Qualification - Higher National Diploma in Business

Unit Name - Entrepreneurship and Small Business Management

Unit Number - Unit 9

Assignment Title - How to set up a small business from an entrepreneurial mind-set?

Learning Outcome 1: Explore and illustrate the range of venture types that might be consider entrepreneurial

Learning Outcome 2: Assess the impact of small businesses on the economy.

Learning Outcome 3: Determine and assess the key aspects of an entrepreneurial mindset.

Learning Outcome 4: Examine the different environments that foster of hinder entrepreneurship.

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Assignment brief:
A small medium trading company, being registered as sole proprietorship, is planning to approach your consultancy firm to develop its' business. You, as a business consultant, are required to give advice to the trading company in various aspects of business development (e.g. different range of venture type).

Since the trading company is such a small company and does not have professional experts. Therefore, it has only a flat structure and a manager to deal with the business issues himself. As the workload of daily operation is being complicated and is to further streamline the business, the manager plans to outsource the business development planning.

You have agreed to offer your consultancy services under a half yearly contract which seems to be the most appropriate arrangement due to shortage of funds. After having signed up the contract, you are being asked to provide a report to the manager of this potential organization.

In the above scenario of a small medium company, produce a profile of a selected small business (including the introduction of the business nature & characteristics of a SME).


A) Introduction

The rationale for this report

This report has been made to understand how to set up a small business from an entrepreneurship mindset. This report contains information about what is an SME or Small Medium Enterprise, how to set up one, and what skills are required. A Hong-Kong based fintech company Apoidea Group as a research subject. The potential client sought for my professional advice as they are planning for further development.

Company Profile
Apoidea is a technology company based in Hong Kong. The company was incorporated on the 11th of September 2019. The team consists of only 3 co-founders. This company offers AI-powered business solutions and produces automated financial software. The highest share of the company is held by Justin Chiu (Apoidea.ai, 2021). Their software is made to cultivate and present critical economic and business information with the help of artificial intelligence. Their goal is to take the current technological advancements and merge them into the financial world with various innovative implementations. Moreover, they had also generated $34 as revenue in 2019.

Educational and industry Background of one of the co-founders

This part contains the Industry and educational background of "Hardy Liu" who is one of the co-founders of the Apoidea group. He studied B.B.A., Finance and Information System Management from the Hong Kong University of Science and Technology. He also studied at the University of Virginia (Apoidea.ai, 2021). From 2010 to 2013 he was working as a Derivatives trader in ICBC Asia. From 2013 to 2015 he was an Investment Analyst in LST capital partners. From 2015 to 2018 he worked as a TMT industry analyst in Macquarie Group. In 2018 he joined Apoidea as a co-founder.

Explain the roles and characteristics of micro, small and medium-sized organizations.


Introducing of franchise, merger, and acquisition

The franchise is considered as the aspect where an organisation expands its business. It is termed the authorisation of an organisation to carry out a specified activity (Dogru et al., 2020). In this regard, the distribution of the products and services of a company is done by a franchisor. The person is responsible for establishing the trademark of the brand. The main advantage of the franchise is the excellent gaining of financial assistance.

A merger is defined as a business process where two different entities combine to create a joint organisation. In this regard, new ownership is created, along with the management structure. The primary aim of opting for mergers is the lowering of operational costs. Apart from that, the joint organisation has the capability of expanding into a new market, along with an excellent boosting of revenue.

In the case of acquisition, the shares of one organisation are purchased by another organisation, and the former gains effective control over the latter one (Dogru et al., 2020). At present, acquisitions have become very common. The primary advantage of acquisition is the gain of excellent access to capital. Moreover, effective market power can also be gained.

Differentiation between sole proprietorship, partnership, and limited companies (private)


The sole proprietorship is described as a kind of unincorporated entity, which is owned by a single person (Kiran, 2017). The person is also called a sole trader. In this case, the profit is not shared, and is enjoyed by a single person.
On the other hand, a partnership business is defined as the arrangement between two or more parties who agree to work together. However, a limited company is defined as the type of business firm where there is a limitation on the amount of liability undertaken by the shareholders of the company.

A limited company can be a public or a private one. In the case of a public limited company, the shares are traded on the stock exchange. However, a private limited company does not trade shares publicly, and there is a limitation of 50 shareholders (Teoh et al., 2021). Apoidea Group is a private limited company, and it has effective management flexibility. A sole proprietorship can be easily formed and has less government control. However, the formation of a partnership business is not so easy but it has fewer tax forms as compared to limited companies. The members of the limited companies are not liable for the action of the company unlikely the sole proprietorship, and the partnership business.

Also try to explain the meaning of entrepreneurship to the potential client in the related social public and its' impact on the social economy growth.


