BUS 100 Chapter Notes - Chapter 4: Labour Force Survey, Private Equity, Small Business

66 views5 pages
Thomas Davies Business 100
1
Chapter 4 Entrepreneurship, Small Business,
and New Venture Creation
Small Business
1) Small” can be defined through # employees, sales revenue, investment required, or ownership
2) Small businesses info collected by Business Register (tracks businesses), and Labour Force Survey
(tracks individuals)…..both run by StatsCan
a) Business Register = 1+ paid employee, >$30,000 revenue, or incorporated
Goods is small if <100 employees
Service is small if <50 employees
b) Labour Force Survey collects unemployment, if self-employed, etc.
3) Nascent entrepreneurs = people trying to start business from scratch
4) Small business = independently owned/managed, does not dominate market, <100 employees
5) The New Venture/Firm
a) New = operational within last 12 months
b) New venture = recently formed commercial organization providing goods/services for sale
6) Entrepreneurship = process of identifying opportunity in market, and accessing resources to
capitalize on it
a) People start businesses to control their destiny, chance > secure job
b) Entrepreneur = business person who accepts risks and opportunities for new business
c) Countries ranked by Heritage Foundation on economic freedom (Canada 7th)
d) Intrapreneurs = people who create something new in existing large firm/organization
One impt. difference is that these don‟t worry about having resources
The Role of Small and New Businesses in the Canadian Economy
1) Small Businesses
a) 97.8% of businesses are “small” (<100 people)
b) Often lead the way for innovation/new tech
c) 10.9 million private sector employees, with distribution varied by industry
d) Both easier and harder to „go green‟
2) New Ventures
a) New firms main source of job creation (>100k formed in 2007) and new prods/services
b) 2006-2006 130k new ventures per year (about same # as those that close)
c) Women are becoming more common entrepreneurs (some are “mompreneurs”)
The Entrepreneurial Process
1) Three key elements: the entrepreneur, the opportunity, the process
a) Entrepreneur: needs to take initiative, be independent, good problem solver
However, what someone does > what someone is
1) Identify opportunity 2) Access resources 3) new venture 4) growth,
stability, decline, demise
2) Identifying Opportunities
a) Idea generation
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 5 pages and 3 million more documents.

Already have an account? Log in
Thomas Davies Business 100
2
Think „outside the box‟ no „blocking‟ of ideas
Most come from events relating to work/regular life (also from hobbies,, or chance)
b) Screening
The idea creates/adds value for the customer
(1) Ex. FoxFibre (naturally grown in many colours no dyeing)
The idea provides a competitive advantage that can be sustained
(1) All other things equal, more able to sustain advantage while markets are in
flux
The idea is marketable and financially viable
(1) Need enough customers, and sales must lead to profits
(2) Must prepare sales forecast = estimate of how much of product/service will be
purchased by customer over period
(3) Need: start-up costs, cash budget, income statement, balance sheet
Idea has low exit costs
(1) If profits take long time, high exit cost….vice versa
c) Developing the Opportunity
Recognize the original vision, but must adapt to new market info etc.
Entry through: 1) Totally new product/service 2) Product/service to directly compete
with existing 3) Franchise (arrangement that give franchisees [buyers] right to sell
product)
When capital costs high, much research needed, business plan for investors… (or if
complex, analysts needed)
(1) Business plan = comprehensive review of business strategy for proposed
venture, and how strategy will be implemented
Opportunity, marketing plan, operational/financial details, managers‟
skills/abilities
3) Accessing Resources
a) Financial Resources
Bootstrapping = doing more with less (not getting resources, of using others‟)
Debt and equity main types of financing
(1) Debt is preferred, as equity required giving up control
(2) Loan required collateral (assets used to secure a loan, that may be seized if
loan isn‟t repaid)
(3) Equity may require loss of control, or gifts:
Personal savings
Love money
Private investors (“angels” or money-for-ownership %)
Venture capitalists (require 35-50% return to be considered…very
rare)
(4) Debt financing:
Financial Institutions (established small business is common, but hard
to new venture…..banks are anti-high risk. Interests rate high)
Suppliers (trade credit…supplied given, agreement to pay when sold)
(5) Other options: require advance payment from customer, lease equipment,
share space, subcontract manufacturing
b) Other Resources
Federal/provincial gov‟ts have assistance programs
(1) Business Development Bank of Canada (BDC)
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 5 pages and 3 million more documents.

Already have an account? Log in

Document Summary

Chapter 4 entrepreneurship, small business, and new venture creation. One impt. difference is that these don t worry about having resources. The entrepreneurial process: three key elements: the entrepreneur, the opportunity, the process, entrepreneur: needs to take initiative, be independent, good problem solver. However, what someone does > what someone is. 1) identify opportunity 2) access resources 3) new venture 4) growth, stability, decline, demise: identifying opportunities, idea generation. Think outside the box no blocking of ideas. Most come from events relating to work/regular life (also from hobbies,, or chance: screening. The idea creates/adds value for the customer (1) ex. Foxfibre (naturally grown in many colours no dyeing) The idea provides a competitive advantage that can be sustained (1) all other things equal, more able to sustain advantage while markets are in flux. Idea has low exit costs (1) if profits take long time, high exit cost . vice versa: developing the opportunity.

Get access

Grade+
$10 USD/m
Billed $120 USD annually
Homework Help
Class Notes
Textbook Notes
40 Verified Answers
Study Guides
Booster Classes
Class+
$8 USD/m
Billed $96 USD annually
Homework Help
Class Notes
Textbook Notes
30 Verified Answers
Study Guides
Booster Classes