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LO1 Exploring and Illustrating the Range of Entrepreneurial Venture
Entrepreneurship is a process that involves creating a new enterprise and taking on the involved risks to make profits (Down, 2010).
Entrepreneurial activity refers to enterprising human action, which aims to pursue value generation by creating and expanding economic activities by identifying and exploiting new processes, products, or markets.
Furthermore, an enterprise refers to an undertaking or a project that is risky, difficult, or complicated.
In the following paper we will underline some of the similarities and differences between entrepreneurial ventures. Moreover, will highlight their significance for the economy of a region/country. Finally through the given 2 case studies we will examine the personal characteristics of the entrepreneur.
The process differentiates growth from lifestyle businesses. The intention of a lifestyle business is not only to make money for the owner but to make the owner money that is enough to keep them comfortable with a good balance of work and life and give them freedom while focusing on work that bring them joy. The majority of lifestyle businesses begin based on the owner’s passion or hobby, representing the owner’s values. Founders of growth-minded businesses work hard to ensure business growth, most often to a point where it attracts funding. Growth entrepreneurs focus on growth, whereas Lifestyle entrepreneurs focus on the profitability of the business for personal income with growth goals in mind. Growth entrepreneurs are always making efforts to raise money, while lifestyle entrepreneurs are against raising money from outside. As long as they maintain this style, lifestyle entrepreneurs are comfortable, while growth entrepreneurs are always looking for faster ways of growth and reinvention of their business.
The entrepreneurs are also grouped by their characteristics.
Characteristics and Roles of Small, Medium Sized, and Micro Organisations
Small enterprises and medium-sized enterprises refer to non-subsidiary and independent firms employing a less than a given employee number. A micro business in the UK refers to a business whose number of employees is lower than ten. Microbusinesses has been a popular growth area in the UK businesses due to an increase in the number of people who are becoming self-employed, especially in the most recent years (Cumming and Johan,2010).
A small business entrepreneur runs a business with less capital, labour, and machine requirement. Such businesses are having significance for a certain area. Local clinics, Small shops, Barber shops, Butchers, Accountants are typical examples of such entrepreneurs. Small businesses have a competitive advantage because they are flexible, can provide high-quality service, their overheads are low, and they are more efficient with their production. However, they are also faced with difficulties as they don’t enjoy the economies of scale, lack proper management skills, and face difficulties in marketing and selling. Moreover they are very limited to the number of orders that they can proceed, thus limited in the levels of profit that they can generate.
Medium and Large businesses ventures involve between fifty to two hundred and fifty employees, and their turnover annually is above 10 million pounds but do not exceed 50 million pounds. An entrepreneur who runs such businesses are visioners who take advantage of advanced technologies and use economy of scale to lower their production cost for single item. Example of medium-sized and Large entrepreneurial ventures are Made.com, Pure Gym, Clarks, Verdant Leisure and Captify (Burns, 2016).
Social entrepreneurship refers to recognising existing social problems and working towards the achievement of a social change through the employment of principles of entrepreneurship, operations, and processes. It involves researching to define a specific social problem followed by the organisation, creation, and management of a social venture to achieve the change desired. A social entrepreneur can be defined as a person who confronts a social problem that is pressing with a path-breaking or innovative solution. Profit-making is secondary to social entrepreneurs due to their determination and passion in implementing their business idea. They are highly motivated as they aim at changing things. An example of a social entrepreneur is Florence Nightingale, who was responsible for laying a foundation for the first nursing school and improving hospital conditions. Sir Richard Bronson is a very influential person who can be considered as such entrepreneur. Sir Alan Sugar also is entrepreneur who educates young entrepreneurs by its show “The Apprentice”.
Growth of Social Enterprises
Social enterprises Advantages
Nowadays raising capital is much easier as the UK government has created huge schemes and incentives to support social enterprise. It is easy to market and promote due to the solution provided to a social problem, thus easily attracting media and people’s attention. Through the Start-up Loan programs created by the government the new entrepreneurs are having instant access to a financial resource if they have good enough idea supported with solid Business Plan and realistic projections.
This represents a type of venture that is nonprofit, where there is an engagement between the entrepreneur and a societies section, including public and private organisations, to realise a specific social innovation. Hybrid nonprofit ventures are equally nonprofit but involve cost recovery by the sale of goods and services. Entrepreneurs seek funding sources in addition to public sectors for sustaining the organisations activities. Social business ventures are profit-making entities providing ecological or social products and services. The goal may be to make a profit, but the organisations main objective is not to accumulate wealth. They aim to grow a venture to reach a large number of people and positively impact various sectors of society.
