Textbook Notes (363,508)
Canada (158,391)
Commerce (1,634)
Rita Cossa (83)

ch 7 + 14 notes.docx

11 Pages
Unlock Document

McMaster University
Rita Cossa

Chapter 7 THE AGE OF ENTREPRENEUR • Entrepreneurship is not the same as small businesses -> Entrepreneurs: 1. Create substantial wealth rather than income stream that replaces traditional employment 2. Make money quicker 3. Take bigger risk 4. More innovative (new products, new production methods ..) • Well-known Canadian entrepreneurs (pg 200-1). I don't think she'll ask us about it WHY PEOPLE TAKE THE ENTREPRENEURAL CHALLENGE Some reasons why people might want to start a business: • New idea, process, or product: they believe they can produce something new or some product at a lower cost, or they have a new improvement. (ex: Travel CUTS) • independence: do not enjoy working for others, want to do things on their own (ex: Melissa Harvey's company --> Will n' Roses LLC) • Challenge: doing something new or difficult • Family pattern: family members started their own businesses, pass down to generations • Profit: reward for the risk and hard work, satisfaction of success • Immigrants: hard to find jobs (lack education, weak English, no Canadian experience) -> start own business like convenience store What does it take to be an entrepreneur? • Self-directed: being your own boss, responsible for failure/success • Self-nurturing: believe in your idea, confidence, enthusiasm • Action-oriented: realize your dream into reality • Highly energetic: mentally, emotionally, physically able to work hard • Tolerant for uncertainty: take risk • Able to learn quickly: learn from mistakes and admitting them Turning your passions and problems into opportunities • Anita Roddick started the Body Shop (recycles bottles) because she hated paying for expensive packaging when se bought makeup • Get ideas by looking around and asking and looking more • What do i want and can never find? What product would improve my life? What really irritates me and what product can help? It must also meet people's needs Female entrepreneurs • 50,000 self-employed in 2011 (third of all self-emp.), grew by 23% from 2010 (vs. 14% fro males) Reasons for this emergence: • Financial need: avg. real incomes of Canadian employees dropped in last decade • Lack of promotion opportunities: high positions still dominated by men • Women returning to workforce: after raising a family-> skills outdated, encounter age discrimination • Family and personal responsibility: divorced, single moms -> little financial support • Public awareness of women in business: give confidence to other women to try • Part-time occupations: develop their hobby or skills on part-time basis to see how far they can go • Higher rate of success for women: because they have less pressure than men to achieve quick results, more cautious, accept advice more readily. Entrepreneurial teams • A group of experienced people from different areas of business who form together to join a managerial team with the skills needed to develop, make, and market a new product • Team is better than individual (ensure more cooperation and coordination among functions) Micropreneurs and home-based businesses • Micro-enterprises: small business defined as having fewer than 5 employees • Micropreneurs: owners of above, happy with staying a small business that offers them a balanced lifestyle (writers, consultants, architects, bookkeepers) Reasons for growth of home-based businesses: • Computer technology: makes it easier to start a business, internet, iPhones, allow company to look and act big • Corporate downsizing: big companies outsourcing their work to smaller companies to fill their needs • Change in social attitudes: not looked down on like before Challenges of having a home-based business: • Getting new customers: difficult to get the word out • Managing time: use time wisely • Keeping work and family tasks separate: keep distractions to minimum, need self-discipline • Abiding by city ordinances: gov't restrict some types of businesses that are allowed in certain parts of community and how much traffic they can attract to neighborhood • Managing risk: homeowner's insurance policy - not all cover business-related claims Web-based businesses • Canada is behind other developed countries when it comes to how much spent online ($18 b in 2010) • eBay, shop.ca , throwthings.com • Affiliate marketing: internet-based marketing strategy in which a business rewards individuals or other businesses for each visitor or customer the affiliate sends to its web site entrepreneurship within firms • Intrapreneurs: creative people who work as entrepreneurs within corporations • Use company's existing resources to launch new products and generate new profits • Example: at 3M, managers are expected to devote 15% of their time to come up with new ideas/services. -> post it notes developed by guy working at 3M (he wanted to mark pages without damage or falling from book) ENCOURAGING ENTREPREUNARSHIP: WHAT GOV'T CAN DO • Canada Business Network - federal gov't information service for entrepreneurs serves as access point for gov't services, programs, and regulatory requirements for business • Canada Business; their mandate - serve as primary source of up-to-date and accurate business related information Their mission - improve start-up, survival, and growth rates of small/medium enterprises • Industry Canada's SME Research and Statistics site - encourage small business researchers and policy analysts to share info • The Small Business Quarterly- provides quick snapshots of recent performance of Canada's small business sector. • Incubators: centres that provide hands-on management assistance, education, information, technical and vital business support services, networking resources, financial