Meaning of Entrepreneurship

Entrepreneurship refers to the act of creating and running a business enterprise. The motive behind Entrepreneurship is to generate profit. But it is not limited to that. Entrepreneurship also means having a vision and taking risks to turn that vision into a functioning business. Those who possess the capabilities of setting up an enterprise are called entrepreneurs (Egan-Wyer, Muhr, and Rehn, 2018). Entrepreneurs have a significant impact on a country's success in the global marketplace. Entrepreneurship often faces many obstacles and roadblocks blue powering through these and setting up a strong foothold in the market is a true reflection of the skills of an entrepreneur.

Differentiate between serial entrepreneurs, intrapreneurs and owner-manager.


Concepts of serial entrepreneur, intra-preneur, and owner-manager
It is evident that an entrepreneur comes up with a new business idea, and starts a business on the basis of it. A serial entrepreneur is a person who never dares to take on any challenges (Yun et al., 2019). After the establishment of a business, a serial entrepreneur opts for moving on to a new venture by delegating the responsibility of the previous one. An intra-preneur is a person who adopts a direct responsibility for turning an idea into a finished product relying on risk-taking and innovation. The person acts as an entrepreneur, and he/she possesses all the qualities of an entrepreneur. An owner-manager is a person who owns and manages a business. The person is responsible for carrying out various activities within the business, and the entire responsibility of the business rests on his/her shoulder (Yun et al., 2019). Apart from that, the person does not have to answer anyone while making any decision for the company.

How to maintain creativity and innovation in SME management from entrepreneurial idea and the business protection from intellectual property rights.


Maintenance of innovation and creativity in an SME
There is a high need of maintaining innovation and creativity within an SME for gaining high profit. In this regard, there is a need of fostering an open and creative working environment (Meutia, Ismail, and Ummi, 2018). Apart from that, the opinions and views of the employees should be valued, and respected by the entrepreneur. In this regard, various innovative ideas can be obtained. It plays an important role in the success of an SME. Along with that, it can be said that encouragement of diversity is one of the most significant aspects for maintaining innovation and creativity in small and medium-sized businesses (Genc, Dayan and Genc, 2019). This is because various creative ideas can be obtained from a diverse workforce.

The explanation of need in establishing the SME (e.g. role & the contribution to the economy at national, regional and local level. 


Financial analysis of the organisation
For the purpose of the financial analysis of Apoidea Group, the annual reports of the organisation have been consulted to gain a better understanding regarding the profit and loss that have been experienced by the organisation over the past three years, that is, 2017, 2018 and 2019.

Table 1: Profit loss statement for Apoidea Group


2019 (HK$)

2018 (HK$)

2017 (HK$)

Sales Revenue




Investment income




Employee benefits expenses




Indirect employment costs




Payroll tax




Less: Operating Expenses




Depreciation and amortisation expense




Finance costs




Advertising & Marketing expense




IT costs




Rental expenses on operating leases




Corporate and administration expenses




Occupancy expenses




Other expenses








Net Profit and loss for the year




(Source: apoidea.ai, 2017; apoidea.ai, 2018; apoidea.ai, 2019)

Based on the data that has been presented above in the profit and loss statement that has been acquired from the annual report of the company, it can be stated that the organisation has experienced a decline in the net fee income and therefore, it can be stated that the firm had experienced a mild loss in that year.

As per the data that has been presented above, it can be stated that the organisation was successful in overturning the situation of loss that was experienced in the previous year and was successful in earning a profit of about HK$707,000, over the profit of HK$90,000 that was earned in the year 2017. This has been possible due to the various strategic decisions that have been made by the organisation with respect to its business expansion processes.

As per the data that has been presented above, it can be deciphered that the organisation has experienced further growth with respect to its business, however, the same has been very low in comparison to the previous year. The profit that has been earned in the year 2019 was HK$717,000 which is quite low as compared to the profit earned the previous year, that is, HK$707,000 in 2018.

Protection of the patent right in an SME
In the case of protecting the patent right in an SME, the management must think of keeping the intellectual properties under scrutiny. Moreover, there is a need for expert consultation in this regard. Apart from that, it can be said that often SMEs opt for a trademark to protect their patent rights (Lv, Zeng, and Lan, 2018). There is a high need of protecting the patent rights so that other organisations cannot imitate the products and services, and the uniqueness can be kept intact. There is a need of protecting the IP of the business without any form of delay. Businesses of Hong Kong can gain patent right as per the Hong Kong Patents Ordinance of 1997 (Wong et al., 2018).

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Carry out an analysis of the business using comparative measures of performance (e.g. size, turnover, profit, rate of growth) and international differences impact upon business start-up.


