Small and Medium Sized Enterprise in the United Kingdom - Research Paper Example

Executive Summary The general context which is used for businesses is based on the large businesses and the contribution to the economy at a global level. However, there are also specific relationships to the macro economy and the link to the development of small and medium enterprises. The effects which entrepreneurs have on the macro economy create a large impact and shock. This is based on the dynamics of entrepreneurial endeavours and the responses which easily can be complied within the economy. This research study examines the entrepreneurial behaviours within the UK and how this develops specific needs and attributes. The study will specifically look at the current status of those in the UK. It will further this with the understanding of how entrepreneurs contribute to the regions of the UK and what this implies at an international level. Future suggestions for entrepreneurs and meeting the specialized dynamics that contribute to the economy will then be developed. This is specific to the understanding that entrepreneurs to medium enterprises have a large impact on the economy because of the number of entrepreneurs, ability to respond to the economy and the dynamics that are flexible in nature in each region. Table of Contents Introduction.................................................................................................................................3 Background of Small Enterprises in the UK...............................................................................3 Benefits of Small Enterprises......................................................................................................4 Economics and Small Enterprise................................................................................................6 Macroeconomics and Small Business.........................................................................................7 Future Implications for Small Businesses...................................................................................8 Conclusion and Recommendations...........................................................................................10 References.................................................................................................................................12 Introduction The applications to small and medium business enterprises in Europe directly affect the economy, wealth creation and employment. The understanding of how the businesses directly impact various areas of economic and industrial growth is one which can no longer be ignored, specifically with how each of the businesses directly impact both the micro and macro economy. The wealth growth is one which is reflective of entrepreneurial level opportunities as well as how this is able to expand into the international landscape of business. Identifying and understanding the concepts which are associated with this allows for a different approach with how businesses at this level can be enhanced to continue to support the ideologies of economy and industry within Europe. This paper will examine the impact which has been made to the UK with small and medium business enterprises, specifically which add into the overall economy. The ideologies will contribute to the understanding of the enterprises and how it directly reflects the growth within the regional and international levels. This will combine with an understanding of the challenges which many small to medium enterprises face, specifically because of the misconceptions of the contributions of the businesses with recommendations on how this can be altered within the region. Background of Small Enterprises in the UK The number of small enterprises in the UK is one which is not looked into in terms of the number of businesses currently operating. It is noted that there are currently 4.5 million small businesses that are located in the UK. This constitutes for 99% of all enterprise structures, including 58.8% in the private sector employment and 48.8% in the private sector turnover. On average, 13.8 million people are employed with small businesses with an annual turnover of 1,500 billion . The small businesses that have employees are inclusive of 25% of the industry. This has fallen by 29,000 since the year 2010. London has one of the largest areas for enterprises, including 748,000 businesses that are currently under operation. This is compared to the South East, which has the second largest number of small businesses at 745,000. An average of 45.3% of businesses are registered as VAT and / or PAYE with sole proprietorship increasing by 87,000 from 2010. The largest area with small business structures is construction, which includes 876,000 businesses. There has also been an increase in the number of operating small businesses from 2010 by 6,000 new listings (FSB, 2011). The current number of small businesses in the UK is one which is continuing to increase and which holds a specific perception by many within the region. The growth of small and medium enterprises is continuing to grow, specifically because of the historical relevance which this holds. At the current time, the recession and economic fluctuations are forcing many into new ventures and with the ability to begin changing the approaches used with business endeavours. Many have begun small businesses and entrepreneurial endeavours because of the economic fluctuations and difficulties with meeting the corporate and enterprise level alternatives. The conditions that are with large firms dont match with the problems by the small and medium enterprises. This is allowing several of the businesses to continue to operate. This is based on smaller loans that are taken out, performance changes that are associated with this, adaptation and performance alterations that are easier to make during a recession and the building of diversity in the market that is more difficult to meet by larger corporations. Each of these changes is one which is driving several new entrepreneurs into business while creating an alternative for the UK to meet the recession conditions with the use of small and medium businesses (Kitching, Smallbone, Xheneti, 2011: 2). Benefits of Small Enterprises The developments with entrepreneurial endeavours in the UK are being followed by a variety of benefits for individuals that are moving beyond the recession problems. The concept of self – employment income is one which is continuing to develop with the capacity of offering different financial fluctuations which are proven to be more beneficial. The compensation which an entrepreneur or small business is able to receive is able to continue to expand. When there are difficulties, it is easier for a small loan to be taken out to boost the needs of the business while developing more options for economic changes in the future. This is followed with different stages of the business life cycle, all which are able to create and develop new contributions to the economic well – being of entrepreneurs and those working in small businesses. The result is that the economic shifts with