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Entrepreneurship and Small Business Management in UK
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Task 1 Report of small and micro businesses in UK
Micro and small businesses make up 99.3% of the UK economy. Micro businesses are
classified as business with a single owner and between 0-9 employees, and a turnover of less
than £632,000. Small businesses are enterprises with 10-50 employees, with an annual turnover
of £2-10 million (White, 2016).
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UK: By 2016, UK had 1,068,815 micro business, employing 4,010,000, and with a
combined turnover of £435,624 million. By 2016, the number of small businesses in UK was
5,349,930, with a combined turnover of £1,215,873 million, employing 12,428,000. These
enterprises are considered as the engines of the UK economy and provide services such as
catering, restaurant, hospitality, cleaning, laundry, garage and car repair, small retail, florists,
insurance and stock advisory services, 3D printing, hi-tech, IT, etc. For 2015-2016, a 3% growth
was seen in the number micro and small businesses in UK (White, 2016).
London, Manchester, Edinburgh: In 2015-16, 295,325 new business or start-ups opened
in London, contributing £65,857 million. Manchester had 3,290 contributing £723.8 million and
Edinburgh had 6,635 start-ups during 2015-16, contributing £1,479 million (StartUp Britain,
2017).
North East, West Midlands, South East: During 2015-16, the North East region saw
15,380 new venture start operations, contributing £3,383 million. West Midlands, with
Birmingham as the hub, saw 29,753 firms starting operations, contributing 6,634 million. South
East regions saw the emergence of 90,000 start-ups, contributing £19,800 million (Rhodes,
2016).
Germany and China: In 2015-16, Germany saw the growth of 1,842,862 micro
enterprises and 33,531 small businesses, contributing 514.3 billion Euros. During 2015-16, more
than 4 million start-ups were launched in China, contributing more than $1 trillion to the
economy (European Commission, 2017; Custer, 2016).
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USA: During 2015-16, number of start-ups in USA was comparatively low and stood at
452,835, contributing $45.2 billion (Long, 2016).
2. Importance of small businesses and start-ups: Small businesses and start-ups play a
very important role in supporting the economy. The provide entrepreneurs opportunities to
launch their businesses and some of the small firms later grow into big firms. They generate jobs
and provide a livelihood for a large number of people. Small businesses also infuse liquidity into
the market since they transact business, take loans, pay wages, pay taxes, hire property, buy
goods and support other enterprises (De Wit and De Kok, 2014).
3. Evaluation of small business and difference they make to the UK economy: As
mentioned in section 1, small businesses operate in a number of sectors. Three sectors are
selected for this study.
Hospitality industry: The hospitality sector is made of caterers, small restaurants,
wineries, hotels, pubs, and other types of businesses. In 2015, the sector employed 2.9 million or
9% of the total UK workforce. The sector contributed £57 billion to the GDP or 4% of the total
UK GDP (Oxford Economics, 2015).
Construction: During 2015-16, micro and small business in the construction sector
employed 16.1 million and about 975,000 firms operate in this sector. These firms contributed
£99.6 billion or 7% to the UK GDP (White, 2016).
Manufacturing: These are firms operating in segments such as machine shops, plastics,
hi-tech, hardware, and others. In 2015-16, there were 266,000 firms, employing 2.7 million. The
total contribution was £210 billion or 15% of the GDP (White, 2016).
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Task 3: Case Study: Hilary Andrews and Mankind
The case study, of Hillary and Andres (Burns 2011) is analysed in this section.
1. Determine and analyse the characteristic traits and skills of a successful entrepreneur
that differentiates them from other business managers. Illustrate your answer with examples from
the case study.
Answer:
Burns (2011) speaks of a number of characteristics of entrepreneurs, which differentiate
them from business manager. The three most important are: need for achievement, locus of
control, and risk taking propensity. There is also the issue of born and made entrepreneur,
indicating that the entrepreneurial spirit is inherited to some extent. Need for achievement is a
personality characteristic and trait and high achievement motivation is a key entrepreneurial
behaviour. This characteristic is a learned and stable trait, where a person derives satisfaction by
having an own business and aims for high excellence. This characteristic can evolve, improve, or
subside with time. Locus of control is the perception of internal control and focus and the desire
to have power, discretion, which allows them to be innovative. With internal locus, the
entrepreneur feels that the future can be controlled by own efforts. Risk taking is an essential
trait and entrepreneurs often take up new and untested ventures, based on their belief and
conviction (Gupta and Muita, 2013).
A review of the case study indicates that Hillary has strong and positive relations to these
traits. She left college to take up a beautician course and started her salon. She got bored, left and
became a teacher, then took up work selling beauty products. The stint helped in developing an
idea of selling beauty products for men. This was a risk and banks refused to lend her funds, and
she invested her own funds, borrowed, brought in a partner, and made a success of the enterprise.
