chapter 6 copyright © 2011 by nelson education ltd. 1 prepared by norm althouse university of...

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Copyright © 2011 by Nelson Education Ltd.1

Prepared byNorm Althouse

University of Calgary

Prepared byNorm Althouse

University of Calgary

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LEARNING OUTCOMES


1 Explain why people become entrepreneurs, and what the different types of entrepreneurs are.

2 Describe the characteristics that successful entrepreneurs share.

3 Discuss how small businesses contribute to the Canadian economy.

4 Summarize the first steps to take if you are starting your own business.

5 Examine some of the special challenges of a small business owner.

6 Identify the advantages and disadvantages facing owners of small businesses.

7 Describe how the Business Development Bank of Canada helps small businesses.

8 List some of the trends that are shaping entrepreneurship and small-business ownership.

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Small Business in Canada

Account for approximately 98% of all employers

≈ 55% of Canadian businesses employ fewer than 5 people

≈ 95% of Canadian businesses employ fewer than 50 people

Approximately 40% of all new jobs are created by small businesses


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ENTREPRENEURSHIP TODAY

4Copyright © 2011 by Nelson Education Ltd.

People with vision, drive, and creativity who are willing to take the risk

of starting and managinga new business to make

a profit or of greatlychanging the scope and direction of an

existing firm.

People with vision, drive, and creativity who are willing to take the risk

of starting and managinga new business to make

a profit or of greatlychanging the scope and direction of an

existing firm.

EntrepreneursEntrepreneurs

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Reasons for Becoming an Entrepreneur

55Copyright © 2011 by Nelson Education Ltd.Copyright © 2011 by Nelson Education Ltd.

Desire to control one’s own destinyThe opportunity for profitCreate something newPersonal satisfactionLifestyle

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Types of Entrepreneurs

6Copyright © 2011 by Nelson Education Ltd.

Risk takers who start their own companies

Risk takers who start their own companies

Classic Entrepreneurs

Classic Entrepreneurs

Entrepreneurs who start a series of companies

Entrepreneurs who start a series of companiesMultipreneursMultipreneurs

Employees who apply theircreativity, vision, and

knowledgewithin a large corporation

Employees who apply theircreativity, vision, and

knowledgewithin a large corporation

IntrapreneursIntrapreneurs

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The Entrepreneurial Personality


AmbitiousAmbitious

IndependentIndependent PassionatePassionate

EnergeticEnergeticSelf-confidentSelf-confident

Risk takingRisk taking CreativeCreative

VisionaryVisionary

CommittedCommitted

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What is a Small Business?


CharacteristicsCharacteristicsof aof a

Small BusinessSmall Business

CharacteristicsCharacteristicsof aof a

Small BusinessSmall Business Based locallyBased locally (although may serve wide market)(although may serve wide market)

Based locallyBased locally (although may serve wide market)(although may serve wide market)

Independently managedIndependently managedIndependently managedIndependently managed

Owned by an individualOwned by an individualor a small groupor a small group

Owned by an individualOwned by an individualor a small groupor a small group

Not a dominant companyNot a dominant companyNot a dominant companyNot a dominant company

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Small Businesses are found in various sectors:


ServicesServices

AgricultureAgriculture

ConstructiConstructionon

ManufacturiManufacturingng

RetailRetail

WholesaleWholesale

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Ways to Start Your Own Business


Buy a FranchiseBuy a Franchise

Buy an Existing BusinessBuy an Existing Business

Start from ScratchStart from Scratch

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Checklist Before Starting a Business


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Getting Started

Find an idea

Choose a form of business organization (see ch 5)

Develop the business planFinancing

Debt Equity Angel investors (see Exhibit 6.3) Venture capital


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Risky Business


Lack of ExperienceLack of Experience

Financial CausesFinancial Causes

Economic FactorsEconomic Factors

Reasons forBusinessFailures

Reasons forBusinessFailures

Personal ReasonsPersonal Reasons

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Managing a Small Business (how to keep going)


Using outside consultantsUsing outside consultants

Hiring and retaining employeesHiring and retaining employees

Going global with exportsGoing global with exports

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Why Small Businesses Thrive


Independence and a better lifestyle

Personal satisfaction from work

Best route to success

Rapidly changing technology

Outsourcing

Major corporate restructurings and downsizing

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Why Stay Small? (the advantages)


React more quickly to changing market forces

Develop and market ideas faster, with fewer financial resources and fewer people

Efficient operations keeps costs down

Serve specialized markets

Offer a higher level of personal service

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Disadvantages of Small Businesses


Difficulties in obtaining adequate financing

Limited managerial skills may impact growth

Expensive to comply with regulations

Requires a major commitment by owner

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Mission of the BDC (Business Development Bank of Canada)


Help people start and manage small businesses

Help people start and manage small businesses

Help win federal contractsHelp win federal contracts

Speak on behalf of small businessesSpeak on behalf of small businesses

http://www.bdc.ca http://www.bdc.ca

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Trends in Entrepreneurship


Changing demographics create entrepreneurial diversity

Baby boomers, increase in minority groups

Growth of “Web-Driven Entrepreneurs”

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