MGTA01H3 Lecture : Textbook notes Ch.3-Understanding Entrepreneurship, Small Business and New Venture Creation
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CHAPTER 3 ± UNDERSTANDING ENTREPRENEURSHIP, SMALL BUSINESS
AND NEW VENTURE CREATION
Principle points:
Market Economies - easy to start a business
Æ sole proprietorship
Small business very important to Cdn. Economy
Æ number of business
Æ number of jobs
Æ job creation
Who starts new businesses [small business]: entrepreneur
Æ demographic characteristics
Æ psychological characteristics
Introduction
- Canada is free market economy.
- Generally, entrepreneurs have NO obligation to ask govt. permission to establish new
business.
- Generally: no fees payable, no forms to fill in [banks need permission]
- At simplest: to start a new business, just.... begin (380 new business everyday)
The New Venture Firm: a recently formed commercial organization that provides G+/S
for sale
criteria for firms coming into existence:
1) when it was formed
2) whether it was incorporated
3) sells G or S
- its new if become operation in last 12 months
Entrepreneurship: the process of identifying an opportunity in the market place and
accessing the recourses needed o capitalize on it
Entrepreneurs: Individual who organises and co-ordinates the activities required to start
a new business. Individuals who recognize and seize opportunities
(French: entrer: to enter prendre: to take)
- small business are usually independently owned and influenced by unpredictable market
forces
- provide an environment to use personal attributes (ex creativity) that have come to
associated with entrepreneurs
- entrepreneurs characteristics are everywhere: big companies, public/private sectors ect
Intrapreneurs: ppl who show entrepreneurial characteristics and create something new
within an existing large firm or organization
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bring the new product to market since their employees provides the resources
- starting business involves dealing with: uncertainty, ambiguity, and unpredictability
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Who Starts A Business?
Entrepreneur: Individual who organises and co-ordinates the activities required to start
a new business
(French: entrer: to enter prendre: to take)
Entrepreneurs: Demographic Attributes [READ TEXT]
Children of entrepreneurs ("Pull" factors)
Immigrants/children of immigrants ("Push" factors)
Æ forced to start own business maybe cuz of no MBA degree
Between ages 30 - 40 (Managed risk)
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Not academically inclined (Doers not thinkers)
- ppl of entrepreneurs but not good at skol
Women less likely to fail (Better risk managers)
- men make decisicions faster
Entrepreneurs: Personality Trait
High NAch (Need for Achievement)
Comfortable with uncertainty
Willingness to take calculated risks
Self Confidence (Self directed)
Internal locus of control
Three most common forms:
1. Sole Proprietorship
2. Partnership
3. Corporation
1. Sole Proprietorship: Business owned and operated by one person, who is personally
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- Easiest form of business organisation
- Most common form of business ownership
Advantages
Quick
Cheap (free)
Simple
Disadvantages
Personal liability
Unlimited liability
Business dies with owner
Small Business
small business: an owner-managed business with less than 100 employees
Experts agree: it's difficult to define "small business"
Definition in textbook has weaknesses:
"An independently owned and managed business that does not dominate its market."
But - what is "independently owned and operated"? Independent from who?
- Industry Canada is the main federal gov agency responsible for small business
[estimates 2.1 businesses/ impossible to know]
Æ reporting small business statistics rely one 2 sources
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1) Business register (tracks business)
2) labour force survey (tracks individuals)
x to be included in register: one paid employee, annual sales revenue $30 000 +, or
be incorporated
x goods business : 100 ± employee = small
x service : 50- = small
x Labour force survey use info from individuals to make estimates of employment
and unemployment levels
Æself-employed if working for own business even if unpaid
x Majority of business in Canada have no employees (owner) and not
incorporated
General Motors of Canada is independently owned by GM
"Not dominant": Sleeman has c. 8% share of Cdn. beer market. Is it a small
business?
THE ROLE OF SMALL AND NEW BUSINESS IN THE CANADIAN ECONOMY
- b4 1980, large business were the focus of attention in terms of economic impact within
industrialized nations
Small Business
- Close 98% of business in Canada are small
- 58% of all business established are in Ontario and Quebec
- Account for over 2/3 of employment in 4 industries: non-institutional health care,
construction industry, other services and accommodation and food
- Contribute 25% to GDP
Private sector: the part of the economy that is made up of companies and organizations
that are not owned or controlled by the gov
New ventures
- most growth occur in service producing sectors
- # of firms in high-knowledge industries (ex.high technology) nearly doubling
- more women are in work : 800 000 + women entrepreneurs and increase 3% APR
- a business counted new could have been operating for few yrs b4 being
statistically counted as a new business
THE ENTREPRENEURIAL PROCESS
- identify opportunity Æaccess the resources need to capitalize on it Æsocial, economic,
political, and technological factors in the broader environment will have an influence
Entrepreneurs (page 43 chart)
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MGTA01H3 Full Course Notes
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Document Summary
Market economies - easy to start a business. Generally, entrepreneurs have no obligation to ask govt. permission to establish new business. Generally: no fees payable, no forms to fill in [banks need permission] At simplest: to start a new business, just begin (380 new business everyday) The new venture firm: a recently formed commercial organization that provides g+/s for sale criteria for firms coming into existence: when it was formed, whether it was incorporated, sells g or s. Its new if become operation in last 12 months. Entrepreneurship: the process of identifying an opportunity in the market place and accessing the recourses needed o capitalize on it. Entrepreneurs: individual who organises and co-ordinates the activities required to start a new business. Individuals who recognize and seize opportunities (french: entrer: to enter prendre: to take) Small business are usually independently owned and influenced by unpredictable market forces.