being an entrepreneur are not as dramatic and are able to offer more in terms of compensation and development within the work. The rewards which are achieved are one of the personal reasons why many are moving into small business development as an alternative for growth (Carter, 2010: 39). The opportunities and development associated with entrepreneurial alternatives continue with the dynamics that are allowing for more options to be created. The opportunities available to entrepreneurs are now classified into formal and substantive alternatives that are available. This is inclusive of responding to things as they happen, actions which are expressed with the business development and opportunity which comes from marketing structures. Each of these opportunities is developed with the dynamics of small businesses. The flexibility that is available is easier to reach, specifically because there is a smaller number of people which need to change with the environment. This is able to move toward new opportunities as actions and responsiveness to the different structures are faster and easier to reach. If the small business has fewer than five people, it is expected that leadership and initiatives are taking place with the model that is occurring. This continues with development and more opportunities which are available. Entrepreneurs which become successful are able to find options through discovery, recognition and identification of the particular idea. This furthers with action and being able to meet the market on a continuous basis. The ability to continue to grow and develop and the results that are within this are able to build a different and more practical alternative. For the current conditions of the economy, entrepreneurs are easily able to create responses, move into action and offer innovative ideas that solve problems while offering new rewards and opportunity within the marketplace (Dimov, 2010: 58). Economics and Small Enterprise The benefits and characteristics of small enterprises further with the economic structure and way in which this is maintained with small enterprises. The economics of individual entrepreneurs and small businesses is recognized as rewarding, specifically because of the dynamics and potential that make it easier for small businesses to work effectively. This is combined with the development of the economy which takes place and the way in which this begins to affect the small enterprises. The economics of the UK are directly impacted by the opportunities for growth by entrepreneurs and the way in which this stimulates each region. The first way in which this occurs is with the entrepreneurs and small businesses that have more opportunities for growth and which dont have as much of an impact by the recession because of the ability to develop and respond to the current market. The second way in which this is able to positively impact the economy is through the number of small businesses that are within a region. The continuous growth that is noted in the UK is one which shows that the majority of individuals in the region are able to stimulate the economy and create a contrast to the recession which is occurring. The one disadvantage is that the size output of entrepreneurial options is smaller, meaning that production lines are smaller. However, the ability to grow and respond to different needs as well as the dynamics of a business begin to change the way in which businesses develop and grow within the economy (Gollin, 2008: 219). The ability to have more opportunities and respond to this is one that not only stimulates the basic economy within a region. Other financial applications combine with this to create the necessary responses to the economy. In a current study (Beck, Kunt, Maksimovic, 2008: 467), 48 countries were studied to look at the dynamics of small enterprises. The question was whether the contribution to the economy was able to work in favour of the region and how it was directly affected. The examination included different financial areas which may have a direct impact with the economy and the responses which occur. It was found that in all countries, the small and medium sized firms dont have as much of an impact. This is because the finances are taken out with small loans and not as much money is required for operations. This is combined with financing sources that are spread into different areas, including leasing, suppliers, development and informal finances. The way in which this works also leads to protection of property rights that occur, specifically because external financing is used that doesnt cause the property to be lost and which continuously adds into the economic structure. The result is that there is lower access to bank financing with the ability to circulate the other financial mediums for better results. The finances and patterns then create more opportunities for financial development while changing the fluctuation of finances that are occurring within each region (Beck, Kunt, Maksimovic, 2008: 467). Macroeconomics and Small Business Another question which is raised with the dynamics of small and medium enterprises is whether the economic structure impacts the national and global economy. While it can be noted that the local and regional changes offer dynamic shifts, there is also a question of whether this is strong enough to change the structure of international exchange. The international exchange which is associated with entrepreneurship is one which follows the dynamics of opportunity. According to the cognitive – based model, the responses from entrepreneurs is what creates the exchange with international expectations. It has been noted that the advantage of entrepreneurs to move into the global marketplace is dependent on the knowledge and understanding of being able to expand into different regions. The indications are not based specifically on the ability to have more production and power within the entrepreneurial actions. Instead, there is the need to begin to offer the exchange and production with defining new ventures and expanding into different regions. By doing this, there is more capacity to create and develop the organizational capabilities and entrepreneurship that is available at an international level. For individuals that do have this understanding, is the ability to continue to expand and develop what is available internationally (Autio, George, Alexy, 2010: 11). The knowledge and development with specific regions furthers with the ability to expand both regionally and internationally by boosting the economy. The entrepreneurial endeavours that are able to move into different regions and expand also have the capacity of stimulating the macro economy through the innovations and ideas. The dynamics of small businesses and the ability to link to opportunity in different regions is one of the ways in which the macro economy is directly affected by the endeavours. The influence begins with the ability to expand into different regions with development, ideas and the dynamics with small businesses. This is furthered with the innovative ideas that become available in other regions, such