Textbook Notes (363,212)
Canada (158,271)
RSM100Y1 (431)
John Oesch (214)


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University of Toronto St. George
Rotman Commerce
John Oesch

Chapter 4Understanding Entrepreneurship Small Business and New Venture CreationSmall Business New Venture Creation and Entrepreneurship Small Business y Industry Canada relies on two distinct sources of information both provided by Stats Canada The Business Register which track businesses and the Labor Force Survey which tracks individuals To be included in the Business Register a business must have at least one paid employee and annual sales revenues of 30 000 or more or be incorporatedy A goodsproducing business in the register is considered small if it has fewer than 100 employees while a serviceproducing business is considered small if it has fewer than 50 employees y The Labor Force Survey uses information from individuals to make estimates of employment and unemployment levels Individuals are classified as selfemployed if they are working owners of a business that is either incorporated or unincorporated if they work for themselves but do not have a business of if they work without pay in a family business y We define a small business as an ownermanaged business with fewer than 100 employees The New VentureFirm y Various criteria can also be used to determine when a new firm comes into existence Three of the most common are when it was formed whether it was incorporated and if it sold goods andor services y A business is considered to be new if it has become operational within the previous 12 months if it adopts any of the main organization forms proprietorship partnership corporation or cooperative and if it sells goods or servicesy Thus we define a new venture as a recently formed commercial organization that provides goods andor services for saleEntrepreneurship y Entrepreneurship is the process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize on that opportunityy Entrepreneurs are people who recognize and seize opportunities y Creativity is an important personal attribute that has come to be associated with entrepreneurs and small businesses provide a great environment to use creativity y Intrapreneuringentrepreneurial characteristics that can create and maintain the innovation and flexibility of a smallbusiness environment within the confines of a large bureaucratic structure y A key difference between intrapreneurs and entrepreneurs is that intrapreneurs typically dont have to concern themselves with getting the resources needed to bring the new product to market since their employer provides these resources The Role of Small And New Businesses in the Canadian Economy Small Businessesy While one large business has many more employees than one small business as a group small businesses provide more jobs than large businesses y Small business also lead the way when it comes to innovation and new technology y The distribution of employment by size of firms varies considerably across industries Small businesses account for over twothirds of employment in four industries noninstitutional health care the construction industry other services and accommodation and foodNew Ventures y New ventures are important as a source of job creation and for the introduction of new products and services y In 2007 small business created 100 000 jobs in Canada this represented 40 of all jobs that were createdy Women are playing a more prominent role than ever before in starting new ventures y Women who run businesses from their homes are sometimes called mompreneursThe Entrepreneurial Process y To start up a new venture the entrepreneur must identify a business opportunity and access the resources needed to capitalize on it Social economic political and technological factors in the broader environment will have an influence but there are 3 key process elementsthe entrepreneur the opportunity and the resourcesand how they interactThe Entrepreneur y Since the entrepreneur is at the heart of the entrepreneurial process researchers have paid considerable attention to identifying the personal characteristics of entrepreneurs y The two main things that entrepreneurs need to do are to identify an opportunity and to access resourcesIdentifying Opportunities y Identifying opportunities involves generating ideas for new or improved products processes or services then screening those ideas so that the one that presents the best opportunity can be developed and then developing the opportunity
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