Chapter 6 - Edwards School of Business

Report
Chapter 6
Prepared by
Norm Althouse
University of Calgary
Copyright © 2011 by Nelson Education Ltd.
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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.
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8 List some of the trends that are shaping entrepreneurship and small-business
ownership.
Copyright © 2011 by Nelson Education Ltd.
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Small Business in Canada
 Account for approximately 98% of all employers
 ≈ 55% of Canadian businesses employ fewer than 5
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people
 ≈ 95% of Canadian businesses employ fewer than 50
people
 Approximately 40% of all new jobs are created by
small businesses
Copyright © 2011 by Nelson Education Ltd.
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ENTREPRENEURSHIP TODAY
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Entrepreneurs
Copyright © 2011 by Nelson Education Ltd.
People with vision, drive,
and creativity who are
willing to take the risk
of starting and managing
a new business to make
a profit or of greatly
changing the scope
and direction of an
existing firm.
Reasons for Becoming an Entrepreneur
 Desire to control one’s own destiny
 The opportunity for profit
 Create something new
 Personal satisfaction
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 Lifestyle
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Types of Entrepreneurs
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Classic
Entrepreneurs
Risk takers who start
their own companies
Multipreneurs
Entrepreneurs who start
a series of companies
Intrapreneurs
Employees who apply their
creativity, vision, and
knowledge
within a large corporation
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The Entrepreneurial Personality
Ambitious
Independent
Self-confident
Passionate
Committed
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Risk taking
Energetic
Creative
Visionary
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What is a Small Business?
Independently managed
Characteristics
of a
Small Business
Owned by an individual
or a small group
Based locally
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(although may serve wide market)
Not a dominant company
Copyright © 2011 by Nelson Education Ltd.
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Small Businesses are found in various sectors:
Services
Wholesale
Manufacturing
Retail
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Agriculture
Construction
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Ways to Start Your Own Business
Start from Scratch
Buy an Existing Business
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Buy a Franchise
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Chapter 6
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 plan
 Financing


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

Debt
Equity
Angel investors (see Exhibit 6.3)
Venture capital
Copyright © 2011 by Nelson Education Ltd.
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Risky Business
Economic Factors
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Reasons for
Business
Failures
Financial Causes
Lack of Experience
Personal Reasons
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Managing a Small Business (how to keep going)
Using outside consultants
Hiring and retaining employees
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Going 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
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 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
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 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
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 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 win federal contracts
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Speak on behalf of small businesses
http://www.bdc.ca
Copyright © 2011 by Nelson Education Ltd.
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Trends in Entrepreneurship
 Changing demographics create
entrepreneurial diversity
 Baby boomers, increase in minority groups
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 Growth of “Web-Driven Entrepreneurs”
Copyright © 2011 by Nelson Education Ltd.
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