advice, as well as advice on where to go to seek financial assistance. - Offer new business low-cost offices with basic services - 1400 in North America (120 in Canada) and 7000 worldwide • Gov't can also offer investment tax credits that give tax breaks to businesses that make the kind of investments that create jobs GETTING STARTED IN SMALL BUSINESS • Demand capital, good ideas, planning, budgets, accounting, marketing, good employee relations ... Small vs. Big business • Business establishment: must meet at least one of following minimum criteria: at least one paid employee, must have annual sales revenue of $30,000, or it must be incorporated and have filed a federal corporate income tax return at least once in the prev 3 years • Employer business: meets one of the business establishment criteria and usually maintains a payroll of at least one person, possibly the owner. - Small (<50 employees), medium (50 to 499), large (>500) • 2.4 m business establishments -> 1.1 m "employer business", while the rest are classified as "Indeterminate" • Small business: independently owned and operated, is not dominant in its field, and meets certain standards of size in terms of employees or annual revenues Importance of small businesses • Nearly all small businesses are Canadian -owned and managed • As they prosper and develop new g&s, small businesses are often bought out by large companies • Some convert from private to public , enabling them to obtain financing and become larger • Contribute to ~ 30% of GDP • Advantage over large corp: More personal customer service and ability to respond quickly to opportunities • Big businesses don't serve all needs of market, small companies make profit filling those gaps Wide diversification Small businesses are in many sectors: • Service businesses: salons, travel agencies, hotels, accountants, repair services, etc. • Retail businesses: stores selling shoes, clothes, ice cream ... • Construction firms: building bridges, roads, homes, schools ... • Wholesalers: warehouses, jewellery centre. (they make more money and have free time) • Manufacturing: designers, mechanics, engineers, safety inspectors • There's also mining and farming but only organic or exotic crops that are doing well Small-business success and failure • Some businesses go out of business to start new and different business OR change from partnership to corporation OR retirements of sole owners -> included in 'failure' category • Managerial incompetence and inadequate financial planning are two of the biggest reasons of failure • Businesses with low failure rate require advanced training (iex: dentist) • High-growth businesses like technology firms are not easy to start and are hard to keep going -> make you rich • Businesses that are easy to start -> lowest growth rate and highest failure rate LEARNING ABOUT SMALL-BUSINESS OPERATIONS Many ways to get into your first business venture: Learn from others • Post-secondary schools programs • Talk to and get advice from others who done it before Get some experience • Becoming an apprentice or working for some entrepreneur • Industry standard is to have 3 years experience in a comparable business • Some people stay in their fulltime jobs while starting their own business as a part-time thing Buy an existing business • Find successful business with owner who want to retire or get away for vacations • Ask for apprenticeship (1 year or so). At the end of it, ask to be assistant manager • Owner would then enjoy vacations and weekends and work less • Work hard and learn all about business then ask to take over business while owner can retire • You can share profits, he works less and still gets money while you make profit off a successful firm without investing in it • If he doesn't want to share profits, you can but the business. If not, quit and start your own thing fully trained Buy a franchise • Method of distributing a good/service to achieve max market impact with a min investment • You don't have to start product from scratch, you benefit from experience of franchisor Inherit/take over a family business • Often owned by smaller group of shareholders whose interest is not just revenue. They have family legacy, identity, and community responsibility ("emotional ownership") • Clear understanding that business must be preserved for future generations • Only one-third of these companies survive the transition to second generation. And one-third after that to third generation • 2 reasons why a family does not retain a business: -> no qualified successor -> business fail or sold off due to a lack of planning MANAGING A SMALL BUSINESS • First two operations are concern when you start a business, the other 3 are the heart of the actual operations once business is started Planning • Business plan (definition in slides) • Must analyze competition, how much money they need to start ... • Tool to transition from having an idea to actually start operating • Writing a business plan: • Takes long time to write, but you only have few minutes to convince readers in Executive Summary section • Check figure 7.5 Financing your business • When starting: Personal savings (73%), commercial or personal loans (51%) -> most frequent sources • When maintaining: Commercial or personal loans (64%), retained earnings (57%), personal savings (54%), leasing (22%) • Venture capitalists (VCs): individuals or companies that invest in new businesses in exchange for partial ownership of those businesses • Angel investors: private individuals who invest their own money in potentially hot new companies before they go public • Online financing sources: • Bunch of websites (pg 222) Knowing your customers (marke
More Less

Related notes for COMMERCE 1B03

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.