Entrepreneurship and Small Business Management

P1 Examine different types of entrepreneurial ventures and explain how they relate to the typology of entrepreneurship

Laukkanen and Tornikoski (2018) have determined the process of altering lifestyles associated with any entrepreneurial venture to be reflective of Lifestyle Entrepreneurship. This process transcends the conventional profit-earning objectives and also highlights the passion of the entrepreneur with greater focus concentrated on change institution in the lifestyles of targeted customers. Two examples of such a form of entrepreneurship based businesses are EG Solutions PLC with Elizabeth Gooch as the CEO and the MOMA Foods with Tom Mercer as the proprietor.

According to Schaper (2016), Social Entrepreneurship could be identified to be an approach for setting up of start-up organizations through the encouragement of new entrepreneurs. This process involves the development, implementation and funding of different business solutions which tend additionally to address different social and cultural issues. The concept could be applied to organizations which could vary according to their sizes, business objectives and organizational structure and vision. One prime example could be the HSBC Bank.

Social Entrepreneurship characteristics

1: Investors are always sought after since investment capital is always necessary for the expansion of the business.

2: Social Entrepreneurs formulate multiple exit strategies to suit specific conditionality.

3: The locations of operations for such entrepreneurs are mostly limited in number.

4: This form of entrepreneurship is oriented towards profit earning to ward off failure related effects.

5: The working hour durations are mostly flexible.

6: Extensive utilization of administrative regulations could be observed to ensure an effective control mechanism within the organization by the entrepreneurs.

Lifestyle Entrepreneurship Characteristics

1: Investors are not actively sought after since the growth finance capital is derived from the exchequer of the entrepreneurs themselves.

2: Exit plans are not actively formulated since the entire effort of this form of entrepreneurs remains concentrated on the undertaken business discipline, regardless of the situations.

3: Locations of operations are considerably greater in number than social entrepreneurship.

4: Profit earning is only a secondary objective and instituting definite lifestyle changes is the primary objective.

5: Flexibility of working hours is not sought after and balancing work and life balance are provided greater significance.

6: Rigid and control based organizational structures are not found in such companies formed by Lifestyle Entrepreneurs. The structures are mostly fluid in nature.

Explore the similarities and differences between entrepreneurial ventures

According to Scarborough (2016), any Entrepreneur has to invent a novel business idea and utilize limited resources and manage the emergent risks regarding the initiation of a completely new form of business discipline. The orientation is towards the development of a completely new service or product. The objectives of entrepreneurial ventures are the achievement of the highest returns while having to handle greater uncertainty. Expenditure of development capital, time and other resources is incumbent on the entrepreneur in this context.

Burns (2016) has observed that extremely proactive, hyperactive and self-motivated entrepreneurs operating within large organizations are to be known as Intrapreneurs. The characteristics are similar to Entrepreneurs and the orientation is towards the promotion of innovation in marketing, service and product development. According to Linton and Solomon (2017), the focus of Intrapreneurs remains on the tackling of particular issues within the discipline of concern such as productivity increment or skill development. The emphasis is put on the driving of changes and processes through which innovative development of existing services and products could be materialized. The security buffer of organizational resources could enable an Intrapreneurto to operate from within his zone of comfort without having to be apprehensive about the probable detrimental effects arising from the prospects of business failure. Here lies the fundamental difference between an Intrapreneur and an Entrepreneur.

