Introduction to the debate and the rise of small business in the UK

1. The role and character of
small business
Lecture 4 week 13
The Office

2. This Week
• The role of small business
• What do small Businesses look like
• The economics of regional development
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3. • Small businesses characterised by the way they
are run and the management issues that they
encounter.
• Entrepreneurs typically linked to small
businesses.
• Small businesses have changed in recent years
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4. Definitions
• European Commission, DTI &SBS define
Medium, small and micro businesses
– DTI is now called BIS!
• BIS Definition
• Small < 50 people
• Medium >50 < 250 people
• Large > over 250
Typically determined by number of employees –
– however problematic since 49 employees in a
manufacturing business is small yet in a consultancy
firm – it is quite large!
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5. Quiz - Background
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% of all companies are SMEs 99.9%
% are sole traders 74.1%
No. people employed 13.7 million
Its current market value worth £1,500 Billion that’s…
1,500,000,000,000
% business services 25%
Retail 20%
Yorkshire and Humber 346,000 businesses
56.5% employed in SMEs

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7. The trouble with SMEs
• The Bolton Report 1971
– Small firms managed by owner in personalised way
– Small firms tend to have small share of their market in
economic terms
– Small firms tend to be independent and free from
outside control
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8. Recent issues
• Uncertainty – persistent feature of small firms –
with typically small customer bases and limited
resources.
• Innovation – new products or subtle variations of
existing products or services a key factor to
success or failure.
• Evolution – as markets rapidly change small
firms struggle to survive and develop
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9. Government Agenda
• Support growing businesses
• Increase Start - up
• Improve growth
• Agencies
– SBS
– FSB
– Business Link
– DTI
– Regional Economic Development
• Diagnostic Tools Forum 21
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10. Minority groups
• Women owner business
• BAME - Black and Minority ethnic
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11. Forum 21 -
Diagnostic of a business
• Vision of the owner
– Lifestyler
– Survivalist
– High Growth
– Limited Growth
• How the company adds value
– Labour through to knowledge
• Life stage of the business
– Start up through to maturity
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12. Differences between large
and small companies
Large Organisations Entrepreneurial Small Firms
Liar Liar
Order Informal
Formality Trust
Planning Intuition
Analysis Synthesis
Systems Ownership
Bureaucracy Autonomy
Power culture Achievement culture
Politics Risk taking
Rule compliance Breaking the rules
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13. Why have they increased
• Outsourcing
– Better use of IT ERP etc
– Globalisation and the internet
– Increased control and accountability
• Employability
– No Job for life
– 5 to 9 not 9 to 5
– e.g. The Elephant and the Flea - Charles Handy
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14. International Perspective
• Why bother?
– The US produces 70,000 engineering graduates each
year. China and India alone produce 700,000
graduates to comparable standards.
– How can the US compete – by developing
entrepreneurial attitudes. The US engineering schools
are all responding to the challenge and changing their
curriculum – shouldn’t we?
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15. Economic theory says
• Free market theory
– Right wing UK and US governments in the 80s supported the
emerging Enterprise Culture – "the freer the society, the more
small businesses there will be" - M Thatcher
– This theory requires SMEs to provide the competition to keep
large organisations on their toes.
– capitalism propaganda
• Marxism
– Capitalism will degenerate into economies dominated by
monopolistic companies.
– Small firms numbers will rise as the major companies increase
their domination by subcontracting less profitable work to SMEs
when times are hard.
– Communism/socialism/marxism propaganda 15Dr Andrew Hirst Room 9339

16. Battle against Big Business?
• Green movement
– Over production, bureaucracy, centralisation and
short term material gain – symbols of a crisis in
industrial society.
– Small is beautiful – taken to mean quality of life must
come before materialistic motives of big business.
• Social Responsibility
• Globalisation
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17. Your Journey
• In a few weeks time you will be invited to
develop a virtual micro business.
• In the supporting tutorials you will find out about
what makes groups function and be effective.
• You should get into a small effective group and
start to think about what skills you have and
what you could offer as a group. Could you be a
group of IT consultants?
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18. Next
• Rules and Regualtions with Anita Whitworth
– important INFO for your assessments
• Thursday tutorials
– Check times
– This week only at 2pm
– next week onwards 4-5pm
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19. Next Week
• The anatomy of an Entrepreneur
– What does it take to be successful
– exploring the myths about Entreprenuers
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20. Final Thought!
What is Entrepreneurship mean?
– Harvard defines entrepreneurship as;
• Pursuing an opportunity regardless of the resources currently
available.
– Babson defines entrepreneurship as;
• A way of thinking and acting that is opportunity obsessed,
holistic in approach and leadership balanced for the purpose
of value creation and capture.
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