Chapter 5: Entrepreneurship and Small Business Management
What is entrepreneurship?
- Strategic thinking and risk-taking behaviour that results in the creation of new opportunities for
individuals and/or organizations
Who are entrepreneurs?
- Risk-taking individuals who take actions to pursue opportunities and situations others may ail to
recognize or may view as problems or threats
- Entrepreneurs are...
oFounders of businesses that become large-scale enterprises
oPeople who: buy local franchise outlet, open a small retail shop, operate a self-employed
oPeople who introduce a new product or operational change in an existing organization
oKen Kurtargi: Inventor of the Playstation
Typical Characteristics of Entrepreneurs
- Internal locus of control
oBelieve that they are in control of their own destiny
oThey are self-directing and like autonomy
- High energy level
oPersistent, hardworking, and willing to exert extraordinary efforts to succeed
- High need for achievement
oExcel in what they are doing; driven by exceeding their tasks
oAchieve a certain goal and attain certain profit
oMotivated to accomplish
oThey thrive on performance
- Tolerance for ambiguity
oThey do not give up that fast
oThey go through a lot of ups and
oMust adapt to highly competitive
oHigh degrees of uncertainty
oBelieve that the venture will work
oWilling to make decisions
- Passion and action-oriented
oWilling to work hard and implement the passion into action
oAct ahead of problems
oWant to get things done and not waste valuable time
- Self-reliance and desire for independence
oWant to be their own bosses and not work for others
oAre willing to admit problems and errors
oWilling to change a course of action when plans are not working
Typical Entrepreneurial backgrounds and experience
- Parents were entrepreneurs or self-employed
- Families encouraged responsibility, initiative, and independence
- Have tried more than one business venture
- Have relevant personal or career experience
- Become entrepreneurs between 22 and 45 years of age
- Have strong interests in creative production and enterprise control
- Seek independence and sense of mastery
Diversity and Entrepreneurship
-Necessity-based entrepreneurship: Takes place because other employment options do not exist
- Sometimes these are women and member of visible minorities who have suffered the ‘glass-ceiling’
effect and have found career doors closed
- Offers women and member of visible minorities opportunities to strike out on their own and gain
economic independence, providing a pathway for career success that may be blocked otherwise
-Common myths about entrepreneurs:
oEntrepreneurs are born, not made.
oEntrepreneurs are gamblers.
oMoney is the key to entrepreneurial success.
oYou have to be young to be an entrepreneur.
oYou must have a degree in business to be an entrepreneur.
What are small and medium-sized businesses?
- Small businesses:
oFor goods producing firms, with 100 or fewer employees
oFor service firms, with 50 or fewer employees
oMicro-enterprises – fewer than 5 employees
Home based businesses
- Medium Businesses
oFor goods producing firms - From 101-499 employees
o50 % of the private labour force works in small businesses
- Large Businesses
oFor goods producing firms – more than 500 employees
How can they be established?
- Starting a new business
- Buying an existing business
- Buying and running a franchise
Statistics on Canadian small businesses (data from Industry Canada, 2005)
- What percentage do small firms (employing less than 100) make up of all goods-producing employer
businesses in Canada?
- What percentage for small service firms (employing less than 50) make up of all service-producing
employer businesses in Canada?
- From 1991 to 2002
Strategic thinking and risk-taking behaviour that results in the creation of new opportunities for individuals and/or organizations. Risk-taking individuals who take actions to pursue opportunities and situations others may ail to recognize or may view as problems or threats. Internal locus of control: believe that they are in control of their own destiny, they are self-directing and like autonomy. High energy level: innovative, risk takers, persistent, hardworking, and willing to exert extraordinary efforts to succeed. High need for achievement: excel in what they are doing; driven by exceeding their tasks, achieve a certain goal and attain certain profit, motivated to accomplish challenging goals, they thrive on performance feedback. Tolerance for ambiguity: they do not give up that fast, they go through a lot of ups and downs, must adapt to highly competitive environment, high degrees of uncertainty. Self-confidence: believe that the venture will work, feel competent, willing to make decisions.