role in reducing unemployment and creating job for UK population. The total employment in SME was 15.7 million that accounts for 60% of all private sector employment in United Kingdom. Depending upon the size of ventures, they employ in different proportions, alone small-scale business employ 12.5 million people.
- Turnover: It is an important aspect to calculate growth of economy and amount generated by particular business. Small-scale business shows impressive growth by giving combined annual turnover of £1.8 trillion which accounts to 47% of all private sector turnovers in UK.
- Growth: Small Business Enterprises has succeeded in growing and expanding their business as they are the seedbeds of Innovation. This helps to keep market fresh and prevent them from going stagnant. It is reported that 77% of SME is operated by non-employing business. They play a key role in lifting UK economy from recession of 2008. There were 5.5 million small businesses which is 99.3% of the total business population.
- Impact on Industry: The small and medium sized businesses have a mutually beneficial and symbiotic relationship with overall economy of UK. The dominant industries of UK are manufacturing, repair and retail sector. Around 50% of all SME’s revenue is generated from business in these sectors. Small-scale business contribution is vital to economic health and UK current financial climate provides great opportunity and act as facilitator for small and start-up business (Burns and et. al., 2016).
- Registered SME for VAT and PAYE: Around three quarters of UK private sector businesses are non-employers and majority of them are not registered for VAT and PAYE this accounts for 55% as 'un-registered'. The Office for National Statistics recorded 2.5 million private sector businesses registered.
P4 Importance of small businesses and business start-ups to the growth of the social economy
Small businesses are considered as drivers of UK’s economy and contributesgreatly in the social development of economy. On an average data presented by the Confederation of British Industry (CBI), it has been revealed that SME's make up to total of 99% of private sector businesses including 60% of jobs in private sector (Storey, 2016.).
Following are important contributions made by small and start-up businesses of UK:-
Employment- It has been noticed that majority of small-scale businesses are not employers although it makes good contribution in the area of employment, which is very important aspect of social welfare. They had the total employment of over 24.3 million people in UK which is a great contribution made for unemployed individuals of UK.
Increase in the Standard of living- It is another objective of small business and start-ups in UK with regard to social development. Key role has been played by entrepreneurs in increasing the standard of living of local people. This is not only done by increasing employment but with development and innovations which leads to improvement in living standard and employees are getting quality of life on working at such a start-ups and small businesses. They provide good quality products which increases quality of living (Burns, 2016). .
Contribution to economy- SME’s are termed as growth driver for economy of UK. They generate notable income and made important contributions to the economy by its performance and productivity. In the year 2007, this sector has contributed about 4.4% in context of employment and 5.6% of total UK's GDP that resulted in good productivity.
P5 Difference Between entrepreneurs and mangers in terms of characteristic traits and skills
The term Entrepreneur and manager are often contrasted against each other in context of skills and traits as they are the main individuals to a business, organisation and management.
An entrepreneur is defined as a person with ideas, skills and courage to take risks and to have the idea and that can be changed to reality, whereas a manager as clear from its name, manages functions including operations of an organisation.
Table below will show a clear comparison in context of skills and traits of a manager and an entrepreneur:-
The Focus area of manager is different from that of an entrepreneur. The manager focuses on sustainability of an organisation and importantly has an aim on things that can be done within the decided time framework.
Entrepreneur is focussed on key factors and necessary components needed to start or continue the existing business (Barringer, B.R., 2015).
For a manager, interpersonal skills are concerned with interacting with employees as well as with people above line. Different inter-personal skills are needed for a manager to be able to manage effective communication. It is one of the essential skills a manager can hold in order to be different from competitors as well as from that of entrepreneurs.
For an entrepreneur, it is very important to have sound interpersonal skills with customers, shareholders, investors and suppliers in the form of communication only.
The point of concern for a manager is vision of whole organisation. New markets and businesses can't be opened by managers but they can be innovative in terms of handling employees and motivate them to do better. They have to be innovative in order if they want their employees to be innovative. Managers inspire employees to create more innovative ideas, increase efficiencies by making use of resources.
