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Lecture

Chapter 7 - October 4th 2011.docx

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School
Department
Business
Course
BUSI 1600U
Professor
Shaprio, Morden
Semester
Winter

Description
Management of the Enterprise Chapter7: Entrepreneurship and Starting a Small Business th October 4 2011 Entrepreneurship and Small Business1 - Entrepreneurship  is accepting the challenge of starting and running a business. - The word entrepreneur originates from the French word, entreprendre, which means “to undertake”. - On the one extreme, an entrepreneur is a person of very high aptitude who pioneers change, possessing characteristics found in only a very small fraction of the population. - On the other extreme, anyone who wants to work for himself/herself is considered an entrepreneur. - Entrepreneurial ventures differ from small businesses in the following 4 ways:  Amount of wealth creation: o Rather than simply generating an income stream that replaces traditional employment, a successful entrepreneurial venture creates substantial wealth, typically in excess of several million dollars of profit.  Speed of Wealth Creation: o While a successful small business can generate several million dollars of profit over a lifetime, entrepreneurial wealth creation often is expanding.  Risk o The risk of an entrepreneurial venture must be high. Otherwise, with the incentive of sure pure profits, many people would pursue the idea of entrepreneurship making business ventures impossibly competitive.  Innovation o Entrepreneurship often involves substantial innovation beyond what a small business might exhibit. This innovation gives the venture the competitive advantage that results in wealth creation. Innovation may be in new products, new production methods, new markets, and form of new organizations. Why People take the entrepreneurial Challenge - Taking the challenge of starting a business can be scary and thrilling at the same time. - Some reasons may include: unexpected structural employment, a sudden inheritance that allows them to try something different, a change in health that forces a career path adjustment, a change in family responsibility that sparks a search to increase income or even disliking a supervisor so much that being self-employed is an attractive option. - Other reasons why people are willing to take the challenge:  New Idea, Process or Product  Some are driven by a belief that they can produce a better product or a current product at a lower cost than anyone.  Example: the start of Travel CUTS (Canadian Universities Travel Service)  Independence  Some entrepreneurs like doing things their own way without someone standing over them.  Gets a great deal of satisfaction out of what they achieve.  Challenge  The excitement and the challenge of doing something new or difficult.  Thrive on overcoming challenges  Family Patterns  Family background might have started their own business.  The next generation grows up expecting to take its place in due course.  Profit  Natural for people to benefit monetarily from their ideas and dedication and to be rewarded for the money they risk and their hard work when they run a business.  May enjoy the challenge of overcoming the endless problems that every business faces and the satisfaction of continued success.  Immigrants  May lack education.  Combined with no Canadian job experience and weak language skills make it hard to find employment. What does It Take to be an Entrepreneur? - Self-directed:  You should be a self-started with lots of confidence.  Don’t hesitate to step into any situation.  Should be comfortable and self-disciplined.  Responsible for your success or possible failure. - Determined:  Self-direction you need to see you through all of the obstacles and difficulties you will encounter.  Believe in your idea  Be able to replenish your enthusiasm  Keep going when others give up. - Action-Orientated:  Burning desire to realize, actualize and build your dream. - Highly Energetic:  Emotionally, mentally and physically able to work long and hard. - Tolerant of Uncertainty  Take only calculated risks (if they can help it).  Make decisions that involve varying degrees of risk (day to day). - Able to Learn Quickly  Making errors is inevitable.  Learn from your mistakes.  Adapt and change direction as required. - Courage isn’t a skill, but it is an important element of an entrepreneur. - Courage is required to challenge the status quo, to see an opportunity and most importantly, to try and do something about it. - Ideas for goods and services come in a flash to entrepreneurs. Women Entrepreneurs7 - A major phenomenon since the late 1970s is the large number of women who have gone into business for themselves. - SME (Small and medium sized enterprise)  refers to all businesses with fewer than 500 employees. - Women owners of SMEs tend to operate in the wholesale, retail and professional service industries. - Example: Rachel Arseneau-Ferguson, president of Centre Trans med Center Inc. - Variety of reasons for the significant emergence of female entrepreneurs:  Financial Need: o Previous decrease saw the average real incomes of Canadian employees drop and unemployment fluctuates. o Forced many women to support the family budget.  