Chapter 1Copyright © 2010 by Nelson Education Ltd. EntrepreneursEntrepreneurs 1 PowerPoint Presentation by Ian Anderson, Algonquin College

Chapter 1 Copyright © 2010 by Nelson Education Ltd.

EntrepreneursEntrepreneursEntrepreneursEntrepreneurs

11

PowerPoint Presentation by PowerPoint Presentation by

Ian Anderson, Algonquin CollegeIan Anderson, Algonquin College

Chapter 1 Copyright © 2010 by Nelson Education Ltd. 1-2

Looking AheadLooking AheadLooking AheadLooking Ahead

After studying this chapter, you should be able to:

1. Discuss the availability of entrepreneurial opportunities and give examples of successful businesses started by entrepreneurs.

2. Explain the nature of entrepreneurship and how it is related to small business.

3. Define and identify the importance of small business.

4. Identify rewards and drawbacks of entrepreneurial careers.

5. Describe the various types of entrepreneurs and entrepreneurial ventures.

6. Discuss several factors related to readiness for entrepreneurship and getting started in an entrepreneurial career.

7. Describe some characteristics of successful entrepreneurs.


Entrepreneurial OpportunityEntrepreneurial OpportunityEntrepreneurial OpportunityEntrepreneurial Opportunity

• An economically attractive and timely opportunity that creates value.

• A true opportunity exists only for the entrepreneur who has the interest, resources, and capabilities required to succeed.


Entrepreneurial OpportunityEntrepreneurial OpportunityEntrepreneurial OpportunityEntrepreneurial Opportunity

• In the Trenches: Gumdrops

Vancouver’s first wet weather boutique proved that customers saw value in the concept and that a business idea was present, not just an opportunity.

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Entrepreneurship and Small BusinessEntrepreneurship and Small BusinessEntrepreneurship and Small BusinessEntrepreneurship and Small Business

• Despite similarities, entrepreneur and small business manager are not synonymous– Entrepreneurs might be the founders of

business firms, or they might be owner-managers of existing firms

– Small business managers receive specified compensation and do not assume ownership risks

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What Is a Small Business?What Is a Small Business?What Is a Small Business?What Is a Small Business?

• Criteria for Defining Smallness in Business–Financing supplied by one person or small group–Localized business operations (except marketing)–Business’ size small relative to larger

competitors–Fewer than 100 employees


Why is Small Business Important?Why is Small Business Important?Why is Small Business Important?Why is Small Business Important?

• In 2007, 1,030,000 small businesses were registered in Canada– 97% of these businesses have fewer than 50 employees– 80% of all business entities have less than 5 employees

• There are 2.5 million self-employed Canadians• 56% of Canadians work for small and medium-sized

businesses• New jobs created by small businesses are growing at rate

of 2.3 percent per year, with almost 80 percent of the growth being generated by the newly self-employed.


Exhibit 1-1

Entrepreneurial IncentivesEntrepreneurial IncentivesEntrepreneurial IncentivesEntrepreneurial Incentives


Drawbacks of EntrepreneurshipDrawbacks of EntrepreneurshipDrawbacks of EntrepreneurshipDrawbacks of Entrepreneurship

• Hard work

– Finding new customers and markets

– Frustrations with financing, government, tax, technology, and employment issues

• Long hours

– 20% work more than 60 hours per week

• Emotional loneliness

• Strong possibility of failure

• Disruptions to personal life


Causes of Business FailuresCauses of Business FailuresCauses of Business FailuresCauses of Business Failures

• Lack of managerial and financial abilities• Fail to adapt to competitive environment• A broad based study found the following:

– 32% inadequate research and development– 23% lacked competitive advantage– 14% uncontrolled costs– 13% poorly developed marketing strategies– 10% poor market timing– 8% succumbed to competitor activities


Varieties of EntrepreneurshipVarieties of EntrepreneurshipVarieties of EntrepreneurshipVarieties of Entrepreneurship

• Founder (“Pure” Entrepreneur)An entrepreneur who brings a new firm into existence.