Scalable start-up entrepreneurship
Other type of entrepreneurship is scalable entrepreneurs whose ideas are making major breakthrough in certain business industries or also create new industries through their innovative approach.
Nowadays utilizing the advancement of the technologies allowing such entrepreneurs to be creative and build corporations that have significant importance for the society and economic. Jeff Bezos who Is founder of Amazon and Elon Musk (Tesla & Space X) are bright examples of such entrepreneurs.
Similarities and Differences Between Entrepreneurial Ventures
Different business ventures employ different number of employees depending on their size and the scale of operations. The number of employees in small business entrepreneurship is below fifty. On the other hand, the structure and the size of the company determines the number of employees in scalable entrepreneurship. Large company entrepreneurship can have more than one thousand employees. There is a high similarity between scalable entrepreneurship and social entrepreneurship regarding to the number of employees which depend on the structure and size of the organisation. Comparing the structure of businesses, large company entrepreneurship has a structure that is concrete whereas small business entrepreneurship lacks a concrete structure as they can be operated as partnerships or by sole proprietors. The structure that is normally used by large company entrepreneurships is complex and most times they are either public limited or private where on the other hand trustee-based organisations are used by social entrepreneurship. Also, differences exist in terms of the level of risk to a business with small businesses being exposed to lower risk. The level of risk to small business entrepreneurship is comparably similar to the risk faced by social entrepreneurship which is in contrast to the risk faced by scalable startup entrepreneurship which is relatively high. On the other hand, the risk faced by large company entrepreneurship is medium. The objectives and goals of different entrepreneurial ventures are also different. Large company entrepreneurships’ objectives are more structured as compared to small business entrepreneurship and social entrepreneurship. They are more focused on profitability and growth, and their focus is more on development of new products and investing more in innovation. There is also a similarity between small business enterprises and scalable start-up enterprises as the aim of both the ventures is the constant provision of innovative products to increase their profitability and become more attractive to investors. Also, there is a difference between social entrepreneurship and large company entrepreneurship as social entrepreneurship main aim is to make the world better by providing quality services whereas large company entrepreneurship is focused on developing new products and strategies to attract more customers thus increase its revenue and profitability (Dorado, 2006).
LO2 Assessing the Economic Impact of Small Businesses
Creativity and Innovation
Creativity refers to the act or ability to conceive an unusual or original idea, whereas innovation refers to the implementation of a new idea. Creativity and innovation are essential for the success of an entrepreneur. Moreover, they influence economically the region of the entrepreneurs by creating new products and services
Major sources of Entrepreneurial and Business Ideas Generation
Business ideas may be generated from various sources, which include personal interests and hobbies. This is developing an idea from what a person enjoys doing in their leisure time and the activities they engage in to avoid boredom. Also, a business idea can be developed from work experience acquired in the past, whereby the skills that were learnt may be employed in starting a business. Business ideas may also be generated in the course of travel or during various forms of adventures that enable realizing various ways of doing things differently from what one is accustomed to in their place of origin. Also reading magazines, and books may inspire an entrepreneur with a new business idea. Moreover, current trends determine what is needed, thus inspiring new business ideas to meet a particular demand in the market.
Protection of Intellectual Property Rights by Businesses
Businesses have various ways in which they protect their rights to intellectual property. These include using trademarks, patents, and copyrights. A patent is used for a specific design of a product. It protects processes, inventions, and non-obvious methods and are useful. A trademark is used to protect the name of the business, and copyright alludes to protecting a document in written form. A trademark protects symbols or words used in representing a particular product to identify and distinguish the product from others in the market. Copyright does not protect ideas but protects their expression.
Small Firms Importance and Roles
The UKs economy is largely supported by the micro and small business considering that they account for about sixty percent of the jobs in the country’s private sector. Looking at the various ventures in the country, micro and small businesses are seen to be growing at the fastest rate thus further contributing to the growth of the economy and showing a promise in creating more jobs in the future. The per capita of the countries micro business is the highest in the world whereby in a thousand people there are eighty-one microbusinesses. Looking at the overall employment in the country, micro and small business create around thirty three percent of the jobs in the country (Carter and Jose Evans, 2008). They also contribute to about twenty percent of the country’s turnover which shows the significance of the level of contribution by these business to the country’s economy. Thus, they boost the income generated in the country mainly through exporting their products and services thus increasing the amount of foreign exchange raised. As shown by the graph below, there is a significant contribution of micro and small businesses in terms of the number of these businesses in the UK, as well as their turnover and the number of jobs that they provide to the UKs citizens emphasizing on their importance to the country’s economy.
