Entrepreneurship: Starting and Managing Your Own Business 6 Chapter © 2004 by Nelson, a division of Thomson Canada Limited.

2 Learning Goals 1.Why do people become entrepreneurs, and what are the different types of entrepreneurs? 2.Which characteristics do successful entrepreneurs share? 3.How do small businesses contribute to the Canadian economy? 4.What are the advantages and disadvantages facing owners of small businesses?

3© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goals (cont’d) 5.How does the Business Development Bank of Canada help small businesses? 6.What are the first steps to take if you are starting your own firm? 7.Why does managing a small business present special challenges for the owner? 8.What trends are shaping the small business environment?

4© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 1 Why do people become entrepreneurs, and what are the different types of entrepreneurs?

5© 2004 by Nelson, a division of Thomson Canada Limited. Entrepreneur: a person with vision, drive, and creativity willing to take the risk of starting a new business for profit or of greatly changing the scope an direction of an existing firm

6© 2004 by Nelson, a division of Thomson Canada Limited. Reasons for Becoming an Entrepreneur Desire to control one’s own destiny The opportunity for profit Create something new Personal satisfaction Lifestyle

7© 2004 by Nelson, a division of Thomson Canada Limited. Types of Entrepreneurs 1.Classic entrepreneurs –people who start their own companies based on innovative ideas 2.Multipreneurs –people who start a series of companies 3.Intrapreneurs –people who apply vision and risk taking within a large organization

8© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 2 Which characteristics do successful entrepreneurs share?

9© 2004 by Nelson, a division of Thomson Canada Limited. Characteristics of Successful Entrepreneurs Ambitious Independent Self-confident Risk takers Visionaries Creative Energetic Passionate Committed

10© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 3 How do small businesses contribute to the Canadian economy?

11© 2004 by Nelson, a division of Thomson Canada Limited. Small Business: a business that is independently owned by an individual or small group of investors, locally based, and not dominant in its industry

12© 2004 by Nelson, a division of Thomson Canada Limited. Small Business Contributions The majority of businesses in Canada are small businesses Dominate the services, wholesale, retail, construction and agriculture fields Provide most of the new jobs Lead in creating new products and services

13© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 4 What are the advantages and disadvantages facing owners of small businesses?

14© 2004 by Nelson, a division of Thomson Canada Limited. Small Businesses Advantages –Greater flexibility –More efficient operation –Greater ability to serve specialized markets –More personal service Disadvantages –Limited managerial skill –Difficulty raising funds –Burdensome govern-ment regulations –Extreme personal commitment of the owner

15© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 5 How does the Business Development Bank of Canada help small businesses?

16© 2004 by Nelson, a division of Thomson Canada Limited. Business Development Bank of Canada Provides small and medium sized businesses with flexible financing, affordable consulting services, and venture capital Canadian Business Service Centres ( provide services for start-up and growing small businesseswww.cbsc.org

17© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 6 What are the first steps to take if you are starting your own firm?

18© 2004 by Nelson, a division of Thomson Canada Limited. Steps to Starting Your Own Business 1.Self assessment 2.Find a business idea 3.Buy a business or start from scratch 4.Choose a form of business organization 5.Develop a business plan 6.Finance the business 7.Manage the risk

19© 2004 by Nelson, a division of Thomson Canada Limited. Business Plan Contents 1. Title Page & Table of Contents 2. Executive Summary 3. Vision and Mission Statement 4. Company Overview 5. Detailed Plans for: Products and/or Services, Marketing, Management, Operating, and Financing 6. Appendix of Supporting Documents

20© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 7 Why does managing a small business present special challenges for the owner?

21© 2004 by Nelson, a division of Thomson Canada Limited. Managing a Small Business Owners are involved in all aspects of the firm’s operations. Growth requires: –Using outside consultants hiring a good accountant (CA, CMA, or CGA) outsourcing some business functions –Hiring and retaining employees recruiting process promoting employee satisfaction

22© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 8 What trends are shaping the small business environment?

23© 2004 by Nelson, a division of Thomson Canada Limited. Trends in the Small Business Environment Increase in home-based businesses More younger, female, and minority entrepreneurs Increased use of the Internet – –purchasing –business research –selling