Government Policy and the Small Business Sector
Introduction of Government Policy and the Small Business Sector Assignment Sample
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Small and Mid-Size Enterprises are the countries which are accounted for 60% to 70% of jobs in the (Organization for Economic Co-Operation and Development) also known as OECD countries (Bouazza, 2015). United Kingdom is also a big part of the OECD and these SMEs are accountable for generating large employment opportunities for different individuals living in the United Kingdom (Lorenz and Potter, 2019). Government policy plays a huge role in influencing the business decisions of Small-Scale companies in the United Kingdom or any other country. In this individual report, the discussion on the various aspects of entrepreneurship, the importance of micro and small business sector, government support to small scale or micro business, and furthermore the entrepreneurial issues are also going to take place.
2. Explanation of The Key Terms Significant to Entrepreneurship
An entrepreneur refers to the individual who engages in the creation of a new business and is willing to take risks and enjoy the majority of the rewards from the business. The whole procedure of setting up a business by the actions, strategy and decision of an entrepreneur is called “entrepreneurship” (Audretsch and Moog, 2022). These individuals are mostly recognized as an innovator, generators of new ideas, products and services. Entrepreneurship cannot be fulfilled or can be called entrepreneurship without the entrepreneurs (Ren and Jackson, 2020). There is a huge role of the entrepreneur in attaining prosperity for the small-scale business and micro business and furthermore, they also play a significant role in the economic development by utilizing the skills and expertise to bring new changes and innovation to the table.
Entrepreneurship can be considered successful when the business managed to overcome or handle the risk in starting up the business and as discussed earlier as well that the entrepreneur enjoys all the profits and the growth opportunities if the new start-up business or small-scale business or micro business succeed in the competitive business environment (Hongdiyanto, 2018). On the other hand, Entrepreneurship can be considered a failure when the new start-up or small-scale business or micro business is not able to sustain and generate profits. There are various key terms in entrepreneurship such as Boot Strapping, Bottom Line, Angel Investor, Business Model, Burn Rate etc.
- Boot Strapping refers to the new business that begins with little investment of capital. When an individual from his personal salary or from the operative revenues to starts their own company is called Boot Strapping (Won and Bae, 2019).
- Bottom Line is the term in entrepreneurship that involves net earnings, net income etc. and these can affect the bottom line of the company which simply means an action that has the capability to increase or decrease the business’s net earnings or total profit (Gu et al., 2021).
- Angel Investors are the individuals who are wealthy enough to invest in a new company or established company in return for an “ownership stake” (Taylor, 2019).
- The business Model is the core principle and value of the business that involves how and what the business is going to offer to the customers (Bican and Brem, 2020).
- Burn Rate is the rate at which the company utilizes the “venture capital” for financing overhead before generating positive revenue from business operations (Ibeh, Crick and Etemad, 2019).
3. Identification of The Key Qualities of a Successful Entrepreneur
According to Carree & Thurik (2005), Entrepreneurship refers to a “multidimensional term” which can be very difficult to properly define. Furthermore, as per Panda (2000), entrepreneurship does not only mean the creation of a new idea for the business but also to maintain and project the activities of the business organization so that the business organization can go smoothly.
There are various key qualities of a successful entrepreneur that can be easily identified:
A successful entrepreneur like Steve Jobs has a deep passion for the work they were doing at that time (Isaacson, 2012). Entrepreneurs must try to find a genuine passion for the work that they are willing to do no matter what. Passion is the most vital, important and most common that can be identified as being the key qualities for a successful entrepreneur.
Another key quality that can be recognized in a successful entrepreneur is Creativity and it can also be observed that all the successful companies are thriving for creativity and innovations and these companies are completely driven by the creativity phenomenon (Carayannis, 2020). One of the biggest examples that can be found is Steve Jobs's company's new advanced innovation and technology such as the introduction of the iPhone which was a revolutionary product in the market and furthermore, it assists the world to become more advanced in terms of technology.
3. The Factors To Be Considered When Setting Up A Business And Description Of The Key Features Of The Small Business Sector In The United Kingdom
The first and crucial factor that is required to be considered while setting up business in the United Kingdom is choosing and understanding the right business structure for the business organization (Government Digital Service, 2016). The business structures are sole traders, limited companies, partnerships. Depending on the business model, or the decision of the entrepreneur, the business structure can be determined.
After the determination of the business structure, there comes the registration part for setting up the business in the United Kingdom. For every business structure, the registration process may vary. For instance, a Partnership is required to be done with the help of a correct contract that takes place between two or more individuals. To register the company, there is a requirement to get registered with HM Revenue and Customs which is also known as HMRC (GOV.UK, 2019). According to the United Government, there are other ways to get registered the business such as by utilizing the form SA400. Furthermore, the registration for Value Added Tax also takes place when the “VAT taxable turnover” exceed £85,000.
Determination of the staffing requirements and government guidelines
This is another factor that involves determining the staff requirements for setting up the business or new company. The business organization can never be able to carry out the business operations effectively without the contribution of the human resource. With employing different employees in the company there is a requirement of considering various government legal laws such as the Employee Right Act 1996 (Legislation.gov.uk, 1996).