Graph Showing the Significance of Micro and Small businesses to the UKs Economy
Importance of Business Start-ups and Small Business to UKs Social Economy Growth
The growth of the UKs economy in the long term is significantly dependent on the contribution made by the small businesses and start-ups in the country. The country’s citizens benefit significantly from the startups as they provide them with occupations as well as learning opportunities. Also, the startups and small businesses understand the needs of the people more thus are able to come up with innovative and new ideas that solve many existing problems in the society. Besides, the time taken by these businesses to generate income is much shorter as compared to bigger businesses as they are closer to the people and it is easy to sell their products and services. Also, in many instances there are links between different industries and startups as well as private businesses. This is significantly helpful as it helps in boosting the country’s GDP. There is also a significant connection between start-ups and CSR activities which relate to social, economic and environmental problems. Moreover, they are highly involved in the provision of necessities which include promoting health services and education to the people in the rural areas. Thus, they are important in the provision of resources that help in promoting societal and personal growth which are important to the country’s economic progress (Williams and Martinez, 2014).
Evaluation of The Differences Made to the Economy by Small Medium and Large Businesses
There is a bigger number of SMEs in the UK in comparison to the number of large enterprises. The number of employees working for large enterprises is relatively higher and they get their income with many sources inside and outside of the country. They bring in foreign currency to the country thus their contribution is more significant to the country’s economy. Large enterprises also put in huge investments in activities relating to the corporate social responsibility as compared to SMEs. However, the SMEs play a significant role in the contribution to the country’s economy by creating employment, and bringing in foreign currency through exports.
Impact of Small Businesses on Different Economy Levels (Local, Regional and National)
Small business is more significant to the local economies as they provide employment and improve the ratio of employment in the country. This helps in giving more people opportunities to work and improve the economic conditions in the country. Regionally, the customer demands are met by competing small businesses who are forced to make quality products and provide better services to stay in business and attract customers. Also, minimum skilled individuals are provided with opportunities for employment as startups are not very keen on having particular knowledge in certain business areas (Williams and Martinez, 2014). Moreover, most of these businesses expand with time and operate on the national level in different areas of the country thus generating more income and pays tax to the government which boosts the economy of the country.
Entrepreneurship International Aspects
The Impact of International Differences on Business Startup
Startups are faced with various obstacles that may be difficult to overcome as they aim at breaking into the international markets. These barriers include the costs of setting up startups in foreign countries that are high. There are also problems brought by the startups being unable to enjoy the economies of scale due to their small-scale production, thus unable to compete in the international arena. Other barriers include the regulations that governments set and the advanced technology required to venture successfully into the market. Besides, product differentiation is the challenge whereby the startups do not have enough resources to make more attractive products with unique qualities to compete with other established businesses. Startups may also respond competitively to challenges posed by the competition may fail to access distribution suppliers who are valuable for successful business operations.
LO3 Determination and Assessment of an Entrepreneurial Mindset Key Aspects
Entrepreneurial Mindset and Characteristics
Scope of entrepreneurship
One of the local entrepreneurs is Natasha Faith who started La Diosa, a local jewelry company together with Semhal Zemikael, which has so far been successful. She pursued a business career instead of a university education, at the age of 19 after travelling around the world and gaining skills to make Jewelry in Mexico. She was funded by the Princes Trust and together with her partner, started the business selling out their first collection in two weeks after launching the business in Harvey Nichols. The company’s growth has been gradual with a showroom in Hatton Garden. An example of a global entrepreneur is Richard Branson, who founded the virgin group starting from Virgin records as the first venture in Oxford shire as a record shop. He went on and established Virgin Atlantic and brought his business under Virgin groups umbrella. His businesses grew and are still growing and expanding under his leadership.