It is important for a successful entrepreneur to be a visionary. A good entrepreneur always considers the trend and tries something new in market with potential to turn vision into reality. They are often very innovative in industries where they are dealing every day. In order to be out of the crowd, an entrepreneur always thinks about unique ideas that can be applied differently from rest of the market (DeNisi,2015).
Calculative decisions are taken by managers as they are only one who decides things for entire organisation; therefore they take too measurable steps.
Decisions taken by entrepreneurs are often instinctive, based on the instincts. Any wrong decision will affect the whole and sole proprietor only and no one else.
P6 Assessing how aspects of entrepreneurial personality reflects mindset and motivation
Owing any business or a start-up is a difficult thing to work on. Still, there are some entrepreneurs in the economy of UK who have proved themselves different and successful one by perusing the unique styles of motivation. Promoting company totally depends on personality traits and ways of motivation an entrepreneur uses to build up trust and confidence in employees.
One gem among them is Mark Zuckerberg who has been very enthusiastic from early stages of life of making new inventions day-by-day with in-depth love for technology. As an entrepreneur, he is very well known by Facebook. Mark has the spark of a great entrepreneur which can be reflected by his personality (Obschonka, 2016). The story of success can be understood well by following traits of Mark Zuckerberg, who is one of the best entrepreneurs of the world.
Skill of Mindfulness- It is essential for an Entrepreneur to have the hand in every aspect of business. On using this tactic, leaders are able to have a better place in running their company. For example, Zuckerberg who never let his instincts a negative impact on his mind. This is the main reason of his success today. This ability of Mark reflects his thinking and the way of working. He has power to ignore noise, because he is less bothered about what others are thinking about him. He has used this skill to fuel creativity, innovation and actions that have nurtured his business success very well.
Vision- It is considered as a driver for entrepreneurship. Entrepreneurs who wants way up their business and are looking forward in order to get success in the next phase of development works with the strong vision in their mind. Personality of Zuckerberg, shows that he has involved himself more in reshaping the global landscape of business in recent years. He has the thought in his mind that more than just a “one-hit wonder”. He made some addresses to the United Nations just to carry the need of expansion of internet access to developing the nations. For the accomplishment of vision he also met various leaders in order to give shape to future generations and helping to tackle global social problems (Davis and Mayer, 2016). The leadership style and encouraging the people working in technology has been perfectly embedded in the personality of Mark. He always motivates individuals to take a bigger role in reality of world issues, instead of depending on various politicians to do this on an individual's behalf.
Quality of Equanimity- It is one of the fancy ways to show his mindset of any entrepreneur. Zuckerberg never loses his temper under heavy pressure of work and it is one of the best qualities any entrepreneur can have in order to make the business a successful one. Anger can't bring success, therefore he deals very calmly even in the most difficult situations. This quality of Mark has been clearly depicted from his personality, the way he works and deals with things.
Aggressive but an encouraging leader- Successful leaders are termed as great because they possess qualities like aggressiveness. For example, Facebook is the result of innovation that entrepreneur who has been termed as aggressive but gets the outstanding success in his business. It's a fact about Mark Zuckerberg that he gets aggressive when he is working and results don’t fetch out on time. He has been clearly defined by his teammates as the leader who demands innovation with the growth in work. Mark has a habit to always push his employees forward to give more than what is required out of them. He is so emphatic and always wants the work to be done in his way. For that, he motivates his employees in such a way that they never feel over burdened by the work (Minola and Obschonka, 2016). He is so supportive towards his employees and that is the most powerful weapon he uses to encourage them to increase their efficiency.
