Task 1: Range of Entrepreneurial Venture Types and Impact of Small Businesses on the Economy
An Entrepreneur is an innovator who starts a new business and runs it with limited resources (Drucker 2014). They do not use existing model of a business. Entrepreneurial ventures are business enterprises that have a high level of risk as well as high return target (Aldrich and Yang 2014). Entrepreneurial ventures are different from small business firms in terms of growth, number of employees, profitability risk, innovative products and impact on economy (Brooks et al. 2014). In order to identify the entrepreneurial ventures certain strategic behaviour of the business needs to be examined. Few characteristics of such behaviour are: new product introduction, new method introduction, new market opening and industrial reorganization. Entrepreneurial typology is the classification of entrepreneurial ventures based on certain classification (DeTienne, McKelvie and Chandler 2015). The first category for dividing the ventures into different groups is the potential of growth. First type of ventures is the one which has a potential for high growth (Coad et al. 2014).
The high growth potential venture has two subdivisions: Need Driven and Technology Driven new ventures. The need driven entrepreneurs discover a need in the marketplace and decides to fill in the gap. They find out different techniques to satisfy the needs (Keskin, Diehl and Molenaar 2013). Devon Stores Corporation, 1979 in New York is an example of need driven venture. The technology driven entrepreneurs start a new venture aiming to bring a new technology in the market. They have a desire for new technological developments (Onetti et al. 2012). Example of technology driven venture is the introduction of Apple Computer by Steve Jobs. The second type of venture is the one which has low potential for growth. The employment growth and economic growths are less in case of low growth potential firms. Their main aim is to get income. They do not target for high growth, their potential for income is very high. First category is Income Substitution venture. This venture is established in order to replace the income of the person. Their aim is not to reach high standards but to generate income greater than which they would have got by working for others (Onlinelibrary.wiley.com, 2017). This is what drives them to start a new venture.
People get into these types of ventures due to loss of job, moving to a new land. McDonald’s hamburgers are a perfect example of Income Substitution. The second category is Part time ventures or Income Supplementing. These new ventures are formed in order to avail extra income apart from their regular income. Some of the college professors start their own business to earn more money but they do not give up their full time profession. This is an example of Income Supplementing venture. The third category of new ventures is Lifestyle or Hobby ventures. The main objective of starting a new venture in this case is to reduce the hobby cost rather than generating huge profits (Morris 2015). The Pacific sea coasts have a number of people who are not enthusiastic about sailing. They wait for the weekend to take the tourists on water by charging certain fees to pay for their own expenses. This is a good example of Hobby ventures. Some people start a new business to maintain a certain kind of high lifestyle. Sir Richard Branson was the founder of the Student Magazine. It was the first business magazine for students. The Virgin Records is record label which is recognized worldwide. Its headquarters is in Hollywood. His commendable leadership qualities and talents led to the growth and rise of Virgin Records. He is considered to be an exponential entrepreneur whose focus is to generate profits by satisfying the employees as well the customers. Sir Richard Branson has introduced his Virgin brand in various other sectors like aviation, hospitality and space (Branson 2013). He had suffered from dyslexia in his childhood days but did not stop fighting. He was able to overcome such challenges. He said that entrepreneurship is about ideas, innovations and self motivation. It is the will to excel. The type of entrepreneurial ventures adopted by Sir Richard Branson’s Virgin Group is high growth potential ventures (Branson 2013). Their main aim is to excel in all types of sectors. They have their own airlines, mobile phones, retail stores, radio, health care products, spaceflights, internet, music and films. Their objective was to explore different industries find the need of the marketplace and introduce something new. With the exponential approach of leadership, Sir Richard Branson succeeded in becoming one of the world’s renowned entrepreneurs with a net worth of 5.1 million US dollars.
