Managing Small & Medium Sized

Enterprises: MS60047E
➢ Module Overview
➢ Your Assignment
➢ Session 1 – The Nature of
Entrepreneurship
 Road map for today
• Introductions; what are we here for?
• Module Overview:
– Managing Small and Medium Sized Enterprises
• Your assignment
• Session 1: Entrepreneurship
 Introductions and
what am I here for?
• Who am I?
– Colin Webb BSc Econ 2.1
https://www.linkedin.com/in/
colin-webb-99b307-ceo-
managing-director/
– >25 years business experience
– Father of 3 graduates!
– When I’m not lecturing you can
find me at the gym or running
• What am I here for?
– To do my best for you
– To invest in you
 Introductions and
what am I here for?

• Activity: Who is your partner; be ready

to introduce them; someone you don’t
know well
– Name and Nationality
– Job/Work
– Previous study experience; where what
studied?
– Something they like to do when not at
University?
– What they want to get out of the
course; what are they here for!!
 Managing SMEs - Module overview
Aims; to provide students with the opportunity to:
1. Critically evaluate contemporary issues relating to SMEs
2. Explore strategic issues in SME management
3. Explore alternative routes of business development in SMEs
4. Investigate/evaluate diverse business development in SMEs
5. Analyse financial aspects of business expansion in SMEs
6. Critically appraise change and development processes in SMEs
 Topics to be covered

• Understanding the meaning and nature of enterprise and

entrepreneurial process
• The nature, characteristics and variety of small business
• Challenging conventional views on small business and
entrepreneurship
• Becoming an entrepreneur and running a small business
• Growth and consolidation of the entrepreneurial venture
• Finance & Small Business
• The entrepreneur and the macro-economic environment
• Enterprise policy and government intervention
 Expectations; its 2 way
What you can expect from me/the UWL

• Constructive feedback on assignment draft of your assessment

• Lecture slides made available prior to lecture
• Assessment marks and summative feedback given within 15 days of the assessment submission
deadline

What I need from you

• Attend teaching sessions and arrive on time

• Participate; group work, discussion
• By all means read the material in advance or have it with you but…..I want you to think…contribute
to lectures yourselves, don’t just regurgitate what my charts say!
• Behave professionally in classes and avoid disruption to class and other students
• Inform tutor via email beforehand when not able to attend any classes
• Participate and communicate professionally in class and with tutors
• Attempt assessments by submission deadline and communicate with the tutor if there are any
extenuating circumstances
Starter: Make learning easier

“If I were a
decent set of
reading notes I
would…”
 Your assignment
• Undertake a detailed evaluation of an existing
SME and then design a growth/development
strategy for the business.
• Present your findings in a 3000 word report
and make clear and costed recommendations
• First submission (formative) by W10
• Final submission by W14
 Your assignment
Students will need to find out about a small, or medium sized business using secondary sources determining the
following:
• The nature of the entrepreneur behind the venture.
• The SME start-up processes.
• The business concept and any sources of competitive advantage
• The current level of demand and the competitive environment
• The growth and development of the business to date
• The challenges of managing and running the business
• The SMEs current growth and development strategy
• Any government support measures that may be available to help the business overcome the challenges faced

The process to do this must be carefully followed to avoid any issues around the collection of data; there are strict
rules around this and we need to gain appropriate permissions.

Design a growth/development strategy for the business and present your findings in a 3000 word report and make
clear and costed recommendations

For more information: see module study guide. MS60047E Managing Small and Medium Sized Enterprises

