Entrepreneurship Flashcards
Entrepreneurs
People who risk their time, money, and other resources to start and manage a business.
Reasons to be an entrepreneur
1- Being your own boss
2- Financial Success
3- Job Security
4- Quality of life
2 types of entrepreneurs
Local and global
Local entrepreneur
- self-employed
- franchises
- local service industry
• Launch options
– From scratch
– Purchase existing business
– Franchise
• Minipreneurs
• Local help
Global entrepreneur
• innovative (mark Zuckerberg, Opera Winfrey, Jeff Bezos)
• Risk & Reward
• The constant need for
funding
• Education & attributes
• Assistance
Local entrepreneur advantages and opportunities
Advantages
• Independence
– Be your own boss
• Higher standard of living
– As an owner
• Have an opportunity present
itself
Opportunities
• Solve a problem or a need
• Personal customer services
• Market niches
> market comes first
product or service comes after
Opportunities for small business
Opportunities:
Market Niches
Personal Customer Service
Lower Overhead Costs
Technology
Innovations, risks and rewards for global entrepreneurs
Innovations :
• New markets • New products • New production methods
(processes) • New forms organisation
High risk
High reward :
return on investment, leverage
> it is the innovator (inventor) or the financier who gets the higher reward
Capital for global entrepreneurs
• High value innovative ventures require lots of capital
• Where does it come from?
- Banks, when assets can be given as a guarantee
- Venture capital or angel funding
> Seek 20% to 30% annual return on investment
> Actively manage the business
> He/she who has the gold, makes the rules
Minipreneurs
Minipreneurs – individuals launching super small scale enterprises. Include microbusiness, freelancers, side businesses, weekend entrepreneurs, hobbypreneurs, Web-driven entrepreneurs, free agents and more..
Qualities of an entrepreneur
Vision, Desire and passion, Self-reliance, Energy, Ability to deal with uncertainty, Business knowledge, Determination, Resiliency, Market awareness, Accountability, Persuasiveness, Self-confidence, Problem-solving ability, Networking ability, Good people judgment
Launch options
Starting from scratch
Buying an established business
Buying a franchise
Starting a business from scratch pros and cons
Pros :
• The choice of target market, product quality and selection, location, suppliers, operating structure, marketing and general concept is up
to you.
• You don’t have to deal with the prior owner’s bad decisions
i.e. location, employees, reputation, etc.
+ Note: In Quebec, if you purchase a business in the same location, you must offer the employees continued employment.
Cons :
• There are a lot of decisions to make, which can mean a lot of pressure and can be time-consuming.
• It can be hard to get credit for a business that is not proven.
• Logistics can be challenging, i.e. arranging suppliers, hiring employees, etc.
• It can take a significant amount of time to build a reputation and a
clientele and for the business to become profitable.
Buying an established business pros and cons
Pros :
• The concept, organizational structure, marketing and operating practices are in place.
• Relationships with suppliers are established.
• Experienced employees are available.
• Clientele is established and company’s reputation is made.
• Financing may be easier to obtain due to proven track record.
+ Note: These assume that the company is well
run and profitable.
Cons :
• Working with someone else’s idea may not be as rewarding.
• You are obliged to keep the existing employees.
• You inherit the reputation, clientele, products, etc. which may not be what you want.
• The purchase price may be difficult to negotiate and more expensive than starting on your own.
Buying a franchise pros and cons
Pros :
• Partnering with established brand; existing reputation and customer base as well as promotional support
• Start-up is easier (assistance with location, set-up, equipment selection, negotiated prices with suppliers, existing operating procedures)
• Training and ongoing operational management coaching
• Access to financing
• Less risk; lower failure rate due to above points
Cons :
• Less opportunity for creativity; need to follow standard procedures and subject to constant evaluation of performance
• Tied to national brand’s mistakes and decisions
• Purchase price (franchise fee) and on-going royalties, marketing fees and other fees can be high and reduce profitability
