Chapter 6 Copyright © 2011 by Nelson Education Ltd. 1 Prepared by Norm Althouse University of Calgary Prepared by Norm Althouse University of Calgary

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

Chapter 6 Small Business in Canada 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

Chapter 6 ENTREPRENEURSHIP TODAY 4 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. Entrepreneurs

Chapter 6 Reasons for Becoming an Entrepreneur 5 Copyright © 2011 by Nelson Education Ltd. Desire to control one’s own destiny The opportunity for profit Create something new Personal satisfaction Lifestyle

Chapter 6 Types of Entrepreneurs 6 Copyright © 2011 by Nelson Education Ltd. Risk takers who start their own companies Classic Entrepreneurs Entrepreneurs who start a series of companies Multipreneurs Employees who apply their creativity, vision, and knowledge within a large corporation Intrapreneurs

Chapter 6 The Entrepreneurial Personality Copyright © 2011 by Nelson Education Ltd. 7 Ambitious Independent Passionate Energetic Self-confident Risk taking Creative Visionary Committed

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

Chapter 6 Small Businesses are found in various sectors: Copyright © 2011 by Nelson Education Ltd. 9 Services Agriculture Construction Manufacturing Retail Wholesale

Chapter 6 Ways to Start Your Own Business Copyright © 2011 by Nelson Education Ltd. 10 Buy a Franchise Buy an Existing Business Start from Scratch

Chapter 6 Checklist Before Starting a Business Copyright © 2011 by Nelson Education Ltd. 11

Chapter 6 Getting Started Find an idea Choose a form of business organization (see ch 5) Develop the business plan Financing Debt Equity Angel investors (see Exhibit 6.3) Venture capital Copyright © 2011 by Nelson Education Ltd. 12

Chapter 6 Risky Business Copyright © 2011 by Nelson Education Ltd. 13 Lack of Experience Financial Causes Economic Factors Reasons for Business Failures Reasons for Business Failures Personal Reasons

Chapter 6 Managing a Small Business (how to keep going) Copyright © 2011 by Nelson Education Ltd. 14 Using outside consultants Hiring and retaining employees Going global with exports

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

Chapter 6 Why Stay Small? (the advantages) Copyright © 2011 by Nelson Education Ltd. 16  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  Offer a higher level of personal service

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

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

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