Venkataraman (2019) has noted that the alternative to providing stupendous taxation rebates and other forms of monetary incentives and financial inducements to foster large cluster of companies within the UK economy, is the focusing on the nurturing of the small and micro corporate entities. The most profound benefit of this could be outlined as the development of the greatest number of employment opportunities by the small and micro organizations. This is the primary argument in favor of small, micro and medium businesses which could be juxtaposed with the effects of having to set up and encourage the large industrial organizations. According to Volery and Mazzarol (2015), the available evidence outlines the fact that the substantial majority of the newly formulated corporate and ancillary employment opportunities get generated by the SMEs on the average per annum basis. However, Trehan, Higgins and Jones (2018) have presented a counter-argument with highlighting the fact that expansion of any large and existing organizational structure with at least 1000 employees, could result in the impact of net employment generation for up to 2000 personnel. This is a definitive statement in favor of the notion that the prospects are better when it comes to internal growth of the businesses rather than setting up large or small firms. However, in the context of the UK economy, Dunne et al (2016) have observed that the governmental financial burden in providing incentive packages for job creation through larger firms is always significantly greater than encouraging the growth of SMEs. One significant perspective is that larger firms tend to undervalue and underestimate the substantial costs associated with the recruitment process at the early stages. Yan and Yan (2016) have specified this as the cost of creating each employment opportunity for an enterprise which could be formulating employment positions for 1000 new personnel at the UK and which could have been offered an incentive package of £20 million, is that of £20000. However, due to a variety of reasons, if the net impact of the job creation process could only result in the generation of 285 posts, the true cost of the average employment opportunity could become, in excess to £ 70000, with inflationary trends and associated costs having been factored in at the UK.

Interpret and assess relevant data and statistics to illustrate how micro and small businesses impact on the economy

According to Cowling et al (2015), the number of micro and small business organizations operating within the economy of the United Kingdom during the financial year of 2016-17 had been 5.4 million. This indicated the majority (99%) of the gross total of all of the businesses within the UK. Each of the small businesses within this extensive amount of organizations had fewer than 250 employees. Furthermore, according to Martin et al (2016), there had been up to 5.3 million micro-business operators within the entire micro and small organization sector within the UK during the financial year of 2016-17. Each of these micro-business organizations employs less than or equal to 9 employees. However, Cowling, Liu and Zhang (2016)have observed that the extensive numerical amount of micro and small business organizations currently operating within the UK has only been able to account for 32% of the gross total of the current employment scenario. On the other hand, Shehata, Salhin and El-Helaly (2017)have outlined that the micro and small organizations in the UK contribute to the minuscule percentage of 19% of the gross turnover per annum. Furthermore, in the UK employment sector, up to 60% of the private organizational employment is provided by the small and micro business entities and this amounts to 15.7 million employees. Rizos et al (2016)have stated that the annual combined turnover of all of the current small and micro enterprises has been 47% of the gross turnover of the UK based private sector production which amounted to £1.8 trillion in actual monetary value. According to Baldock and North (2015), from the international perspective, the employment extent provided by the SMEs at the UK could be compared favourably with the approximate 60% to 80% of the jobs at the United States of America which are provided by the SMEs of that specific country. Currently, according to the research of Storey (2016), there are 5.5 million private-sector operated businesses within the UK economy and this number is experiencing consistent growth per annum. For example, the growth in numbers of the SMEs in between the financial years of 2015-16 and 2016-17 had been that of 97000. Grimm and Paffhausen (2015) have specified the consistent increment in the opportunities of accessing available loans and grants for the business start-ups within the UK. Such loans could be categorized as government-backed business loans which have contributed significantly to the positive expansion of start-up organizations.

Explain the importance of small businesses and business start-ups to the growth of the social economy

According to Abisuga-Oyekunle and Fillis (2017), the positive growth of innovation could be observed to be a direct outcome for start-up businesses and small and micro organizations. Some credible examples of these could be outlined as the operations of the digital or innovation-based initiatives such as Airbnb, Uber and Funding Circle who had startled the respective industrial sectors with their advent. Such start-ups, primarily based on innovations, also have contributed to the growth of the social economy in the UK through the expansion of the competitive scenario within the existing market conditions. Furthermore, Kersten et al(2017) have stated that the long term implications of the global financial crisis of 2008 also had contributed in the multiplicity of development of financial sector based start-ups at the UK which had been founded primarily on the financial technology-based innovations. One prime example of this has been FinTech since the general populace of the UK had become distrustful of the policies of incumbent banking organizations during the period of such a crisis and the ensuing aftermath. According to Martin et al (2016), the loans and financial grants which are provided by the successive UK governments within the SME promotional framework, have attested to the renewed activity of the UK governments to encourage such financial innovations such as the FinTech. This could be comprehended to be the encouragement of growth in the social and domestic industry of finance and this has culminated in the investments in the financial start-up based industry at the UK to multiply manifolds. Currently, the UK is the most significant hub of FinTech operations despite China being the leading element in terms of investments into this sector worldwide.

