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MGTA01H3 (583)
Chapter 3

Chapter 3 In Class + Reading Notes

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Management (MGT)
Chris Bovaird

In class notes for Chapter 3 – Entrepreneurship and Small Business th Monday October 17 , 2011 Entrepreneurs: - psychological characteristics - demographic characteristics - Canada is market economy - Anyone can start business - No fees, no government permission - To start business, just do it - Business: organizing yourself to provide a good/service - Approx. 300 new businesses everyday (textbook) - Canada sympathetic to businesses: encourages, nurtures a business - Our country is rich because it encourages a business - Overall 8 , government 9 , infrastructure 7 , business environment 5 th Small Business in Canada - We don’t’ know the accurate # of small businesses - Impossible: because we don’t need government permission - Also small businesses: tutor, babysitting, snow shoveling in neighborhood - Estimated 2.4 million: # comes from tax return - Even if don’t tell gov’nt about our business, we have to pay taxes - 2.4 million businesses/34 million people = 1 business per 14 people Canadian work in small business - Total working population: 17 million (8% self-employed) - 25% work in business: less than 5 employees - 50% work in business: less than 50 - 95~97% are small businesses Small Business Failure - Easy to start, easy to fail - As years increase, failure rate increases - US higher failure rate - No longer paying income taxes because don’t have enough income to be taxed - Maybe we lost interest - Maybe not as profitable as you think; eg. go back to school for more education or get a full-time job Year Canada (%) U.S.(%) 2 39 40 5 64 60 10 80 90 - Most would-be entrepreneurs think odds of success are worse - People who fail are those who believe in the 2 year failure rate Entrepreneurs: Personality Traits - High “need for achievement” - “Internal” locus of control - Risk Tolerance - Self confident - “Need for Achievement” Theory - we are motivated by 3 basic human motivations: - Need for Power: authority motivated, need to be influential, need to lead - Need for Affiliation: produces need to be liked, team player, ppl who need friendly relationships (eg. nurses, social workers, teams) - Need for Achievements: seek achievement, produces people who need accomplishment, set challenging goals Locus of Control (internal) - Person’s belief about what causes food or bad results in his or her life (result from their own behavior and actions) - “Internals” try to influence others - “Internals” assume their efforts - Likely to start a business Locus of Control (external) - People who believe powerful others, fate or change determine events - Less likely to be leaders, take risks and start own business Entrepreneurs are “internals” - they recognize opportunities - assemble/mobilize resources - assume risks Risk Tolerance - Risk: uncertainity of outcome - Risk Intolerance: new or previously unknown situations (threatening) - Risk Tolerance: they see it as desirable - People see risk: from new situations, complexity or the unknown - Entrepreneur don’t seek risk, they are risk tolerance Chapter 3 – Entrepreneurship and Small Business Monday October 17 , 2011 Small business, new venture, entrepreneurship: closely linked but are distinct Small Businesses Owner-managed, business with less than 100 employees To measure, Canadian small business statistics relies on: - Business Register (tracks businesses) - Labour Force Survey (tracks individual) To be included in register: - One paid employee (min.) - Sales revenue of $30,000 or more (or be incorporated) - Good-producing business: less than 100 employees - Service business: less than 50 - Info used to make estimates of employment and unemployment levels Individuals are self-employed if: - Working owners of a business that is either incorporated or unincorporated - Work for themselves but don’t have a business (eg. musicians) - Work without pay (eg. Family business) - Incorporated: A private company limited by shares - Unincorporated: One which does not have a separate legal identity Important because: majority of businesses in Canada have no employees (only an owner) and they are not incorporated - 2.2 million “business establishments” - 2.5 million “self-employed” The New Venture/Firm New venture: recently formed commercial organization that provides goods and/or services for sale Business considered new if: - operational for 12 months - has any main organizational forms (proprietorship, partnership, corporation, cooperative - sells goods or services Entrepreneurship Entrepreneurship: process of identifying an opp
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