as the businesses incorporating and setting up new ideas for different regions and expanding businesses into other areas. The performance is one which becomes based on the geographic regions which one decides to move into. However, it is also noted that there is growth which can directly impact various areas because of a high level of activity which is added into the area. Even though the entrepreneurial endeavours do not have as many individuals influencing the area, the impact grows through the efforts and opportunity that are a natural component of the dynamics of small to medium sized businesses (Carree, Thurik, 2010: 557). Future Implications for Small Businesses The noted growth of small businesses in the UK and the dynamics that are associated with this also lead to specific opportunities which may continue to grow in each region. Currently, there is little known concepts which are associated with the economic well – being and structures of entrepreneurship. Many consider the number of people in small businesses to not have as direct of an impact with the economy and the structures which are occurring. However, there are entrepreneurial opportunities which are developing that are able to create more market structures and opportunities to those that are within each region. The models which are available and which remain important with the growth of entrepreneurs include cognitive development, responses to the economy and how the dynamics of entrepreneurial behaviours directly impact the economy. As opportunities continue to arise for each individual, there is the ability to build and develop different organizational outcomes for wealth and well – being. The future of entrepreneurship is one that is noted to only begin to develop with more opportunities and concepts that can offer a sustainable economy because of the main dynamics of the entrepreneurial ideologies (Wiklund et al, 2010: 2). The future developments and the impact with the economy is one which is continuing to be looked into because of other opportunities and developments available. In the UK, there is not only a consistent rise with the amount of entrepreneurs in the region. There is also technological innovations and structures that are in the economy. This is created to assist with the expansion and growth of entrepreneurs while helping to create the necessary structures for development. The innovations of technology are offering even more dynamics to entrepreneurs while making growth and development easier for different needs. The ability to become technology leaders and offer dynamic growth, even with a smaller firm, is one which is expected to transform the economy even more. This can help to provide small entrepreneurs with fewer jobs while allowing the continuous growth of the small businesses into other areas while offering rewards through finances and other innovations. By doing this, there is the ability to create and develop more opportunities and to stimulate the necessary dynamics for growth. For the economic structures and development of different areas, this implies continuous growth of the economy while assisting individuals with more options for development (Subrahmanya, 2005: 269). The ability for growth among entrepreneurs is one which can continue to impact the economy, both within the UK and at an international level, by the ability to offer innovation for processes. As entrepreneurs and small to medium enterprises use resources, knowledge and more options, there is the ability to grow with the impact on the economy. This begins with the ability to understand how to move into international regions while creating different formats for specific needs. This continues with the ability to continue with the impact through the use of changing attitudes and looking at international opportunities. Even though the small to medium enterprises do not have as much man power, there are other alternatives that are available. The use of knowledge, technology and other concepts can help to expand and work in favour of the economic structures which are used. The approach taken by entrepreneurs is one which can continue to have a positive impact on the economy while building structures that are developed specifically with the ability to move into international dynamics while remaining a small to medium enterprise (Sommer, 2010: 288). Conclusion and Recommendations The dynamics that are associated with small and medium enterprises carry unique structures and innovations. This offers many benefits to a specific region, defined by the way in which entrepreneurs are able to respond to given situations. This includes new and innovative ideas as well as the ability to begin to change the way in which one works with the given market and environment. The ability for small and medium entrepreneurs to move with these dynamics is one which has offered continuous growth in the economy both within the region of the UK and at an international level. This is furthered with the continuous growth that is noted in the UK with entrepreneurs that are moving outside of the recession and into development of small businesses to find different opportunities and initiatives. The dynamics and growth are then able to provide more options for those interested in development. With these initiatives and opportunities, is expected future growth with innovation, technology and with developing into an international structure that may directly impact and have a positive effect on the macro economy and given regions. While there are several advantages to the small and medium enterprises, there are also not as many resources that are available to help with these initiatives. The one area which was noted with the growth of small and medium sized businesses was that the available resources depicted the ability to expand and work with the ideas in a given region. The resources are inclusive of different financial services, knowledge about expansion and the ability to work with new innovations and ideas that are a part of the main structure and development. Each of these then are able to create new and defined initiatives while creating a direct association with the way in which the businesses function. The ability to develop businesses to offer even more options economically and with sustainable growth in different regions then needs to be expanded into networking resources, information and economic possibilities. Each of these will provide small and medium businesses with more opportunities to offer innovative ideas and options for growth within the local and international economic structure. References Autio, Erkko, Gerard George, Oliver Alexy. 2010. “International Entrepreneurship and Capability Development – Qualitative Evidence and Future Research Directions.” Entrepreneurship Theory and Practice. Beck, T. 2006. “Small and Medium Size Enterprises: Access to Finance as a Growth Constraint.” Journal of Banking and Finance 43 (5). Beck, Thorsten, Asli Kunt, Vojislav Maksimovic. 2008. “Financing Patterns Around the World: Are Small Firms Different?” Journal of Financial Economics. 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