By understanding the meanings of the terms we are referring to (Enterprise, Entrepreneurs, SMEs etc you will be in
a better place to use them effectively in your assignment.
 Learning Resources
• Storey, D. J. and Greene, F. J. (2010) Small Business and Entrepreneurship. 1st edition.
Financial Times Prentice Hall.
• Bridge, S., O’Neill, K. and Martin, F. (2012) Understanding Enterprise, Entrepreneurship and
Small Business. 4rd ed. Palgrave Macmillan.
• Barrow, C., Burke, G., Molian, D, and Brown, R. (2011) Enterprise Development: the
challenges of starting, growing and selling businesses, Andover, Cengage Learning
• Blundel, R. and Lockett, N. Exploring entrepreneurship: Practices and perspectives. New York:
Oxford University Press; 2011:431.
• Carter, S. and Jones-Evans, D. (2012) Enterprise and Small Business, 3rd ed. Harlow, Pearson
Education (E-Book on http://lrs.uwl.ac.uk see dawsonera).
• Deakins, D. & Freel, M. (2009) Entrepreneurship and Small Firms.5th ed. Maidenhead,
Berkshire: McGraw Hill Education.
• Petty, J.W., Palich, L.E., Hoy, F. & Longenecker, J.G. (2010) Managing Small Business : An
Entrepreneurial Emphasis, International Edition, 15th ed. China, Cengage Learning
• Stokes, D. and Wilson, N. W. (2010) Small Business Management and Entrepreneurship. 6th
edition. Cengage.
• Stokes, D., Wilson, N. & Mador, M. (2010) Entrepreneurship. Singapore: Cengage Learning.
 Session 1: 14.9.19
• Session 1:
– SMEs
– The Nature of Enterprise
– Defining entrepreneurship
– The tasks and roles of the entrepreneur
– The entrepreneur as a person
– Entrepreneurship as a style of management
– Types of entrepreneur
– The entrepreneur and the small business manager
– Wider forms of entrepreneurship
• Who has worked in a new business?
• Who has started a new business?
Jargon
• What do we mean
by
• SME =
• MSME =
• SME = small and medium size enterprises
• MSME = micro, small and medium size
enterprises.
Defining small firms and large firms
Number of
Enterprise category Turnover Balance sheet total
employees

Micro 0-9 ≤ €2 million ≤ €2 million

Small 10-49 ≤ €10 million ≤ €10 million

Medium 50-249 ≤ €50 million ≤ €43 million

Large 250 or more ≥ €50 million ≥ €43 million

(Storey and Greene, 2010)

 How important are SMEs
in the UK? (% of businesses?)
➢ 99.9% of firms are SMEs
➢ They generate 60% of employment & almost 76%
have no employees
➢ They generate over 25% of GDP & have lower
productivity than large firms
➢ 50% cease trading within first 3 years

Burns
 Where do most
New Jobs come from?
Birch (1979):
‘Of all the net new jobs created in our sample
of 5.6 million businesses between 1969 and
1976, two-thirds were created by firms with
twenty or fewer employees and about 80
percent were created by firms with 100 or
fewer employees’.
 What are the differences between
small and large firms?
• Small businesses are not smaller versions of
large firms
• The influence of the owner manager
• Personal relationships are a central feature
• Approaches to risk and uncertainty
• Cash constraints
• Scope of operation
• The importance of the customer
• The impact of scale on the economics of the
business
• Evolution
 What are Lifestyle Businesses?
• Satisfies the personal needs of the founder
• Provides an acceptable income
• Not set up to grow
• Most owner managed businesses fall into this
category
 Reasons to Seek an
Understanding of Enterprise

• Studying the subject for an academic course.

• Researching in this area.
• Teaching the subject.
• Wanting to influence enterprise, to advance it and/or to develop more of it.
• Being employed to advise and/or assist those involved in enterprise.
• Wanting to be more enterprising .
 So what do we mean by
Enterprise?
• DTI: ‘Enterprise is fundamental to a dynamic and
growing economy. Lack of enterprise played a
major part in the relative decline of the British
economy…..The key to continued economic
success lies in the further encouragement of the
enterprise of our people ... The change of
approach is reflected throughout DTI’s activities.
• DTI will be the Department for Enterprise.’
• The mission of the Starship Enterprise is ‘to
boldly go where no man has gone before’.

So what is an Enterprise?
 Broad and Narrow
Meanings
Two approaches to the word ‘enterprise’:
• A ‘narrow’ one which regards enterprise as business
entrepreneurialism, and sees its development within
education as enabling young people to learn about
business start-up and management.
• A ‘broad’ one which regards enterprise as a group of
qualities and competencies that enable individuals,
organisations, communities, societies and cultures to
be flexible, creative, and adaptable in the face of, and
as contributors to, rapid social and economic change.
• We will focus the narrower definition as it relates most
closely to SMEs
 The Focus of our Learning
Studying business we focus on: To be entrepreneurial we mean:
• The past • The future
• Critical analysis • Creativity
• Knowledge • Insight
• Passive understanding • Active learning
• Absolute detachment • Emotional involvement
• Manipulation of symbols • Manipulation of events
• Written communication and • Personal communication and
neutrality influence
• Concept • Problem or opportunity

(Gibb)
 Entrepreneurship
• Start-up success can be
engineered through
the right process
• This process can be
learnt and taught
• Entrepreneurship is a
kind of management
• But start-ups still fail
 Defining the Entrepreneur

• No agreed definition of the entrepreneur

• Fundamental to the entrepreneur is the presence
of uncertainty: if everything is known there is no
need for the entrepreneur

• What do you think an entrepreneur is?