Legal requirements in the overseas country
The benefits to establish the market in Hong Kong gives the opportunity for expanding the market in Malaysia and proximity to connect with the east and the west point of the mainland. Malaysia makes inspiration for the growth of SMEs. Malaysia is the financial hub for business entities and in the case of SMEs, they must know the legal requirements of the market are described. According to Article 1, it states that the SME needs to improve the business environment and it promotes logical development for creating more job opportunities for both the rural and the urban people and focusing on national, economic, and social development. Article 2, for the law, SME needs to make different forms of enterprises and establish the territory for the people of Malaysia and provide jobs to the local people and it must be associated with the industrial policies and make business operations for the company.

The SME shall be laid down by the department and the state council in charge with the respect of enterprises and on the basis of the number of employees, total assets and different trades shall be submitted for approval.

In case of establishing SME, the company must register their name and it the local counsel support the employers. It has been found that the Malaysian government has been issued 10 billion for the supporting of SMEs (Mondaq.com, 2021).

Targeting customers
Apoidea provides fintech services to the clients and makes solutions to their clients and they target their customers in terms of following the model of segmenting, targeting, and positioning (Simester, Timoshenko and Zoumpoulis, 2020).

Demographic: in this step, dividing the group in terms of income level and occupation includes the type of business of the client. In this step, Apoidea segments the company according to its total revenue and type of business (En.prnasia.com, 2021).

Age: The company must target people from who are already experienced and owner of the business that includes aged to young people.

Occupation: the company target the people who are the entrepreneur of other company and face issues to make business successful. They must target on that people.


Income groups: The Company must select the medium to a high-income group of companies.

Accessible: the selected company must be accessible for Apoidea and consider the factors like size, growth, and revenue of the company.

In this step, the company must focus on the functional positing and experiential positioning of the product. In China, there are other fintech companies also exist. Therefore, forgetting the competitive advantage Apoidea must present the unique approach of the products.

Functional positioning: it refers to solve problems of the customer and Apoidea needs to design their products in such a way that it helps to solve the problems of the customer.

Experiential positioning: The products must design in such a way that it helps to connect with the customers in the market (En.prnasia.com, 2021).

There are certain benefits of establishing an SME. In any SME helps to contribute on the economy of the UK and SME helps to give increases the GDP of the country (Genc, Dayan and Genc, 2019). Therefore, if SME expands in the country, then it gives opportunity to the youngsters and helps to improve their skills. Moreover, building an SME is quite beneficial because it requires low budget to develop and get established. Also, the risks are low as compared to other business forms. Therefore, SMEs grow faster and create significant employment.

Carry out an analysis to the potential client whether it is appropriate for him to set up a SME and the advantages and disadvantages in setting up a SME from entrepreneurial mindset.


Comprehensive view for SME
SMEs are defined as small or medium-sized businesses whose employee base should be less than 250. There is a need for low investment in starting an SME. The primary characteristic of an SME is that it always emphasises updating its learning. Moreover, striving for continuous improvement is also one of the characteristics of a small-and-medium-sized business (Genc, Dayan and Genc, 2019). The primary role of an SME is to accomplish the needs and desires of different segments of customers.

SMEs of a country have an excellent contribution to the economy. In this regard, it can be said that SMEs provide excellent employment opportunities, which helps reduce the unemployment rate of a country. Apart from that, it can be said that this type of business also has a contribution towards the export of a country. The facilitation of equitable distribution of income is one of the most significant aspects in the case of an SME (Dayan and Genc, 2019). Along with that, it can be said that SMEs represent a source of entrepreneurship abilities, along with high innovation.

What skill sets are required for establishing a SME and are there any differences from other type of organizations?


Required skills for starting an SME

It is obvious that starting an SME is not difficult as the initial investment is minimal. However, there is a requirement for various skills to start an SME. One of the needed skills is the work delegation skill (Yuldinawati, Van and Van, 2018). The entrepreneur has to delegate the daily tasks properly to a low number of employees. As a result, effective outcomes can be gained from the employees, which is highly beneficial for the organisation. Communication skill is one of the vital skills required to start an SME. Relying on the skill, an entrepreneur maintains a good relationship with the employees, along with the customers. As a result, the employees increase their engagement towards the work, and it also exerts a positive impact on their productivity.

One of the most required skills for establishing an SME is decision-making skill. This skill is important because the owner of the SME has to deal with various tough situations. In this regard, the person has to take appropriate decisions to overcome the situation (Meutia, Ismail, and Ummi, 2018). Apart from that, there is a need for financial management skills for setting up an SME. It is helpful for the owner to deal with various financial aspects adequately.