The different entrepreneurial ventures are different and similar with each other in several ways. The broad categories of ventures are high growth and low growth potential ventures (Klotz 2014). The high growth potential ventures aim to become one of the well known enterprises in the world whereas the low growth potential ventures target to earn money for their survival. High growth companies are fast pace in development and generate huge amount of cash. Their focus is innovations and introduction of latest technologies in the world. They are dynamic in nature (Coad 2014). They find out what the market needs and try to fulfil it. They usually generate high revenue. On the other hand there are the low growth potential ventures. The new ventures are developed due to several purposes like income substitution, supplementing income and to maintain a certain lifestyle (Morris 2015). Their aim is not to generate such world recognized fame and status but to earn sufficient money which will fulfil their own needs. Sometimes people want to make use of their hobbies. They sell homemade food and earn money or some people sell their second hand books by putting up a stall. On the other hand there are people who try to set up a venture because they think they can earn more than what they would have by joining another organization. They depend on their business for living purposes (Griffiths and Wall, 2011). There is another category of people who start an entrepreneurial venture because they want to earn extra. This category is known as the income supplementing ventures. They set up a side business and keep working as a professional in their own field. They do not give up their profession for the purpose of business. They are part time business people. From the above discussion it can be found out that there are several distinctions among the different entrepreneurial ventures. The only similarity among the ventures is that all of them want to earn money either more or less.
The introduction of new innovative products and technologies by small and micro business has a positive impact on the economy. It results in the development of the economy. The existing products become obsolete as the new ones replace them (Wright and Stigliani, 2013). The competition level in the market increases which results in high productivity. New opportunities exploit new market segments and create job opportunities for the people. Small and micro businesses form the heart of the economy of UK. They are responsible for creating new markets. They bring new innovative ideas in the market that encourage competition. 99.9 per cent of the ventures or businesses in UK are micro and small businesses. They are valuable and favourable for the economy of UK (Storey 2016). They need more motivation and encouragement to flourish. The scope for opportunities is increasing for the people in UK. Along with the positive impacts there are certain negative impacts as well. The small businesses need the support. Their survival is difficult. 55 per cent of the small and micro businesses in UK are not able to survive for more than 4 to5 years approximately. These businesses also face a lot of obstacles and challenges. 63 per cent of the small and micro business owners confessed that there is a lot of difficulty in order to grow their firms (Isbe, 2017). Several reports also say that 61 per cent of the small and micro business owners lack the confidence whether they will be able to continue the growth of their firm for the next 3 years. In the year of 2014 there was approximately total number of 5.2 million businesses in UK. Out of this 99.9 percent were small and micro businesses (Ward and Rhodes 2014). In order to overcome the risks the businesses should firstly answer few questions like who are the leaders; processes need to be implemented and other requirements. Secondly they should focus whether the necessary tools are available or not. A proper standard can be employed for the success and survival of small and micro businesses.
There are several reasons why small and micro businesses are important for the social economy. They have a huge expansion potential (Morris, Neumeyer and Kuratko 2015). Smaller businesses are comparatively more productive than well renowned large organizations. Smaller firms employ more number of engineers, scientists. This increases the productivity in the area of engineering and science (Goss 2015). The employment opportunities increase with the growth and development of small and micro industries. This improves the level of employment in the economy (Burns 2011). In small business environment, the employees get the chance to interact with the customers and know about their needs. This increases the chance of innovation (Down 2010). This is why most of the innovative workers prefer to work in small enterprises. Small businesses always do not remain small and can one day turn into one large enterprise. Small businesses have a strong adaptability (Bridge and O'Neill 2012). They have few loyal customers which mean that they are able to stay strong even during tough times. All these reasons lead to the growth of the social economy. The development of new ventures in UK has become like a social movement. Start-ups are sprouting out almost on a regular basis (Ward and Rhodes 2014). The rate of developing new businesses are increasing at a fast pace. The turnover of small and micro businesses was 1.6 million pounds in the year of 2014. This was 47 per cent of the total turnover of the private sector. The job opportunity provided by such businesses were 60 per cent of the total employment provided by the private sector. It was reported that 37 per cent of the innovative activities are contributed by the small and micro businesses. Between the year of 2009 and 2013 there was an increase in the number of micro and small businesses by 47 per cent (Blackburn, Hart and Wainwright 2013). Small businesses, repair of motor vehicles, manufacturing and retail are the backbone of the economic activities. The revenue that generates from small business is 46 per cent of the total revenue generated by the private sector. There exists a certain relationship between UK and small businesses which proves to be mutually beneficial for the social economy of UK (Carter and Jones-Evans, 2012). The economic health of the country is strengthened by the contribution of the small and micro businesses. The importance of small businesses in Britain is increasing with time.
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