 • What is an entrepreneur?
• What positive words do you associate
with entrepreneurs?
• What negative words do you associate
Group with entrepreneurs?
• On balance, do you think the
Activity entrepreneurs are a force for good or
bad?
• Who would you refer to when speaking
of entrepreneurs? And why?
Economist’s approach
• Uncertainty (employee vs Entrepreneur),
Cantillion
• Adopt a choice framework – people make
choices and work within a ‘utility’ framework
• Focus on outcomes of economic activity
• No common approach adopted by economists:
• Risk bearers? Kihlstrom & Laffont (1979)
• Special people? Blanchflower & Oswald
(1996)
• Risk ‘lovers’? Kihlstrom & Laffont (1979)
• Innovators? Schumpeter (1934, 1942)
• Market adjusters? Krizner (1973)
• Resource coordinator? Casson (1982)
 The function of the entrepreneur
• “The entrepreneur is an individual who fulfils
a particular economic function by undertaking
certain tasks.”
• Economic functions include:
– Combination of factors
– Providing market efficiency
– Accepting risk
– Maximising investor returns
– Processing market information
 Know an entrepreneur…
when you see one!
• https://www.tes.com/teaching-resource/enterprise-and-entrepreneurs-who-are-they-11175877
 Know an entrepreneur…
when you see one!
• https://www.tes.com/teaching-resource/enterprise-and-entrepreneurs-who-are-they-11175877
• What does an entrepreneur do? Discuss in
Groups and present back
 The entrepreneur’s tasks:

• Owning the business

• Founding new organisations
• Bringing innovation to the market
• Identifying opportunities
• Applying expertise
• Providing leadership
What do you think the
characteristics/behaviours of
entrepreneurs consist of?

Activity
 Definition of Entrepreneur
Entrepreneurs are defined by their actions (not the
size of organization they work for*)
They create and/or exploit change for profit, by
innovating, accepting risk & moving resources to
areas of higher return.
*An intrapreneur is a salaried employee in a larger company & the
profits & risks of their work go to their employer eg Google
 Some other definitions
• ‘An entrepreneur is an individual who brings
together the factors of production in an
innovative way (usually in the form of a new
business venture) to generate economic
value’.
• ‘The entrepreneur is rewarded from the
economic rent generated as a return for
accepting risk’.
 Eight aspects of entrepreneurial
leadership;
1. Personal vision, its articulation and communication;
2. Effective and influential communication to stakeholders;
3. The culture the entrepreneur creates in his or her
organisation;
4. The specialist knowledge and skills the entrepreneur
possesses;
5. The entrepreneur’s desire and motivation to lead others;
6. The credibility the entrepreneur has built up;
7. The performance of the venture and the entrepreneur’s
history of success;
8. The leadership role expected of entrepreneurs and which
they create for themselves within the venture
 Eight aspects of entrepreneurial leadership: thinking
about famous entrepreneurs – can we see evidence of
these traits?
1. Personal vision, its articulation and
communication;
2. Effective and influential communication
to stakeholders;
3. The culture the entrepreneur creates in
his or her organisation;
4. The specialist knowledge and skills the
entrepreneur possesses;
5. The entrepreneur’s desire and
motivation to lead others;
6. The credibility the entrepreneur has built
up;
7. The performance of the venture and the
entrepreneur’s history of success;
8. The leadership role expected of
entrepreneurs and which they create for
themselves within the venture
Classification of entrepreneurs

Nascent/ Promising

All Novice
entrepreneurs
Serial

Portfolio
Classification of entrepreneurs
Organic

Growth
strategy

Acquisition
 Define these terms
– Innovation
– Uncertainty
– Risk

Activity
• Innovation
– New products, new services, new processes
• Uncertainty
– potential, unpredictable, and uncontrollable
outcome
• Risk
– a consequence of action taken in spite of
uncertainty.
What type of entrepreneur?

High ‘Dreamers’ ‘True’

entrepreneurs
Innovation
Low Incrementals Foolhardy

Low High
Risk accepted
Defining entrepreneurship
• Economic
Perspective
Economic • This relates to
the function of
entrepreneur

• Managerial
Perspective
Managerial • The tasks
undertaken by
entrepreneur

• Psychological
Perspective
Psychological
• The personality
of entrepreneur
 Entrepreneurship as a style of
management

Focus on change

Focus on opportunity

Organisation wide management

 Entrepreneurs and owner
managers
• It’s not the size that matters!
• Control is more important than ownership
• Owner-managers aren’t always entrepreneurial
• The degree of innovation practiced differentiates entrepreneurs

Owner Managers Managers

Entrepreneurs

Reproduced from Burns (2011: 14)

 Definition of the small business
• Be owned and managed by the same individual
• Be legally independent, and
• Have a small share of the marketplace.

