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
Franchises’ functioning, franchisee, franchisor
- Not a form of ownership but a way of starting a business
- Food retailers such as McDonald’s, Yuzu Sushi and M&M
- Wide range of other businesses (automotive services, senior care, residential cleaning, real estate, etc.)
• The franchisee signs a contract to use the brand name,
trademark and operating formula of the franchisor and must usually must follow strict operating standards
• The franchisor offers support such as training, marketing and other services
• The franchisee must pay a franchise fee as well as
royalties, marketing and other fees normally based on a % of sales to the franchisor
Starting a business tips
Select a Type of Business
Get to know the field
Study the external environment
Capture opportunities in the marketplace
Follow your passion
Focus on your strengths and skills
Gain Business Experience (specific if possible)
Find a Mentor
Educate Yourself (Entrepreneurship Course)
Access Resources
Develop a Business Plan
Financing options when starting a business
- Personal resources
- Loans from family or friends
- Loans from the bank
- Angel investors (experienced business people or mentors)
- Venture capital (investment companies)
- Government programs
+ Crowdfunding is an increasingly popular source of funding for small companies. A local example is laruchequebec.com.
Business plans : the roadmap
Executive Summary
Description of Business
Competitive and Industry Research
Marketing Strategies
Operating Procedures
Personnel
Financial Projections
