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RSM100Y1 (431)
Chapter 4

chapter 4

16 Pages
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University of Toronto St. George
Rotman Commerce
Stojanovic Dragan

Chapter 4 Understanding Entrepreneurship Small Business and New Venture CreationSMALL BUSINESS NEW VENTURE CREATION AND ENTREPRENEURSHIP Small Business y To describe it account for number of people employed companys sale revenue size of investment required or the type of ownership structure y To be included in the Business Register a business must have at least one paid employee and annual sales revenue of30 000 or more or be incorporated y Goodsproducing businesssmall if it has fewer than 100 employees y Serviceproducing businesssmall of it has fewer than 50 employees y Labour Force Survey uses information from individuals to make estimates of employment and unemployment levels y Individuals classified as selfemployed if they are working owners of a business that is neither incorporated or unincorporated if they work for themselves but dont have a business ie musicians or if they work without pay in a family business y Unincorporated business operated by a selfemployed person with no employees would not be considered a business in the Business Register which tracks businesses y Majority of businesses in Canada have no employees nor are they incorporated y Small Business an ownermanaged businesswith fewer than 100 employees y Define it as that since it enables us to make better use of existing statistics The New VentureFirm y Various criteria used to determine when a new firm comes into existence y Three of the most commonwhen it was formed whether it was incorporated and if it sold goods andor services y Business is considered new if it became operational in the last 12 months if it adopts any of the main organizational forms proprietorship partnership corporation or cooperative and if it sells goods or services y New Venture or New Firm recently formed commercial organization that provides goods andor services for sale Entrepreneurship y Entrepreneurship process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize on that opportunity y Entrepreneurs business person who accepts both the risks and the opportunities involved in creating and operating a new business venture y Creativity is an important personal attribute that has come to be associated with entrepreneurs and small businesses provide a great opportunity to use creativity y Most innovations come from individuals in small businesses since as a firm grows larger it sacrifices innovations and creativity to focus on higher profits and sales y In some large companies new ideas are discouraged y Intrapreneuring entrepreneurial characteristics that can create and maintain the innovation and flexibility of a smallbusiness environment within the confines of a large bureaucratic structure y Supported by many large firms y Key difference between intrapreneurs and entrepreneurs is that intrapreneurs dont have to worry about getting the resources needed to bring the new product to market since their employer provides the resources THE ROLE OF SMALL AND NEW BUSINESSES IN THE CANADIAN ECONOMY Small Businesses y Majority of Canadian businesses are small 978 followed by mediumsized 19 and then large firms 03 y Consistent pattern in all of Canadian provinces y Large businesses do have more employees but small businesses as a group provide more jobsy Small businesses also lead the way in innovation and new technology New Ventures y Important as a source of job creation and for the introduction of new products and services y Mompreneurswomen who run businesses from their homes THE ENTREPRENEURIAL PROCESS y Three key process elements the entrepreneur the opportunity and the resources y As these key elements interact they may be mismatched or wellmatched y After startup the ventures next phase of development will result in either growth stability decline or demise The Entrepreneur y At the heart of the entrepreneurial process y Researchers have paid considerable attention to identifying the personal characteristics of entrepreneurs
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