Ch4 Flashcards
To be included in Canada’s Business Register, a business must have…
at least one paid employee, an annual sales revenue of $30 000 or more, or be incorporated
A goods-producing business in the Register is considered small if it has ___ than ___ employees
goods-producing, less, 100
A service-producing business is considered small if it has fewer than ___ employees
50
What two sources of information does the government use to report small-business stats?
Business Register (tracks businesses) and Labour force Survey (tracks individuals)
Labour Force Survey
uses info from individuals to make estimates of employment and unemployment levels
self-employed
if they are working owners of a business that is incorporated, or if they work for themselves but do not have a business, or if they work without pay in a family business
Which group is not counted in the Business Register?
unincorporated businesses operated by a self-employed person with no employees
nascent entrepreneurs
people who are trying to start a business from scratch
small business
an independently owned and managed business that does not dominate its market
The three most common criteria used to determine when a firm comes into existence
when it was formed, whether it was incorporated, and if it sold goods/services
- considered a new venture/firm if it became operational within the last 12 months
entrepreneurship
the process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize
entrepreneur
a business person who accepts both the risks and the opportunities involved in creating and operating a new business venture
intrapreneurs
people who create smthg new within an existing large firm/organization
private-sector
the part of the economy that is made up of companies and organizations that are not owned/controlled by the government
What is the most common source for new ventures?
- work experience
What are the key characteristics of an idea that is likely to succeed?
- idea adds value for the customer
- idea provides a sustainable competitive advantage
- the idea is marketable and financially viable
- the idea has low exit costs
sales forecast
an estimate of how much a product or service will be purchased by prospective customers over a specific period
How does one typically determine financial viability?
- prepares financial forecasts, two- to three-year projections of a venture’s future financial position and performance
- typically includes estimated start-up costs, cash budget, income statement, and balance sheet
What are the three main entry strategies used by new ventures?
introduce a totally new product/service, introduce a product/service that will compete with existing companies but adds a new twist, or franchise
franchise
an arrangement that gives franchisees the right to sell the product of the franchiser
business plan
a document that describes the entrepreneurs proposed business venture, explains why it is an opportunity, and outlines its marketing plan, operation and financial details, and its managers’ skills and abilities
Sample structure of a business plan
cover page, executive summary, table of contents, company description, product or service description, marketing, operating plan, management, financial plan, and supporting details/appendix
cover page
name of venture and owners, date, contact person and address, any other contact info, social media, and the name of the organization the plan is presented to
executive summary
1-3 page overview of the business plan
company description
identifies the type of company, describes the proposed structure fo the organization (sole proprietorship, corporation, etc)
typical organization of this section: name and location, company objectives, nature and primary product/service of the business, current status, history, and legal form
product/service description
indicates what is unique about product. highlights competitive advantages, legal protection, and dangers of technical or style obsolescence
marketing in business plan
market analysis and marketing plan
operating plan
explains the type of manufacturing or operation system to be used. describes facilities, labour, raw materials, and processing requirements
financial plan
financial needs and expected resources. include financial statements, including cash budget, balance sheet, and income statement
management
identifies the key players and cites experience and competence they possess
bootstrapping
doing more with less
What are the two main types of financing?
debt and equity
What does the entrepreneur have to have to obtain debt financing?
adequate equity investment in the business, typically 20 percent of the business’s value, and collateral
collateral
assets that a borrower uses to secure a loan or other credit, and that are subject to seizure by the lender if the loan isn’t repaid according to the specified repayment terms
most common sources of equity financing
personal savings, love money, private investors, and venture capitalists
- love money: investments from friends, relatives, and business associates