One of the UK’s social enterprises is the Resonance, which was started in 2002 and dealt with charities and social enterprises to assist them in raising capital and making significant differences in communities. The company manages investors capital in operational funds. The company has been involved in creating investment funds to deal with social impacts focusing on major issues that affect society, including poverty, homelessness, education, poverty, and wellbeing. After working in manufacturing for several years in the engineering department and being part of a political campaign that lobbied about the poverty trap in the UK, Daniel founded the company. The situations that led to the business ideas for the three companies that I have discussed were different. For Ladies, it was travel that opened up the founder’s mind to start a jewellery business. However, for Virgin Group, and Resonance personal experiences inspired their ideas that the founders went through in their jobs, the activities that they were involved in, and their personal experiences. Richard Branson missed a flight and thought about Virgin Atlantic, whereas working with political parties that lobbied for the disadvantaged groups prompted Daniel to have an idea that led to Resonance’s birth. All three companies were started by individuals who were passionate about the businesses, and we’re ready to commit their efforts and time in building the businesses; thus, they became successful. Besides, the companies have been on a gradual growth path due to the resilience, the level of determination, and the passion that the founders have shown in their quest to build successful businesses (Zappe, 2018).
Virgin Group Businesses
Shared Entrepreneurial Characteristics and Traits
One of the traits that are shared among these entrepreneurs is creativity. They all thought they could do better than what was being done in other places. Richard Branson started his business to be able to provide better services, as well as Natasha faith in her idea for better Jewelry. Also, Elizabeth Gooch founded EG solutions to offer more efficiency and improvements in operational performance, and the same case applies to Tom Mercer. He felt that he could do better in providing a healthy breakfast. Also, the entrepreneurs had a lot of passion for the businesses that they founded. In all the cases, the entrepreneurs had a great love for their businesses, and they were confident of their success. Tom Mercer’s dream to start MOMA foods, the same as was the case for Elizabeth Gooch when she founded EG solutions. The passion she had was beyond any thought of failure as she believed that she was eventually going to succeed in the business venture despite the challenges. Another trait that the managers had in common was motivation, as they were convinced that they would succeed with perseverance. Just like in the case of Richard Branson, Elizabeth Gooch, and Tom Mercer were highly motivated to run their establishments no matter the sacrifices required of them. Elizabeth had left her employment and was determined to retain the company’s control by floating it despite the challenges. Tom Mercer worked for many hours in a day and spent most of his time trying to promote the company even after facing the challenge of being thrown out of different places that he went looking for customers. The entrepreneurs all share the common trait of optimism, looking at their glass as half full rather than half empty. Both Tom Mercer and Elizabeth Gooch left their jobs which showed that they had a belief in their businesses.
Virgin Mobile Revenue Growth
The businesses faced challenges at first and even along the way, but they stuck with the business as they trusted that they would end up becoming successful businesses as per their dreams and ambitions. The founder’s business orientations were on the future, which is a critical trait in entrepreneurship. Tom was focused on moving products from stalls to Virgin Atlantic, Waitrose, and Ocado and carried out marketing campaigns on better business prospects in the future. Elizabeth also believed in the business’s future when she accepted Rodney’s advice on focusing on the software and even engaged him to be a consultant on the businesses strategic planning. The entrepreneurs experienced great success because they were flexible in the beginning of their business where they had to operate alone or with fewer staff, thus taking up various roles to keep the businesses moving. Tom Mercer took up the job of chopping fruit and blending it and worked night and days until he could get time off to further explore his ideas. To offer better training and consultancy services, Elizabeth had to work on the software that was useful in the task, which later became the main product (Nga and Shamuganathan,2010).
Background and Experiences
The experience that Elizabeth Gooch gained from working with a consultancy that helped large firms find effective ways in using the staff was critical to the running of EG consulting. The chances of her success in her consultancy business were high as she was well versed with what was involved in the business. On the other hand, Tom Mercer had no experience dealing with food, and his idea was developed only from observations that he made on people while he was working as a management consultant. However, the idea was born out of personal experience, and this would be in a position to understand what the potential customer would need.