Key Features of The Small Business Sector in The United Kingdom
As per Business Statistics, in December 2019 there were overall 5.9 million private small business sectors in the United Kingdom. In the United Kingdom, Crowdfunding is among the most active source of investment for many small-scale businesses in the United Kingdom as per the data by (Scott, 2019).
4. Description and Assessment of The Effectiveness of The Government Policy in Promoting the Small Business Sector Across the United Kingdom
Graham Stuart who is the minister for exports stated that the core aim and main goal of the Department of the International Trade (DIT) is to actively support small as well as medium-sized businesses. As of 2020, the Department of International Trade has invested 34 per cent of financial resources from the total fund (Prashar, 2019). The government of the United Kingdom has launched and introduced many initiatives that are designed or developed for economic development and in the process, the UK government want to make the whole economy more accessible to Small-Scale businesses. All the initiatives are further enhanced and strengthened via Public Contracts Regulations 2015 by “re-enforcing” the role of the Small-Scale Business.
DIT actively investing in the process of creating and increasing commercial policy and capabilities across the “Commercial Directorate” for the purpose of encouraging Small-Scale businesses or micro-businesses to expand and grow their business. The Small-Scale business Commercial policy is developed by the Department of the International Trade (DIT) and they make sure to make this policy by keeping it aligned to the actional plan for supporting the performance of Small-Scale Business or micro business (Department of the International Trade, 2020). The United Government has been heavily investing in creating an effective action plan for supporting the Small-Scale businesses and micro-businesses as discussed above earlier as well.
The main goal and objective of the action plan are to outline the different approaches which are mainly concentrated on increasing the percentage of the overall spending on procurement in association with the small-scale business or micro business. Furthermore, HMT has also worked with the team of the “Cabinet Office Central SME” to set realistic targets and goals for the Small-Scale Enterprises or small-scale businesses or micro-businesses (GOV.UK, 2018). The activities related to the small-scale business which contributes to increasing the business opportunities regarding the supply chain activities and recording the “Indirect Spendings” is the number one priority.
5. Explanation and Analysis of The Key Features of Entrepreneurship Issues by Utilizing Suitable Theories to Develop the Explanation
As discussed in the above points Entrepreneurship is a multidimensional term that is very difficult to explain and it is a whole process of precision, organisation and managing the business decisions effectively that are required to establish the business (Ignat and Constantin, 2020).
Followings are the analysis of the core features of the issues of entrepreneurship:
Cash Flow Management
One of the entrepreneurship issues that can be identified is the effective management of the cash flow. There is no denying the fact that cash flow is among the most important factor which is needed for business growth and reaching business sustainability in the process (Yusof and Nor, 2018). These problems can be faced by many entrepreneurs since they tend to be very ambitious, visionary which sometimes results in over ambitioning the different aspects of the business that requires huge financial resources.
On 31st January 2020, the United Kingdom left the European Union (EU) which resulted in affecting the businesses operating in the competitive business environment (Frennhoff Larsén and Khorana, 2020). Especially during these times of the pandemic, it has become very difficult to discover the various different impacts on the new businesses as well as the established businesses. Since the Brexit, Limited trade, shortages in labour and additionally custom checks also started to emerge which is contributing to creating problematic solutions for the entrepreneurs.
Hiring Human Resource
Just like any other established business organization, the entrepreneur also has to engage in the process of employing skilled individuals for the new business started by the entrepreneur. The universal idea and belief are that no business can grow and be sustainable without the contribution of the Human Resource and therefore there is a requirement from the small-scale business or micro business to appoint the human resource who are skilled in carrying out the business operations (Burton, Fairlie and Siegel, 2019). This process can take time, huge financial resources investments in reviewing the resumes and many other recruitment or hiring activities.
6. Discussion of The Different Approaches to Resolving Entrepreneurship Issues Illustrating the Answer with Appropriate Theory
From the above discussion, it can be observed that there were various entrepreneurship issues and the recommendation for the various approaches to resolving these entrepreneur conflicts. Followings are the different approaches to resolve these issues:
Cash Flow Management
The two aspects as Effective Budgeting and Planning are very crucial for maintaining the cash flow but there are various circumstances in which entrepreneurs can fail in managing the cash flow effectively and more importantly efficiently. There is one way that can aid in improving the cash flow is by engaging in a down payment system for purchasing any business-related products. The entrepreneur must ensure that the “Down Payment” is covering all the expenses that are connected with the business project that is being carried forward by the entrepreneur (Omar, Ishak and Jusoh, 2020).
Hiring Human ResourceThe recruitment or hiring of employees is a time-consuming process and expensive procedure, especially for the new companies that are started by new entrepreneurs. These issues can be solved effectively if the entrepreneur is focused and concentrated on being more exclusive in terms of the job advertisement (Khosrow-Pour, 2018). The time can be saved by a large margin if the job advertisement aids in prequalifying the candidates by using the specific information in the job requirements advertisements.
This individual report has attempted to discuss the various aspects of Government Policy and the Small Business Sector. The successful entrepreneur must need key qualities like creativity minded, a risk taker when carrying out business operations. The government of the United Kingdom has already helped small-scale businesses or micro businesses to grow and expand exponentially which is a great positive symbol for the whole industry.
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