P7 Impact of Background and experience on entrepreneurship
Entrepreneurship has been a result of avenue for-upward social mobility, innovation driver, job creation and growth. Background and experience have a great impact on the entrepreneurship in different ways. It can have the great impact on an entrepreneur's life as both the aspects can be the hurdles in the entrepreneurial life. For example, Mark Zuckerberg, one of the biggest entrepreneurs and owner of the biggest social networking site Facebook, whose success has faced some controversies (The effects of entrepreneurial personality, background and network activities on venture growth, 2016).
He was lacking the finance for introducing his invention and even it was difficult for him to attract more of the investors who can help him by financing his idea. Adding to it, one more experience he faced in his college life as few of his peers in college has accused him of stealing the code of Facebook and filed the court case against him, which is still pending. Despite being accused, he has not stopped he had continued with his idea of introducing Facebook to the world as telling himself that nothing can stop his innovation. Likewise, he was also caused by the 'media furor' when he was introduced in the newsfeed function. Many times these experiences of him became problems in growth of his idea but his intelligent mind never made it demerits from life of Mark. Instead, he turned this experiences into advantages and become more strong in life as an entrepreneur.
After facing these problems, he never let his background or false accuses pull him back. In his career, he took the steps by keeping all his experiences in mind; he never let his bad experience threaten his work and innovation. Mark opened the path of success for himself as an entrepreneur. He has the skills of a good entrepreneur and succeeded by overcoming these failures as a successful entrepreneur (Miralles and Riverola, 2016.).
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The above study included traits of a successful entrepreneur and skills applied to run a start up or ongoing business efficiently. Often innovation is required to be successful in sustainable business practices. It is very important for an entrepreneur to be innovative and to do to become a market leader that creates value for society as well.
Secondly, it includes social merits which economy of UK is getting from small business and start-ups. The report summarises with dominant role played by entrepreneurial motivation in psychological process if entrepreneurship. A good entrepreneur as taken the example above can overcome the pressure and difficulties faced in life and continue to tolerate the series of 'uncertainties' from their perspective.
Students also like to read: Understanding of Different Kinds of Business Organization
Books and Journals
Barringer, B.R., 2015.Entrepreneurship: Successfully launching new ventures. Pearson Education India.
Blackburn, R. A., Hart, M. and Wainwright, T., 2013. Small business performance: business, strategy and owner-manager characteristics. Journal of small business and enterprise development. 20(1). pp.8-27.
Burns, P. and et. al., 2016. Small business and entrepreneurship. Macmillan International Higher Education.
Burns, P., 2016.Entrepreneurship and small business. Palgrave Macmillan Limited.
Davis, et.al., 2016. Developing a new measure of entrepreneurial mindset: Reliability, validity, and implications for practitioners.Consulting Psychology Journal: Practice and Research. 68(1). pp.21.
DeNisi, A. S., 2015. Some further thoughts on the entrepreneurial personality.Entrepreneurship Theory and Practice.39(5). pp.997-1003.
Gehman, et.al., 2017. Finding theory–method fit: A comparison of three qualitative approaches to theory building.Journal of Management Inquiry. pp.1056492617706029.
Minola, et.al., 2016. Age, culture, and self-employment motivation.Small Business Economics. 46(2). pp.187-213.
Miralles, et.al., 2016. Evaluating the impact of prior experience in entrepreneurial intention.International Entrepreneurship and Management Journal. 12(3). pp.791-813.
Obschonka, M., 2016. Adolescent pathways to entrepreneurship.Child Development Perspectives.10(3).pp.196-201.
Ramdani, B., and et. al., 2013. SMEs' adoption of enterprise applications: A technology-organisation-environment model. Journal of Small Business and Enterprise Development. 20(4). pp.735-753.
Sahut, J. M. and Peris-Ortiz, M., 2014. Small business, innovation, and entrepreneurship. Small Business Economics. 42(4). pp.663-668.
Storey, D., 2017. Six steps to heaven: Evaluating the impact of public policies to support small businesses in developed economies. The Blackwell handbook of entrepreneurship. pp.176-193.
Storey, D.J., 2016.Understanding the small business sector. Routledge.