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The Rise Of The Small Business - Andy Hirst

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

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The Rise Of The Small Business - Andy Hirst

  1. 1. The role and character of small business Lecture 4 week 13 The Office
  2. 2. This Week • The role of small business • What do small Businesses look like • The economics of regional development Dr Andrew Hirst Room 9339 2
  3. 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 3Dr Andrew Hirst Room 9339
  4. 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! 4Dr Andrew Hirst Room 9339
  5. 5. Quiz - Background 5Dr Andrew Hirst Room 9339 % 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
  6. 6. 6Dr Andrew Hirst Room 9339
  7. 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 Dr Andrew Hirst Room 9339 7
  8. 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 Dr Andrew Hirst Room 9339 8
  9. 9. Government Agenda • Support growing businesses • Increase Start - up • Improve growth • Agencies – SBS – FSB – Business Link – DTI – Regional Economic Development • Diagnostic Tools Forum 21 Dr Andrew Hirst Room 9339 9
  10. 10. Minority groups • Women owner business • BAME - Black and Minority ethnic Dr Andrew Hirst Room 9339 10
  11. 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 11Dr Andrew Hirst Room 9339
  12. 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 12Dr Andrew Hirst Room 9339
  13. 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 13Dr Andrew Hirst Room 9339
  14. 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? 14Dr Andrew Hirst Room 9339
  15. 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. 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 16Dr Andrew Hirst Room 9339
  17. 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? 17Dr Andrew Hirst Room 9339
  18. 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 18Dr Andrew Hirst Room 9339
  19. 19. Next Week • The anatomy of an Entrepreneur – What does it take to be successful – exploring the myths about Entreprenuers Dr Andrew Hirst Room 9339 19
  20. 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. 20Dr Andrew Hirst Room 9339