Chapter 6 Entrepreneurship and Small Business Prepared by

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. Chapter 6 8 List some of the trends that are shaping entrepreneurship and small-business ownership. Copyright © 2011 by Nelson Education Ltd. 2

Small Business in Canada Chapter 6 Account for approximately 98% of all employers ≈ 55% of Canadian businesses employ fewer than 5 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. 3

ENTREPRENEURSHIP TODAY Chapter 6 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 Chapter 6 Desire to control one’s own destiny The opportunity for profit Create something new Personal satisfaction Lifestyle Copyright © 2011 by Nelson Education Ltd.

Types of Entrepreneurs Chapter 6 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 Copyright © 2011 by Nelson Education Ltd.

The Entrepreneurial Personality Ambitious Independent Self-confident Passionate Committed Chapter 6 Risk taking Energetic Creative

What is a Small Business? Independently managed Characteristics of a Small Business Owned by an individual or a small group Based locally Chapter 6 (although may serve wide market) Not a dominant company Copyright © 2011 by Nelson Education Ltd. 8

Small Businesses are found in various sectors: Services Wholesale Manufacturing Retail Chapter 6 Agriculture

Ways to Start Your Own Business Start from Scratch Buy an Existing Business Chapter

Chapter 6 Checklist Before Starting a Business Copyright © 2011 by Nelson Education Ltd.

Getting Started Find an idea Choose a form of business organization (see ch 5) Develop the business plan Financing Debt Equity Chapter 6 Angel investors (see Exhibit 6. 3) Venture capital Copyright © 2011 by Nelson Education Ltd. 12

Risky Business Economic Factors Chapter 6 Reasons for Business Failures Financial Causes Lack of

Managing a Small Business (how to keep going) Using outside consultants Hiring and retaining

Why Small Businesses Thrive § Independence and a better lifestyle § Personal satisfaction from work § Best route to success § Rapidly changing technology § Outsourcing Chapter 6 § Major corporate restructurings and downsizing Copyright © 2011 by Nelson Education Ltd. 15

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 Chapter 6 § Offer a higher level of personal service Copyright © 2011 by Nelson Education Ltd. 16

Disadvantages of Small Businesses § Difficulties in obtaining adequate financing § Limited managerial skills may impact growth § Expensive to comply with regulations Chapter 6 § Requires a major commitment by owner Copyright © 2011 by Nelson Education Ltd. 17

Mission of the BDC (Business Development Bank of Canada) Help people start and manage small businesses Help win federal contracts Chapter 6 Speak on behalf of small businesses http: //www. bdc. ca Copyright © 2011 by Nelson Education Ltd. 18

Trends in Entrepreneurship § Changing demographics create entrepreneurial diversity § Baby boomers, increase in minority groups Chapter 6 § Growth of “Web-Driven Entrepreneurs” Copyright © 2011 by Nelson Education Ltd. 19