Chapter Five.docx

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Chapter Five: Entrepreneurship and Small Business Management
GMS Notes
Entrepreneurship risk-taking behaviour that results in new opportunities
Entrepreneur one who is willing to pursue opportunities in situations others view as problems or threats
- they are born with these traits (“nature” views)
- they learn these traits (“nurture” views)
Entrepreneurs have several distinguished characteristics. They include (1) internal locus of control, (2) high
energy level, (3) high need for achievement, (4) tolerance for ambiguity, (5) self-confidence, (6) passion and
action orientation, (7) self-reliance and desire for independence, and (8) flexibility.
Advantages of being self employed
Disadvantages of being self employed
- have the freedom to set your own priorities and
satisfy your creative drive
- given the tax deductibility of certain business
expenses, you have a definite tax advantage over
people who are not self employed
- you enjoy job security as long as your business is
successful
- you have a flexible work schedule that can
accommodate your personal needs
- you may earn irregular income depending on the
nature of the business and the state of the economy
- the business may be time consuming especially
during start-up years
- you risk losing your capital, and being exposed to
bankruptcy costs under circumstances outside your
control
- business administration may be overwhelming
Necessity-based entrepreneurship takes place because other employment options don’t exist
Small business has fewer than 100 employees, is independently owned and operated, and does not
dominate its industry
- employs 5 million workers, about 48 percent of the Canadian workforce
Franchise a form of business where one business owner sells to another the right to operate the same
business in another location
Family business owned and controlled by members of a family
Family business feud occurs when family members have major disagreements over how the business should
be run
Succession Plan describes how the leadership transition and related financial matters will be handled
Succession problem is the issue of who will run the business when the current head leaves
Small businesses often fail for a number of reasons including (1) lack of experience, (2) poor financial control,
(3) bad or no strategy, (4) ethical failure, (5) insufficient commitment, (6) poor leadership, (7) growing too fast,
and (8) lack of expertise.
New Venture Creation
First mover advantage comes from being first to exploit a niche or enter a market
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