• General Manager (“Second Stage” Entrepreneur)An entrepreneur who directs the continuing operations

of established firms.• Franchisee

An entrepreneur whose power is limited by the contractual relationship with a franchising organization.


High-Potential Ventures versus Small High-Potential Ventures versus Small Firms and MicroBusinessesFirms and MicroBusinesses

High-Potential Ventures versus Small High-Potential Ventures versus Small Firms and MicroBusinessesFirms and MicroBusinesses

• High-Potential Venture (Gazelle)A small firm that has great prospects for growth.

• Attractive Small FirmA small firm that provides

substantial profits to its owner.

• MicroBusiness (Lifestyle)A small firm that provides

minimal profits to its owner.

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• A person with primarily technical skills and little business knowledge.

– Paternalistic approach

– Reluctance to delegate

– Narrow view of strategy

– Personal sales effort

– Short planning horizon

– Simple record keeping

Characteristics of Characteristics of Artisan EntrepreneursArtisan Entrepreneurs

Characteristics of Characteristics of Artisan EntrepreneursArtisan Entrepreneurs


• A person with both business skills and technical knowledge.

– Scientific approach to problems– Willing to delegate– Broad view of strategy– Diversified marketing approach– Longer planning horizon– Sophisticated accounting

and financial control

Characteristics of Characteristics of Opportunistic EntrepreneursOpportunistic Entrepreneurs

Characteristics of Characteristics of Opportunistic EntrepreneursOpportunistic Entrepreneurs


Entrepreneurial TeamsEntrepreneurial TeamsEntrepreneurial TeamsEntrepreneurial Teams

Two or more people who work together as Two or more people who work together as entrepreneurs.entrepreneurs.

Helpful to: Secure a broad range of managerial talents Enhance profits

Useful in: High technology businesses Attractive small firms High potential ventures


Four Routes to EntrepreneurshipFour Routes to EntrepreneurshipFour Routes to EntrepreneurshipFour Routes to Entrepreneurship


Exhibit 1-2

Age Concerns in Starting a BusinessAge Concerns in Starting a BusinessAge Concerns in Starting a BusinessAge Concerns in Starting a Business


• Refugee – a person who becomes an entrepreneur to escape an undesirable situation

• Foreign refugee

– Becomes an entrepreneur in

a new country

• Corporate refugee

– Leaves big business to go

into business for themselves

Entrepreneurial RefugeeEntrepreneurial RefugeeEntrepreneurial RefugeeEntrepreneurial Refugee


• Precipitating EventAn event, such as losing

a job, that moves an individual to become an entrepreneur. Job termination Job dissatisfactionUnexpected opportunity

Taking The PlungeTaking The PlungeTaking The PlungeTaking The Plunge


Successful EntrepreneursSuccessful EntrepreneursSuccessful EntrepreneursSuccessful Entrepreneurs

• Strong commitment / passion

• Willingness to take risks Moderate risk-takers

• Self-Confidence have an internal locus of controlinternal locus of control


Internal vs. External Locus of ControlInternal vs. External Locus of ControlInternal vs. External Locus of ControlInternal vs. External Locus of Control

Internal Locus of Control: Entrepreneurs tend to hold themselves accountable

for their own successes or failures.

External Locus of Control: Non-entrepreneurs tend to believe that external

circumstances, luck or fate impact upon their worlds.


Entrepreneurial CharacteristicsEntrepreneurial CharacteristicsEntrepreneurial CharacteristicsEntrepreneurial Characteristics

• Commitment and determination

• Leadership

• Opportunity obsession

• Tolerance of risk, ambiguity and uncertainty

• Creativity, self-reliance and adaptability

• Motivation to excel

Documents

Chapter 1Copyright © 2010 by Nelson Education Ltd. EntrepreneursEntrepreneurs 1 PowerPoint Presentation by Ian Anderson, Algonquin College