BUS 200 Lecture Notes - Lecture 4: Small Business, Labour Force Survey, Canadian Business
8 Dec 2017
School
Department
Course
Professor
Small Business
Small business- an independently owned and managed business that does not dominate its market.
Make up about 25-30% of Caada’s GDP oe the past deade
Canadian Government (specifically Industry Canada) collects and reports information on small
businesses:
• Business register (which tracks business)
o Must have at least one paid employee
▪ Goods producing less than 100 employees, service producing less than 50
employees
o Have annual sales revenues of $30 000 or more
o Be incorporated
▪ Businesses that have only the owner, no paid employees and are not
incorporated are not included in the Register
• Labour Force Survey (which tracks individuals)
o makes estimates of employment and unemployment levels
o self employed: they are the working owner of a business that is either incorporated or
unincorporated, if working for themselves but not as a business (musicians, artists), or
without pay in a family business
• Both provided by Statistics Canada
New Venture/ Firm
• Criteria for when a new firm comes into existence
o When it was formed, whether it was incorporated, and whether it sold goods and/or
services
• A business is new if:
o It has become operational within the previous 12months
o If it adopts any of the main organizational forms (proprietorship, partnership,
corporation, co-operative)
o If it sells goods and services
• New venture- a recently formed commercial organization that provides goods and/or services
for sale
Entrepreneurship
• Entrepreneurship- process of identifying an opportunity in the marketplace and accessing the
resources needed to capitalize on it
• Entrepreneurs- a business person who accepts both the risks and the opportunities involved in
creating and operating a new business venture
• Every year the Heritage Foundation publishes an index of economic freedom -> to which extent
entrepreneurs have freedom to pursue new business opportunities and where this freedom lies
• Starting a new business involves dealing with uncertainty, ambiguity and unpredictability.
Entrepreneurs possess traits that help them move past these things
o Successful managers in large organizations also possess these traits
▪ Entrepreneurship can occur in many contexts
• Intrapreneurs- create something new within an existing large firm or organization
find more resources at oneclass.com
find more resources at oneclass.com
o Ae’t oeed ith gettig the esoues eause they’e pat of a lage
organization so the resources are already available
The Role of Small and New Businesses in the Canadian Economy
Small Businesses
98.2% of businesses in Canada are small businesses. More than half this amount have fewer than 50
employees. Medium sized businesses (100-499 employees) make up 1.6% and large businesses make up
0.2%
Lead the way for innovation and new technology
Private Sector- the part of the economy made up of companies and organizations not owned or
controlled by the government
Small businesses account for over 80% of employment in agriculture, other services, accommodation
and food service, and construction
New Ventures
New firms are the main source of jobs and responsible for vast majority of new products and services
Women now account for half of all new businesses, but lead only 12% of small and medium businesses
that export goods and services. Women who run businesses from home are often called mompreneurs
The Entrepreneurial Process
Influenced by social, economic, political and technological factors in the broader environment
Entrepreneurs must identify an opportunity and access resources
Identifying Opportunities
Generating ideas, screen ideas and developing the best ones
Idea Generation
• Abandon traditional ideas and come up with new ways of doing things. This new (or improved)
product, process or service should be able to produce a profit or be attractive compared to
other new ventures
• Work experience is the most common source for new ideas (45-85%). Employees are familiar
with the product or service, the customers, the suppliers, the competitors and marketplace
needs. They are able to get the resources to bring to life new ideas that they have
• Other ideas come from personal interest or hobbies or by chance
Screening
• Weedig out the ad ideas that do’t hae ey good potetial
• A good idea:
o Adds value to customers
find more resources at oneclass.com
find more resources at oneclass.com
▪ Is something that would be useful to the customers
o Has competitive value that can be sustained
▪ Customers see the new product or service as better than existing ones
▪ Competitive advantage has to be sustained through changes in the industry and
opetitos’ atios
o The idea is marketable and financially viable
▪ Customers have to be willing to buy the product or service
• Know who the customers are and what they need
▪ Sales must lead to profits
• Understanding how competitors can provide
▪ Sales forecast- an estimate of how much service or product will be purchased by
prospective customers over a period of time
o Has low exit costs
▪ Venture can be shut down without a significant loss of time, money or
reputation
▪ If venture is not expected to make a profit for a few years then the exit costs are
very high
Developing the Idea
• Entry strategies of New Ventures
o Introduce a completely new product or service
o Introduce a product or service that competes directly against existing ones, but has a
twist
o Franchise- an arrangement that gives franchisees (buyers) the right to sell the product of
the franchiser (seller)
• Lost of research and planning must be done for information about manufacturing operations
and product development
• Business Plan- document in which the entrepreneur summarizes his or her business strategy for
the proposed new venture and how that strategy will be implemented. Outlines the marketing
plan, operational and financial details, and the skills and abilities of its managers.
• Research is only beneficial if the market is not changing rapidly, or if the product is not highly
ioatie otheise the aket does’t eessaily apply to it
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Small business- an independently owned and managed business that does not dominate its market. Make up about 25-30% of ca(cid:374)ada"s gdp o(cid:448)e(cid:396) the past de(cid:272)ade. New venture/ firm: criteria for when a new firm comes into existence, when it was formed, whether it was incorporated, and whether it sold goods and/or services, a business is new if: It has become operational within the previous 12months. If it adopts any of the main organizational forms (proprietorship, partnership, corporation, co-operative) If it sells goods and services: new venture- a recently formed commercial organization that provides goods and/or services for sale. Entrepreneurs possess traits that help them move past these things: successful managers in large organizations also possess these traits, entrepreneurship can occur in many contexts. Intrapreneurs- create something new within an existing large firm or organization: a(cid:396)e(cid:374)"t (cid:272)o(cid:374)(cid:272)e(cid:396)(cid:374)ed (cid:449)ith getti(cid:374)g the (cid:396)esou(cid:396)(cid:272)es (cid:271)e(cid:272)ause they"(cid:396)e pa(cid:396)t of a la(cid:396)ge(cid:396) organization so the resources are already available.