Bolton Report, 1971

Entrepreneurship vs small business
Growth potential
• Innovation
• Strategic Entrepreneurial
Objectives venture

• Growth
Small
Potential business

Innovation

Strategic objectives
 Entrepreneurship discussion
• We have seen that small businesses vary
from Entrepreneurial ventures
• We have also seen that there are many
varied ways in which entrepreneurship
has been defined

• Activity: take the following definitions

and discuss them in your groups; be
ready to give your views, pros and cons of
the definitions
 What is entrepreneurship?
• “Entrepreneurs use innovation to exploit or create change and opportunity for
the purpose of making profit. They do this by shifting economic resources from
an area of lower productivity into an area of higher productivity and greater yield,
accepting a high degree of risk and uncertainty in doing so” (Burns, 2011: 13)
• “One who engages in the process of creative exchange” (Watson, in Mole and
Ram, 2011) – the concept of “situated creativity”
• “Entrepreneurship is the pursuit of opportunity without regard to resources
currently controlled” (Stevenson, HBS, circa 1975)
• ‘An entrepreneur is an individual who brings together the factors of production in
an innovative way (usually in the form of a new business venture) to generate
economic value’.
• ‘The entrepreneur is rewarded from the economic rent generated as a return for
accepting risk’. (Wickham, 2006)
• Global Entrepreneurship Monitor (GEM) defines entrepreneurship as: 'any
attempt to create a new business enterprise or to expand an existing business by
an individual, a team of individuals or an established business’.
• Northern Ireland government’s Entrepreneurship and Education Action Plan
(2003) defined entrepreneurship as: ‘the ability of an individual, possessing a
range of essential skills and attributes, to make a unique, innovative and creative
contribution in the world of work, whether in employment or self-employment’.
 3 further types of
Entrepreneurship
• Corporate Entrepreneurship
• Social Entrepreneurship
• International Entrepreneurship

• Activity: What do you think these mean?

Corporate entrepreneurship
• “Corporate entrepreneurship is the
term used to describe entrepreneurial
behaviour in an established, larger
organisation. The objective is simple –
to gain competitive advantage by
encouraging innovation at all levels in
the organisation” (Burns, 2011: 471)
• Eg Google
 Social Entrepreneurship
• “Social entrepreneurship is about putting the social objective first and
utilising commercial skills to achieve it, in an entrepreneurial way.” (Burns,
2011: 85)
 International entrepreneurship
• International entrepreneurship can have two meanings:
1. International entrepreneurship describes “entrepreneurial behaviour in
different cultures and countries”
2. International behaviour describes “entrepreneurial behaviour across
national boundaries.” (Burns, 2011: 203)
Focus on growth
 Growth Businesses
• Most entrepreneurs have established their business
with the intention to grow
• Rapid growth is risky
• Highly strategic in focus
https://www.tutor2u.net/business/reference/
greiners-growth-model
 Information search
• The UK Department for Business, Energy &
Industrial Strategy
• www.gov.uk/government/organisations/department-for-business-energy-and-industrial-strategy
Time for questions and further
discussion as needed
 Learning Resources
• Storey, D. J. and Greene, F. J. (2010) Small Business and Entrepreneurship. 1st edition.
Financial Times Prentice Hall.
• Bridge, S., O’Neill, K. and Martin, F. (2012) Understanding Enterprise, Entrepreneurship and
Small Business. 4rd ed. Palgrave Macmillan.
• Barrow, C., Burke, G., Molian, D, and Brown, R. (2011) Enterprise Development: the
challenges of starting, growing and selling businesses, Andover, Cengage Learning
• Blundel, R. and Lockett, N. Exploring entrepreneurship: Practices and perspectives. New York:
Oxford University Press; 2011:431.
• Carter, S. and Jones-Evans, D. (2012) Enterprise and Small Business, 3rd ed. Harlow, Pearson
Education (E-Book on http://lrs.uwl.ac.uk see dawsonera).
• Deakins, D. & Freel, M. (2009) Entrepreneurship and Small Firms.5th ed. Maidenhead,
Berkshire: McGraw Hill Education.
• Petty, J.W., Palich, L.E., Hoy, F. & Longenecker, J.G. (2010) Managing Small Business : An
Entrepreneurial Emphasis, International Edition, 15th ed. China, Cengage Learning
• Stokes, D. and Wilson, N. W. (2010) Small Business Management and Entrepreneurship. 6th
edition. Cengage.
• Stokes, D., Wilson, N. & Mador, M. (2010) Entrepreneurship. Singapore: Cengage Learning.