CH4 - Entrepreneurship, Small Business, and New Venture Creation

Question 1

def. small business

Answer 1

owner-managed business with fewer than 100 employees

Question 2

how much do small business contribute to Canada’s GDP

Answer 2

30% of Canada’s GDP over the past decade

Question 3

def. new venture

Answer 3

Recently formed commercial organization that provides goods and/or services for sale

Question 4

def. entrepreneurship

Answer 4

process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize on it

Question 5

reasons why people want to be entrepreneurs

Answer 5

1 - goal of independence—independence from working for someone else coupled with some reasonable degree of financial security.
2 - goal of growth and expansion—that is, to transform their venture into a large business
3 - sometimes no specific goal

Question 6

Entrepreneurial Characteristics

Answer 6

resourcefulness and a concern for good long-term customer relations
Some are behavioural (e.g., taking initiative), others are personality traits (e.g., independence), and still others are skills (e.g., problem solving)

Question 7

Intrapreneurs

Answer 7

People who exhibit entrepreneurial characteristics and create something new within an existing firm or organization

Question 8

difference between entrepreneurs and intrapreneurs

Answer 8

intrapreneurs typically do not have to concern themselves with getting the resources needed to bring a new product to market because big companies tend to have the necessary resources already available

Question 9

percentage of small businesses, medium sized and large businesses in Canada (among all businesses)

Answer 9

small : 97.9%
medium : 1.9% (100 to 499 employees)
big : 0.2% (500+ employees)

Question 10

importance of small businesses in general workforce + specific sectors

Answer 10

• half the workforce is employed by small business (all industries)
• 80% of employment in four industries: agriculture, other services, accommodation and food services, and construction

Question 11

importance of new firms

Answer 11

new firms the main source of job creation + also responsible for most new products and services
small businesses created 35.8% of all private-sector jobs in Canada

Question 12

Women role in small businesses

Answer 12

They now account for half of all new businesses formed. However, on a negative note, women lead only 14.8% of the small and medium-sized businesses that export goods and services

Question 13

inclusion of POC

Answer 13

There are many organizations in Canada that are promoting greater inclusion and higher participation rates for youth entrepreneurship and increased opportunities for Black and Indigenous entrepreneurs
ex. Business Development Bank of Canada (BDC) has an Indigenous loan program specifically designed for the needs of Indigenous entrepreneurs

Question 14

3 ways to start up a small business

Answer 14

-> start from scratch
-> buying an existing business
- taking over a family business
-> buying a franchise

Question 15

benefits and drawbacks of buying an existing business

Answer 15

-> increases the chances of success as the business has already proven its ability to attract customers + established relationships with lenders, suppliers, and other stakeholders
-> a more clear picture of what to expect instead of estimate
-> BUT uncertainty about finances, may have bad rep, may be badly located

Question 16

benefits and drawbacks of taking over a family business

Answer 16

+ : can provide otherwise unobtainable financial and management resources—often valuable reputation -> important community + business relationships, employee loyalty often high, and an interested, unified family management and shareholders group may emerge
- : may be disagreements over which family members assume control, expectations can be problematic

Question 17

benefits and drawbacks from buying a franchise

Answer 17

+ : not having to build from scratch, well-known brand, may send training program + advice, can be your own boss
for the franchise - people are working for themselves, so higher profit, they share the cost of advertising, attain rapid growth, not details of local operation
- : long agreements - if you don’t abide you might be sued, no creativity, pay for advertising

Question 18

4 key reasons for success in small businesses

Answer 18

1 - hard work, drive, and dedication : commitment is a must, time and effort
2 - market demand for the product or service
3 - Managerial competence : understanding how to manage -> training, experience, expertise of others
4 - Luck : important but cannot be relied on

Question 19

4 key reasons for failure in small businesses

Answer 19

1 - Managerial incompetence or inexperience : overestimating skills or believe hard work alone ensures success
2 - Neglect : not enough commitment
3 - Weak control systems : if control systems don’t signal potential problems
4 - Insufficient capital : need to have enough capital for the first six months w/o profit