Unit1 What Is Entrepreneurship?

1. Unit1What Is Entrepreneurship?

2. Have You… • Invented something or knows someone who has – what? • Set a goal and achieved it – what? • Been involved in fundraising for a charitable cause – what? • Been inspired by someone – who and why? • A relative who runs his/her own business – who? • Had a part-time or summer job – what? • Been involved in organizing a school or community event – what? • Put together a budget and stuck to it – when? • Experience in sales – what?

3. Principal Reasons Why Canadians Start Businesses of Their Own • To seize an opportunity • To achieve a sense of personal accomplishment • Dreamed of running their own business • A chance to use their experience/skills • To be their own boss • Economic necessity; to make a living

4. Principal Reasons Why Canadians Start Businesses of Their Own • Had previous experience they wished to use • To supplement their income from other employment • To create a job for themselves • Frustrated in their previous job • To make lots of money

5. An Entrepreneur Someone who perceives an opportunity and creates an organization to pursue it.

6. Definitions… Entrepreneurship – means to undertake, to pursue opportunities, or to fulfill needs and wants through innovation or the establishment of a business. Entrepreneur – a person who risks time and money to start and manage a business

7. Business – any activity that seeks to provide goods and services to others while operating at a profit. Venture - a business enterprise which involves risk and effort on the part of those who undertake it. This may apply to a business but other undertakings as well for example a charity. Profit – the amount a business earns above and beyond what it spends for salaries and other expenses. Revenue – the total amount of money a business takes in during a given period by selling goods and services.

8. Loss – when a business’s expenses are more than its revenues. Risk – the chance an entrepreneur takes of losing time and money on a business that may not prove profitable. Stakeholders – all the people who stand to gain or lose by the policies and activities of a business. Non-profit organization – an organization whose goals do not include making a personal profit for its owners or organizers.

9. Three Types of Business • Self-employment business • personal service ex. Lawyers, engineers, plumbers • Owner/Operator business • provide a product/service (or mixture) to a limited geographical area. Ex. Dry cleaner, corner store • National Organizations • manufactures/distributes more than one product not limited to geography. Ex. Wal-Mart, Kraft Foods.

10. Role Demands of a Business Venture • There are five role demands required to successfully run a business: • Inventor • Innovator • Manager • Administrator • Entrepreneur

11. Inventors • Important role in developing new product/services • Usually have strong commitments to success/ability to cope with setbacks. • Usually work alone for long periods of time • patient/self-motivated • Reject conventional way of doing things • think outside the box • often criticized, frustrated, disappointed.

12. Innovators  Do not necessarily make something entirely new or different Create an improved way of doing business ex. grocery store vs. ‘no frills’ grocery store

13. Managers Have 4 main functions – planning, leading, directing, supervising Determine objectives and how to meet them by assigning tasks and ensuring all personnel working towards common goals Lead employees by directing/guiding them towards organizational goals. Evaluate/control progress to ensure it’s directed towards achieving organizational goals.

14. Administrators  No entrepreneurial characteristics Ensure that business continues to function smoothly. Must be efficient/enjoy routine of day-to-day execution of repetitive tasks/assignments.

15. Entrepreneurs Undertake organizational/creative role in starting a new venture. All physical/financial/human resources required organized by entrepreneurs Undertake all the initial risk associated with exploiting a potential business opportunity.

16. Decide to go into business for yourself Assess your potential Find an appropriate product or service idea Buy a business Start a new business Acquire a franchise Conduct a feasibility study Technical feasibility Market acceptability Financial viability Organize your business structure and legal requirements Protect your idea Arrange the necessary financing Develop a comprehensive business plan Outline of theEntrepreneurial Process

17. Components of Successful Entrepreneurial Venture • The Entrepreneur • It all begins with the entrepreneur, the driving force behind the business and the coordinator of all the activities, resources and people that are needed to get it off the ground. • This individual will have conducted some assessment of his or her own resources and capabilities and made a conscious decision to launch the business.

18. Components of Successful Entrepreneurial Venture • Opportunity • The entrepreneur must then find a concept or idea that he or she feels has the potential to develop into a successful enterprise. • The concept behind the business must be carefully evaluated to determine whether there is likely to be a market, and if it might represent a viable opportunity. • The object is to determine the magnitude of the returns that might be expected with successful implementation.

19. Components of Successful Entrepreneurial Venture • Organization • To capitalize on any business opportunity, an organizational structure must be established, with a manger or management team and a form of ownership. • Resources • Some essential financial and other resources must be obtained. The key usually is money. It is the “enabler” that makes everything else happen. Other key resources typically include physical plant and equipment, technical capability, and human resources.

20. Components of Successful Entrepreneurial Venture • Strategy • Once a start-up appears likely, a specific strategy must be developed and a feasibility study conducted. • A feasibility study is a way to test your business concept to see whether it actually does have market potential. • It is a series of tests you should conduct to discover more and more about the nature and size of your business opportunity. • After each test you should ask yourself whether the opportunity still appears to be attractive and if you still want to proceed. • Has anything come up that would make the business unattractive to prevent you from going forward with its implementation? • Throughout this process you probably will modify your concept and business strategy several times until you feel that you have it right.

21. Components of Successful Entrepreneurial Venture • The Business Plan • The business plan not only describes your business concept, but outlines the structure that needs to be in place to successfully implement the concept. • The plan can be used to assist in obtaining the additional resources that may be necessary to actually launch the business and guide the implementation of the strategy. • It assumes you have a feasible business concept and have now included the operational components needed to execute the strategy. • It describes in some detail the company you are going to create.

22. Opportunity The Entrepreneur Business Plan Resources Organization Strategy The Components of Successful Entrepreneurial Ventures

23. 13 Reasons WhySmall Businesses Fail • Poor cash flow management • Absence of a reliable hiring system and a lack of understanding of how to hire, retain, and motivate the right people for the right job • Absence of performance monitoring and lack of understanding or use of performance monitoring information • Poor debt management: a combination of not paying their debts on time and not coordinating payments with incoming cash flows

24. 13 Reasons WhySmall Businesses Fail • Over borrowing; the company is excessively leveraged and debt is not being reduced • Excessive reliance on a few key customers • Poor market research leading to an inaccurate understanding of the market’s wants and needs • Lack of financial and insufficient planning • Failure to innovate

25. 13 Reasons WhySmall Businesses Fail • Poor inventory management • Poor communications throughout the business • Failure to recognize their own strengths and weaknesses • Trying to go it alone; attempting to do everything themselves and not seek external help

26. Envirobond – Video Questions A crash course on how not to run your own business: http://highered.mcgraw-hill.com/sites/0070898103/student_view0/cbc_videos-999/stage_1.html Mike Reid, an inexperienced small-businessman, started a company to produce a material made from small stones and organic glue to use in pathways and driveways. Mike reached out to his family and local bank for financing to help keep his dream alive, but the business did not get off to an easy start due to supplier problems and other issues. After a full season of activity and an investment of over $30,000, Envirobond is in the same situation in which it started – with no sales prospects and no cash flow. Reid now only hopes that he can survive until next year and begin again.

27. Envirobond – Video Questions • What initial challenges did Reid face on starting Envirobond? • Would having a partner have helped Reid? • How important is outside help from family and friends when deciding to venture into a business on your own?

28. Responses to Video Questions • Lack of financing and lack of experience or knowledge related to doing business. • A partner could bring the necessary business experience and provide access to additional financing. • Can be essential. Reid only survived his first year in business due to the generosity of his family in providing him with the necessary financing.