Lack of Promotion Opportunities: o Most positions in higher management are still dominated by men. o Many women frustrated by this pace takes the entrepreneurial route.  Women Returning to the Workforce o Many women return to the job after raising a family find their skills outdated. o Also encounter subtle age discriminations.  Family and Personal Responsibility o The high rate of divorced women and single mothers in recent years has created a situation in which many women find themselves with children and little or no financial support. o Some refuse support to be more independent. o Can start a home-based business.  Public Awareness of Women in Business o The idea catches on and gives others the confidence to try starting their own ventures. o Often 2+ women team up to form a partnership  Part-Time Occupations o Women with some particular talent are encouraged to develop their hobby or skills on a part-time basis to see how far they can go. o Has resulted in many notable success stores.  Higher Rate of Success for Women o Have better success rate than men. o Women feel less pressured than men to achieve quick results. o More cautious, so they make fewer mistakes. o Accept advice more readily than men. Entrepreneurial Teams - An entrepreneurial Team  a group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product. - Better than an individual because you can combine creative skills with production and marketing skills right from the start. Micropreneurs and Home-Based Business - Micro-enterprises  a small business defined as having fewer than five employees. - Micropreneurs (owners of micro-enterprises)  small business owners with fewer than 5 employees who are willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle. - Example: writers, consultants, video producers, architects, bookkeepers, etc. - Home based businesses are owned by people who are trying to combine career and family. - In addition to helping business owners balance work and family, other reasons for the growth of home-based businesses include the following: o Computer Technology: Computer technology has levelled the competitive playing field, allowing home- based businesses to look and act as big as their corporate competitors. o Corporate Downsizing: Downsizing has made workers aware that there is no such thing as job security, leading some to venture out their own. o Change in Social Attitudes: Whereas home-based entrepreneurs use to be asked when they were going to get a “real” job”, they are now likely to be asked instead for “how to do it” advice. - Challenges in setting a home-based business:  Getting New Customers: getting the word out can be difficult because you don’t have signs or a storefront.  Managing time: Takes self-discipline to use that time wisely.  Keeping work and Family Tasks Separate: hard to keep house distractions to a minimum. It is difficult to leave work at the office if the office is your home.  Abiding by City Ordinances: Government ordinances restrict the type of businesses that are allowed in certain parts of the community and how much traffic a home-based business can attract to the neighbourhood.  Managing Risks: Home-based entrepreneurs should review their homeowners insurance policy, since not all policies cover business-related claims. Some even voide the coverage if there is a business in the home. Web-Based Businesses - The internet has sprouted a world of small web-based businesses that sell everything from staplers to refrigerator magnets to wedding dresses. - Example: ebay has created many opportunities for entrepreneurs. It has been such a powerful channel for part- time and full-time entrepreneurs that a book has been developed (eBay for Dummies). - Web based business isn’t always a fast road to success, it can sometimes be a shortcut to failure. Entrepreneurships within Firms - Entrepreneurship in a large organization is often reflected in the efforts and achievements of intrapreneurs. - Intrapreneurs  creative people who work as entrepreneurs within corporations.  The idea is to use a company’s existing resources (human, financial and physical) to launch new products and generate new profit. Encouraging Entrepreneurship: What Government Can Do - The different levels of government provide many services to help entrepreneurs and small businesses to succeed. - Canada business is a federal government information service for entrepreneurs that serves as a single point of access for federal and provincial/territorial government services, programs and regulatory requirements for business - The mission of Canada Business is to improve the start-up, survival and growth rates of small and medium-sized enterprises. - Example: specialized program such as Aboriginal Business Service Network. - Industry Canada’s small business research and policy website is designed to encourage small business researchers and policy analysts across Canada to share information. - The Small Business Quarterly (SBQ) provides a quick and easy-to-read snapshot of th
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