2. Assess and analyse how aspects of the entrepreneurial personality reflect
entrepreneurial motivation and mindset? Was this the case for Hilary with Mankind? How?
Answer:
The personality perspective suggests that entrepreneurs learn and develop as they manage
their business. The entrepreneurial spirit is a dynamic and process based behaviour, where a
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continuum of entrepreneurial spirit, belief, and behaviour drives a person. They have an ability to
change, adapt, and learn as per the situational demands.
These behavioural and personality norms are seen with Hillary and Mankind. From the
beginning, when Hillary wanted to do something different from her father who had a building
and landscaping business and her sister who operated a public relations firm. During college, she
decided that her future was to be different. Therefore, she joined a beauty salon, learnt the trade
and opened her own venture. It appears that the insecurity of self-employment was difficult, so
she took a degree in education, and using her experience in the salon, she began teaching about
beauty and holistic treatment, and then worked with a firm that sold products to the spa industry.
The entrepreneurial spirit is evident here, since she constantly learned, moved on rather than
remain in a secure job, and kept experimenting. The idea of selling beauty products for men
seemed radical, since the market for such products was not present. She realised that men were
reluctant to some to salons and started selling through mail order catalogues. When this idea
became successful, she started through online channels, gaining 99% of sales through this
channel. The discussion shows that Hillary constantly observed, learned and applied knowledge
to her business.
3. Explore and examine different arguments relating to entrepreneurial characteristics,
such has are entrepreneurs born or made? Can anyone learn to be an entrepreneur?
Answer:
Several researchers have argued about traits and characteristics of entrepreneurs. While
Burns (2011) speak of personal character traits, others speak of antecedent influences (Halim,
2011), situational factors (Fine, 2012), and culture of the society (Zhang and Bruning, 2011).
The assessment is that all these factors combine and need to have a positive relation and
encourage the entrepreneur. These characteristic compliment and support each other. While a
person may have important traits such as risk taking, control seeking, achievement orientation,
the situational factors must be positive. This means that the market forces and the economy
should not be depressed, and that people should be willing to spend money, else entrepreneurs
will fail. Culture of the society is helpful, and a culture that encourages new business and allows
risk taking, helps entrepreneurs to grow.
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Though some amount of entrepreneurial spirit and motivation is inherited, one cannot say
that all new business owners come from business families. A person can learn to be an
entrepreneur, provided she has the motivation, drive, need for achievement, and sees new
businesses by first generation owners succeeding. Business management courses teach about
funding, idea generation marketing, etc. However, the spark must come from the inside (Burns,
2011).
4. Examine, using relevant examples from the case study, how background and
experience can hinder or foster entrepreneurship.
Answer:
In the case study (Burns, 2011), background and experience appears to have helped
Hillary in her search to be an entrepreneur. Her father and sister have their businesses, she
dropped out of college to join a beauty salon and then started her own salon, gaining experience.
Perhaps the limited scope of the salon bored her and she joined a beauty products firm as an
employee, gaining insights into the business. She found an idea of selling men’s beauty products,
and started her venture Mankind. Her experience of distribution helped her, and exposure to the
internet, further helped to sell products through the website. The case shows that her background
and experience helped her to succeed.
5. Analyse the link between entrepreneurial characteristics and the influence of personal
background and experience to specific successful entrepreneurs. Critically evaluate how the
background and experience influences entrepreneurs, both positively and negatively. Illustrate
your answer by comparing and contrasting examples that you have researched independently
from the case study.
Answer:
Halim (2011), Fine (2012), and Gupta and Muita (2013) speak of causal non-exclusive
links between entrepreneurial characteristics, personal background and experience, and
successful entrepreneurs. Their research indicates that these factors have a positive relation and
influence on a successful enterprise. However, they report that these characteristics and personal
background do not always lead to success. Many factors can hinder growth and success. They
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indicate that characteristics, experience and motivation to start a business are positively related,
while there a weak relation exists between background and success. In other words, a person
from a business family is more likely to start a venture, while a person with motivation and
experience has equal probability of starting a venture. Success or failure depends on business
idea, market conditions, competition, resources, etc.
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References
Burn, P. D. (2011) Entrepreneurship and Small Business. London: Palgrave Macmillan. pp. 5562.
Custer, C. (2016) China went absolutely startup crazy in 2015. [Online] Tech In Asia. Available
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2017].
De Wit, G. and De Kok, J. (2014) Do small businesses create more jobs? New evidence for
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Fine, M. (2012) Psychological Predictors of Successful Entrepreneurship in China: An Empirical
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Long, H. (2016) Where are all the startups? U.S. entrepreneurship near 40-year low [Online]
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Oxford Economics. (2015) Economic contribution of the UK hospitality industry. [Online]
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