Starting Your Own Business: The Entrepreneurship Alternative 6 Chapter Starting Your Own Business: The Entrepreneurship Alternative

Learning Objectives LO 6.1 Describe what is an entrepreneur and the different types of entrepreneurs. LO 6.2 Explain why people choose to become entrepreneurs. LO 6.3 Discuss factors that support and expand opportunities for entrepreneurs. LO 6.4 Identify the traits of successful entrepreneurs. LO 6.5 Summarize the process of starting a new venture. LO 6.6 Explain intrapreneurship.

What is an Entrepreneur? Entrepreneur: A person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business Differ from many small-business owners in their strong desire to make their business grow Differ from managers through their overriding responsibility to use the resources of the organization to accomplish their goals Willing to take risks

Categories of Entrepreneurs Classic entrepreneurs Serial entrepreneurs Social entrepreneurs

Test Your Knowledge What kind of entrepreneur starts many businesses in succession? a) Classic entrepreneur b) Social entrepreneur c) Serial entrepreneur d) Intrapreneur Answer: c

Reasons to Choose Entrepreneurship as a Career Path In an average month, Canadians start approximately 23,000 new businesses Recent decades have shown a heightened interest in entrepreneurial careers People choose entrepreneurship for many reasons: Dissatisfaction with traditional work Their ideas fulfill customer needs Freedom to make own decisions

Why People Become Entrepreneurs FIGURE 6.2 Why People Become Entrepreneurs

Reasons to Choose Entrepreneurship as a Career Path Being Your Own Boss Self-management is the motivation that drives many entrepreneurs Financial Success Entrepreneurs are wealth creators and idea generators Job Security Over the past ten years, large companies have eliminated more jobs than they have created Quality of Life Starting a business gives the founder some choice over when, where, and how to work

Test Your Knowledge What is the overriding responsibility of an entrepreneur? to manage people to make as much money as possible to use the company resources to accomplish goals to be ethical and socially responsible Answer: c  

The Environment for Entrepreneurs FIGURE 6.3 Factors Supporting and Expanding Opportunities for Entrepreneurs

Globalization The rapid globalization of business has created many opportunities for entrepreneurs Most of the fastest-growing small Canadian companies have international sales (most to the United States) Entrepreneurship is growing worldwide; levels vary by country

Information Technology Education/ Information Technology Education Students at many colleges and universities can take a major in entrepreneurship. Dozens of other colleges and universities offer an emphasis in entrepreneurship and hundreds more offer one or two courses in how to start a business Many schools offer internships with startups. Information Technology Technology has given entrepreneurs tools that help them compete Entrepreneurs have used information technology to revolutionize industries

Demographic and Economic Trends Demographics on Entrepreneurships and Small Business Two groups are most likely to start their own businesses Immigrants to North America People between the ages of 55 and 64 (have access to retirement savings/home equity; want to keep working after retirement) Flexible, adaptable entrepreneurs will have most success

FIGURE 6.4 Characteristics of Entrepreneurs

Characteristics of Entrepreneurs Vision: an overall idea for how to make business ideas successful High energy level: a willingness to work hard Need to achieve: want to excel and achieve difficult goals Self-confidence: fearlessness in the face of difficult odds Tolerance for failure: not easily discouraged Creativity: devise innovative ways to overcome difficult problems and situations; have new ideas for good and services Tolerance for ambiguity: take business uncertainties in stride Internal locus of control: belief in control of own fates

Guidelines for Selecting a Business Idea List your interests and abilities. Include your values and beliefs, your goals and dreams, things you like and dislike doing, and your job experiences Make another list of the types of businesses that match your interests and abilities Read newspapers and business and consumer magazines. Learn about demographic and economic trends that discuss future needs for products that no one yet offers Carefully evaluate existing goods and services. Look for ways to improve them Decide on a business that matches what you want and offers profit potential Do marketing research to decide whether your business idea will attract enough customers to earn a profit Learn as much as you can about the industry in which your new venture will operate, your product or service, and your competitors. Read surveys that project growth in different industries

Starting a New Venture Selecting a Business Idea Find something you love to do and are good at doing Find an idea that can satisfy a need in the marketplace Entrepreneurs must be sure that the idea they choose has interest in the marketplace. Business Plan

Buying an Existing Business Advantages: Established customers Deal with familiar suppliers Good/service known in marketplace Necessary permits and licenses are already secured Financing may be easier Seller financing

Table 6.1 Online Resources for Preparing a Business Plan Creating a Business Plan In the past, many entrepreneurs launched businesses without a formal business plan Business plans help contemporary entrepreneurs prepare enough resources and stay focused on key objectives Table 6.1 Online Resources for Preparing a Business Plan

Finding Financing Seed capital: The initial funding needed to launch a new vendor Debt Financing Credit cards Family and friends Bank loans Finance companies Equity Financing Venture Capitalists Angel Investors

Government Support for New Ventures Business incubators are a key way government supports new ventures Enterprise zones Encourage entrepreneurship in specific geographic areas set aside for economic renewal Urban reserves Economic zone within a municipality set aside as First Nation reserve land for Aboriginal commercial ventures

Test Your Knowledge Which of the following is the least likely source of financing for new ventures? a) venture capitalists b) debt capital c) equity capital d) angel investors Answer: a

Intrapreneurship The process of promoting innovation within the structure of an existing organization An idea to promote creativity Companies promote in a variety of ways Skunkworks Pacing Programs

Test Your Knowledge Bootlegging is a 3M Corp. effort to promote intrapreneurship by allowing a) employees to borrow time from other projects to develop new products. b) employees to take a sabbatical to work on new products. c) employees to take frequent vacations to inspire new product ideas. d) employees to copy competitors’ product ideas and claim credit.   Answer: a

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