LO4 Exploring Environments That Foster or Hinder Entrepreneurship
Assessing and Analysing Skills, Characteristic Traits, and Motivational Drivers for Successful Entrepreneurs
One of the entrepreneurial skills that the two leaders Elizabeth, and Tom, had was that they were risk-takers. Elizabeth left her job to start her business from scratch, armed with only her experience and borrowed one thousand pounds. Tom Mercer followed his dream to start MOMA foods after observing commuters and having a conversation with friends. They both dived into a future that was not certain, and they readily embraced the business challenges that they faced without looking back. Also, both leaders could listen to their instincts and trusting them. Although Tom Mercer went through various challenges to ensure it succeeded. Elizabeth and Tom were both visionary leaders who could see their businesses beyond their current situations. Elizabeth developed software that would end up being the future of the business. Tom Mercer was keen on investing in highly talented team members, ensured great listing in retails, held big marketing campaigns in the city, and ensured that redesigns were affected, focusing on future business prospects. Besides, both entrepreneurs were highly ambitious in ensuring the success of their businesses. They were both determined to invest in ventures that were disruptive and which were unique in their respective businesses. Tom Mercer came up with his idea based on his perception of what a healthy breakfast should be and people liked his idea. He didn’t have any experience dealing with food but after discussions with his friends on a business idea that had just crossed his mind, he was ready to enter into the market, and take over the food business. Elizabeth Gooch developed software when she was faced with the challenge of collecting information that allowed real-time data collection, which enabled monitoring of all company departments’ product process. She was determined to be a leader in the consultation business, and was ready to use innovation to the business advantage. Elizabeth and Tom had great leadership skills as they were able to inspire the people behind them into believing in their ideas and led them towards creating successful organisations despite the challenges that would have made them stop believing in the ideas (Gerlach, 2003).
Conclusions Drawn from Comparing and Contrasting the Two Entrepreneurs
Both Tom Mercer and Elizabeth Gooch left their jobs to pursue their passion in business So in both cases risks had to be taken. Tom left his job as a management consultant, while Elizabeth left her job in consultancy. Elizabeth started a consultancy business, a field in which she was experienced due to her former employment rolls. On the other hand, Tom ventured into a business that was influenced by observation and his personal experience in the time he took in preparing a healthy breakfast. They both started small but grew within a short period of time due to their ambition and commitments to their business. The two entrepreneurs went through challenging moments in their business, but they came up with creative ways and solutions that helped them overcome the challenges and later helped them grow even more. The challenge of collecting information due to the complexities involved made Elizabeth come up with her own software, which helped overcome the challenge and helped increase the company’s turnover. The recession brought in a challenge for MOMA foods in 2008, as the commuters spending was significantly reduced, affecting the company’s sales. Thus, selling to the commuters would no longer be a viable option for the business to continue growing amid the challenging economic conditions that were brought about by the recession. However, the entrepreneur confronted this challenge by changing focus to retailers who included Ocado, Virgin Atlantic, and Waitrose. This bore fruits for the company as it grew to be top in the UK, having its products in coffee shops, trains, and supermarkets in the entire country. The two entrepreneurs have a firm belief that they have a wrong way to go in terms of growth, as they have been eying various available opportunities for growth, both locally and internationally. Tom already has plans to expand the number of stalls and move the company’s products beyond the London borders by using Ocado, a recognised internet retailer in the UK. Elizabeth has plans of venturing beyond the UK market to achieve more business opportunities and grow the business. Thus, both entrepreneurs are determined to make a mark in their respective business areas by becoming trendsetters and using every available opportunity to achieve growth.
Burns, P., (2016). Entrepreneurship and small business. Palgrave Macmillan Limited.
Burns, P (2011). Entrepreneurship and Small Business. 3rd Ed. Basingstoke:Palgrave MacMillan.
Carter, S. and Jones-Evans, D. eds. (2006). Enterprise and small business: Principles, practice and policy. Pearson Education.
Cumming, D. and Johan, S., 2010. Venture capital investment duration. Journal of Small Business Management, 48(2), pp.228-257.
Dorado, S., 2006. Social entrepreneurial ventures: different values so different process of creation, no?. Journal of developmental entrepreneurship, 11(04), pp.319-343.
Down, S. (2010). Enterprise, entrepreneurship and small business. Sage.
Gerlach, A., 2003. Sustainable entrepreneurship and innovation. Corporate Social Responsibility and Environmental Management, pp.29-30.
Nga, J.K.H. and Shamuganathan, G., 2010. The influence of personality traits and demographic factors on social entrepreneurship startup intentions. Journal of business ethics, 95(2), pp.259-282.
Stuart, W. and Griffiths, A. (2005). Economics for Business and Management. Harlow: Pearson.
Williams, C.C. and Martinez, A., 2014. Do small business start-ups test-trade in the informal economy? Evidence from a UK survey. International Journal of Entrepreneurship and Small Business, 22(1), pp.1-16.
Zappe, S.E., 2018. Avoiding Construct Confusion: An Attribute-Focused Approach to Assessing Entrepreneurial Mindset. Advances in Engineering Education, 7(1), p.n1.
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