Evaluate the differences small, medium and large businesses make to the economy, applying relevant data and statistics

According to Rizos et al (2016),in most of the cases, the reception of greater measure of financial and other returns by the national, regional and local communities and administrative bodies in terms of investment in the small and micro organizational establishment in the forms of loans and grants could outweigh the expenditure incurred in such processes. This could be a counter-argument to the traditional view that the formulation of a greater conducive environment of business for the existing businesses. Furthermore, the expansion of large and existing companies within the UK could as well prove to be costly in terms of the direct expenditures and regarding the opportunities which could be lost, relating to the development of diversified avenues of the economy. Storey (2016)has observed that this leads to the endangering of the landscape of economic competition which is not conducive to the overall balanced growth prospects of the economy. According to Grimm and Paffhausen (2015), Britain ranks in at the fourth place in terms of being the most micro and small business density in the current global perspective. There are 81 SMEs which are working within the UK for every 1000 citizens of the country.

critically examine how small businesses have an impact on different levels of the economy (local, regional, national) and in an international context

As per the research of Kersten et al (2017), the Global Small and Micro Business Impact Report has highlighted that the UK has been ranking consistently at the pinnacle of entrepreneurship throughout the years. This has been the outcome of the greater contribution by the micro and small businesses into the local, regional and national level of the UK economy in terms of the employment generation and terms of Gross Value Added (GVA) to the overall economy throughout the years following the 2008 global recession. In terms of the GVA, the SMEs within the UK compose up to 20.4% of the national economy which is comparable to the global average of economy composition in terms of 20.5%. According to Abisuga-Oyekunle and Fillis (2017), in this manner, the average of Norway in terms of SMEs formulating the GVA percentage of the national economy during the financial year of 2016-17 had been 38.1%. This is the highest global average in terms of earning of GVA. Furthermore, the micro-business sector alone within the UK employs 17.3% of the existing workforce personnel and this has been only about half of the 32.3% of the global average measure of employment. On the other hand, the highest average in terms of employment of the workforce in the micro-business sector belongs to that of Australia on the global scenario with 44.5% of the Australian workforce personnel being employed by this particular sector. According to Cowling, Liu, and Zhang (2016), the second position in the world belongs to that of Spain with 41.1% of the existing Spanish workforce personnel being employed by the micro-business sector.

Determine the characteristic traits and skills of successful entrepreneurs that differentiate them from other business managers

According to Yitshaki and Kropp (2016), Elizabeth Gooch has the necessary qualities of leadership and charisma to initiate her business out of her own accord. She possesses both the skills of being an entrepreneur and a leader. Apart from these, she is an innovative personality and this has made her realize the current demand of the consultancy industry and the firm set up by her is an attempt to utilize such opportunities and existing demands. Roach and Sauermann (2015) have stated that she could be risk-averse, however, her strong survival skills have enabled her to recover from the losses which she suffered in two consecutive financial years and this has allowed her to develop the unique capability of transitioning from consultancy to software development disciplines. Thus, Elizabeth has transcended the qualities of a manager and has demonstrated the skills of a visionary.