Carry out analysis the rewards and risks in starting up a SME and how to mitigate the risks and uncertainties during set up.


Risks to establish SME

The wealth and the formation of the vast consumer is the strength for SMEs in a country with high population helps to make the sustainable growth of the market. However, there is a range of risk factors that are responsible to create a barrier for making business. The risk factors are summarised below:

Market access: The local distribution of the markets and the buying habits of the local consumers are varied from one country to another make the difficult to access the market. It has been found that the market environment is completely detached from the outer world and the regulatory requirements of a particular country make difficulties to the access of the market.

Preference of clients: The environment of the consumer is diverse for and it is varied and if the culture is not transparent to the outer world and without knowing the preference of customers, it will be a risk for the SME like Apoidea Group for unable to fulfil the need of the other business groups (Song and Zhang, 2018).

Government challenges: The transparency of the government procedure helps to develope the growth of SMEs. The rules are associated with the manufacturing; designs of the products must comply before entering the market (Song and Zhang, 2018). The inadequate funding, poor infrastructure of a particular country and lack of management skills make challenge for the SME.

Intellectual property rights: This could be the issue for the Apoidea Group for acquiring the trademark or the copyright system for the company. The trademark and the copyright system are essential for making the identity of the company. The policies of country are not making the transparency of about property right system then it creates risk for the SME. The benefits of doing business of SME help to increase brand equity and gaining opportunity to expand their market.

Mitigation method to avoid risks

1. The company must be clear about the legal requirements of Hong Kong and develop a framework to adopt the requirements of China for accessing the local market (Wang, Wang, and Wang, 2017).

2. The company must know the preference of the customer and understanding the satisfaction level of customers with other financial media companies of Hong Kong. They must survey the requirements of the company about fintech services and knowing their culture help to make an effective approach towards the company.

3. The company must consult with the professional for taking advice regarding the government policies and adopt those policies for sustainable growth in the market (Genc, Dayan and Genc, 2019).

4. Primarily, the company needs to trademark, which is inexpensive and it is needed fast and helps to save the property rights of the company. The company files a patent and the application must translate into national language and it must make to save from public disclosure.

Conclusion and recommendations

A Hong Kong-based Small Medium Enterprise or SME, Apoidea group has been taken as an example. Then the company history and the details of the industry experience of one of its co-founders have been describing. By going through all of this information, how to set up and a small business from an entrepreneurial mindset can be understood.

The company can hire more highly qualified employees to strengthen the workforce. This will be very helpful to manage more work and getting work done faster. Ultimately the more work the company gets done, the more revenue it earns (Genc, Dayan and Genc, 2019).
The company can expand its field of operation and develop software that can be used in other parts of the industry. Artificial intelligence-powered software can be very helpful to many other sectors like production, management, resource keeping, and many more (Sardo, Serrasqueiro Alves, 2018).







Are You Looking for Assess the impact of small businesses on the economy?

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Learning Outcomes and Assessment Criteria:

Learning Outcome




LO1: Explore and illustrate the range of venture types that might be consider entrepreneurial.

P1: Examine different types of entrepreneurial ventures and explain how they relate to the typology of entrepreneurship.


P2: Explore the similarities and differences between entrepreneurial ventures.

M1: Investigate a diverse range of entrepreneurial ventures to demonstrate an understanding of entrepreneurship in both the public and corporate sector.


D1: Critically examine the scope, development and growth of entrepreneurial ventures.

LO2: Assess the impact of small businesses on the economy.

P3: Interpret and assess relevant data and statistics to illustrate how micro and small businesses impact on the economy.


P4: Explain the importance of small businesses and business start-ups to the growth of the social economy.

M2: Evaluate the differences small, medium and large businesses make to the economy, applying relevant data and statistics.

D2: Critically examine how small businesses have an impact on different levels of the economy (local, regional, national) and in an international context.

LO3: Determine and assess the key aspects of an entrepreneurial mindset.

P5: Determine the characteristic traits and skills of successful entrepreneurs that differentiate them from other business managers.


P6: Assess how aspects of the entrepreneurial personality reflect entrepreneurial motivation and mindset.

M3: Explore and examine different lines of argument relating to entrepreneurial characteristics.

D3: Analyse the characteristic traits, skills and motivational drivers of successful entrepreneurs, supported by specific examples.

LO4: Examine the different environments that foster of hinder entrepreneurship.

P7: Examine, using relevant examples, how background and experience can hinder or foster entrepreneurship.

M4: Analyse the link between entrepreneurial characteristics and the influence of personal background and experience to specific successful entrepreneurs

D4: Critically evaluate how background and experience influences entrepreneurs, both positively and negatively, by comparing and contrasting examples.

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