CH4 - Entrepreneurship, Small Business, and New Venture Creation Flashcards
def. small business
owner-managed business with fewer than 100 employees
how much do small business contribute to Canada’s GDP
30% of Canada’s GDP over the past decade
def. new venture
Recently formed commercial organization that provides goods and/or services for sale
def. entrepreneurship
process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize on it
reasons why people want to be entrepreneurs
1 - goal of independence—independence from working for someone else coupled with some reasonable degree of financial security.
2 - goal of growth and expansion—that is, to transform their venture into a large business
3 - sometimes no specific goal
Entrepreneurial Characteristics
resourcefulness and a concern for good long-term customer relations
Some are behavioural (e.g., taking initiative), others are personality traits (e.g., independence), and still others are skills (e.g., problem solving)
Intrapreneurs
People who exhibit entrepreneurial characteristics and create something new within an existing firm or organization
difference between entrepreneurs and intrapreneurs
intrapreneurs typically do not have to concern themselves with getting the resources needed to bring a new product to market because big companies tend to have the necessary resources already available
percentage of small businesses, medium sized and large businesses in Canada (among all businesses)
small : 97.9%
medium : 1.9% (100 to 499 employees)
big : 0.2% (500+ employees)
importance of small businesses in general workforce + specific sectors
- half the workforce is employed by small business (all industries)
- 80% of employment in four industries: agriculture, other services, accommodation and food services, and construction
importance of new firms
new firms the main source of job creation + also responsible for most new products and services
small businesses created 35.8% of all private-sector jobs in Canada
Women role in small businesses
They now account for half of all new businesses formed. However, on a negative note, women lead only 14.8% of the small and medium-sized businesses that export goods and services
inclusion of POC
There are many organizations in Canada that are promoting greater inclusion and higher participation rates for youth entrepreneurship and increased opportunities for Black and Indigenous entrepreneurs
ex. Business Development Bank of Canada (BDC) has an Indigenous loan program specifically designed for the needs of Indigenous entrepreneurs
3 ways to start up a small business
-> start from scratch
-> buying an existing business
- taking over a family business
-> buying a franchise
benefits and drawbacks of buying an existing business
-> increases the chances of success as the business has already proven its ability to attract customers + established relationships with lenders, suppliers, and other stakeholders
-> a more clear picture of what to expect instead of estimate
-> BUT uncertainty about finances, may have bad rep, may be badly located
benefits and drawbacks of taking over a family business
+ : can provide otherwise unobtainable financial and management resources—often valuable reputation -> important community + business relationships, employee loyalty often high, and an interested, unified family management and shareholders group may emerge
- : may be disagreements over which family members assume control, expectations can be problematic
benefits and drawbacks from buying a franchise
+ : not having to build from scratch, well-known brand, may send training program + advice, can be your own boss
for the franchise - people are working for themselves, so higher profit, they share the cost of advertising, attain rapid growth, not details of local operation
- : long agreements - if you don’t abide you might be sued, no creativity, pay for advertising
4 key reasons for success in small businesses
1 - hard work, drive, and dedication : commitment is a must, time and effort
2 - market demand for the product or service
3 - Managerial competence : understanding how to manage -> training, experience, expertise of others
4 - Luck : important but cannot be relied on
4 key reasons for failure in small businesses
1 - Managerial incompetence or inexperience : overestimating skills or believe hard work alone ensures success
2 - Neglect : not enough commitment
3 - Weak control systems : if control systems don’t signal potential problems
4 - Insufficient capital : need to have enough capital for the first six months w/o profit