Assess how aspects of the entrepreneurial personality reflect entrepreneurial motivation and mindset

On the other hand, the Tom Mercer had also encountered a large number of problems during the initiation of his business since he had to distribute his product samples to generate interest in the potential customers with the hope of reaping the benefit in the future. This outlines Tom to be tolerant of risk and such qualities are not to be found in conventional managerial personnel. Gruber and MacMillan (2017) have suggested that the factor of optimism is at the core of the process of entrepreneurship which encompasses all of the other factors in line with the general functionalities. The entrepreneurial mind-set always provides preference to the stimulation of persistent commitment toward undertaking of hitherto untried business ventures and creation of value thereafter.

Explore and examine different lines of argument relating to entrepreneurial characteristics

According to Würmseher (2017),the entrepreneurial personality-based characteristics are mostly reflected through the factors of extreme drive for achievement, functional orientation towards taking the necessary business steps, concentration on the internal control locus, the tolerance towards uncertainty, risk and ambiguity of market information, opportunism, commitment towards the fundamental business idea, taking of initiatives, creativity and innovation and finally, through the factor of optimism.

According to Rauch and Hulsink (2015), the motivational aspects reflected through the outlook of Elizabeth could be identified to be self-reliance and confidence in the judgment of herself regarding the determination of the course of actions for her entrepreneurial venture. The departure from the HSBC bank where she had joined at 18 years of age and where she had worked for 12 years required her to be independent and single-minded in her approach to initiate the business she had thought to launch. Furthermore, Elizabeth proved herself to be hardworking since she only had to work for 12 months for the formulation of her business venture named EG Solutions PLC which was previously known as the EG Consultancy. Apart from this, the psychological traits of Elizabeth had proven to be reflective of perseverance and visionary capabilities. This could be outlined, according to De Jong et al (2015) through the development of the software suite named Operational Intelligence which was oriented towards the collection of complicated information and data and analysis of the same to enable the company to deliver effective financial services advisories to the clientele. The hiring of Rodney Baker-Bates, the former CEO of the Prudential Financial Services, as the Chairman of the EG Solutions, to enable the company to get engaged in the strategic planning of transitioning from the consultancy services to software development services also attested to the farsightedness and perseverance of Elizabeth Gooch.

According to Afsar et al (2017), it would have been difficult for Elizabeth to undertake her entrepreneurial venture and conducting the perceived business model without the existing technical knowledge of hers. Through the instinctive perception of an entrepreneur who could understand the scheme of things, Elizabeth, after meeting Rodney, thought it opportune to transmute from the consultancy to the software development services. Similarly, Kautonen, van Gelderen and Fink(2015) have observed that the clarity of vision had been the most significant background aspect for Tom Mercer which had been generated through his years of work with Bain and Co. He managed to find a preferable location for his business outside of the railway station through consistent and dogged determination and perseverance which he had learnt during his work as the management consultant.

The CEO of MOMA foods, Tom Mercer, had been attempting to develop effective business ideas while he was working at the Bain and Co as the management consultant at London. The development of the start-up venture business idea and selling the same attested to the visionary and innovative nature of Tom. His hardworking nature could be discerned from the tribulations which he encountered while selling his product mix at the Waterloo East station and he had to purchase filing cabinets and old vans utilized and then discarded by the British Telecoms and he even had to utilize the location of railway arches prior to accumulation of enough capital for the MOMA foods to commence sells to the London based commuters.

Furthermore, the financial and resource-based backgrounds of both the entrepreneurs have proven to be hindrances in the form of Elizabeth having to borrow £ 1000 and Tom having to consistently be hindered to find a suitable location for setting up his breakfast delivery services. However, both of the entrepreneurs had enough experience from their working lives which permitted them to persevere on and develop solutions to their hindrances.

Wales(2016) has observed that such activities outline the motivational aspects and perseverance as well as the risk-taking ability of Tom. Another aspect of the entrepreneurial mentality which could be delineated from the case study related to Tom is the fact that he has been a person with much forward-thinking skills through which the survival of his company could be ensured. Teague and Gartner (2017) have drawn attention to the fact that Tom had planned the strategy of the relocation of his business to the super shops during the recession. It had further added to the persuasive nature of Tom as an entrepreneur against that of a manager.

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