Textbook Notes (378,539)
CA (167,157)
UTSC (19,214)
MGT (1,095)
MGTA01H3 (583)
Chapter

Ch 3 Notes

2 Pages
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Department
Management (MGT)
Course Code
MGTA01H3
Professor
Chris Bovaird

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Wednesday, April 27, 2011
TN: Chapter 3 [MGTA03]
The Links Among Small Business, New Venture Creation, and Entrepreneurship
Small Business: An owner-managed business with less than 100 employees
New Venture/firm: A recently formed commercial organization that provides goods/services for sale
1. Operating within the previous 12 months
2. Adopted main organizational forms
3. Sells goods/services
Entrepreneurship: The process of identifying an opportunity in the marketplace and accessing the
resources needed to capitalize on it
Entrepreneurs: People who recognized and seize opportunities
The Role of Small and New Businesses in the Canadian Economy
Majority of canadian businesses are small, most have fewer than 5 employers
Private Sector: The part of economy made up of companies that are not owned by government
Small businesses contribute to employment but not significantly to GDP
The Entrepreneurial Process
Identifying Opportunities: involves generating ideas for new or improved goods/services
1. Idea Generation: through work experience, hobbies/interest and chance happening
2. Screening: weed out the “dead-end” ideas
a. The idea creates or adds value for the customer
b. The idea provides a competitive advantage that can be sustained
c. The idea is marketable and financially viable using a sales forecast
d. The idea has low exit costs
3. Developing the Opportunity
a. Produce a total new product/service
b. Introduce a product/service that would compete but with a new twist
c. Franchise: a franchisee purchases the right to sell the product/service of the franchiser
A business plan describes the proposed venture, explains why its an opportunity, outlines its
marketing plan, operational and financial details and managers’ skills/abilities
Accessing Resources
Debt Financial Resources
1. Financial Institutions: commercial banks are a main source, usually done by a personal loan (other
examples: trust companies, credit unions, government agencies which usually have higher interest)
2. Suppliers: who provide goods/services with an agreement to pay later=trade credit
Equity Financial Resources
2.1. Personal Savings
2.2. Love Money: money from family relationship or friendship
2.3. Private Investors: individuals willing to invest money (aka angels)
2.4. Venture capitalists: managed pools of investors money (need high criteria)
3. Other Resources: A team needed depending on the size of venture, personal competencies
Assessing the “Fit” Between Elements in the Entrepreneurial Process
The Entrepreneur-Opportunity Fit: is it something he/she can do and wants to do
The Opportunity-Resources Fit: whether the resources needed for the opportunity can be acquired
The Entrepreneur-Resources Fit: whether the entrepreneur has the capacity to meet those resources
Start Up and Beyond
Starting Up as Small Business
1. Buying an Existing Business/Taking over a Family Business
2. Buying a Franchise
1
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Description
Wednesday, April 27, 2011 TN: Chapter 3 [MGTA03] The Links Among Small Business, New Venture Creation, and Entrepreneurship Small Business:An owner-managed business with less than 100 employees New Venturefirm:Arecently formed commercial organization that provides goodsservices for sale 1. Operating within the previous 12 months 2. Adopted main organizational forms 3. Sells goodsservices Entrepreneurship: The process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize on it Entrepreneurs: People who recognized and seize opportunities The Role of Small and New Businesses in the Canadian Economy Majority of canadian businesses are small, most have fewer than 5 employers Private Sector: The part of economy made up of companies that are not owned by government Small businesses contribute to employment but not significantly to GDP The Entrepreneurial Process Identifying Opportunities: involves generating ideas for new or improved goodsservices 1. Idea Generation: through work experience, hobbiesinterest and chance happening 2. Screening: weed out the dead-end ideas a. The idea creates or adds value for the customer b. The idea provides a competitive advantage that can be sustained c. The idea is marketable and financially viable using a sales forecast d. The idea has low exit costs 3. Developing the Opportunity a. Produce a total new productservice b. Introduce a productservice that would compete but with a new twist
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