CHAPTER 1

Entrepreneurs
 LOOKING 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 small business 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 the Changing face of entrepreneurship in Canada.
7. Describe some characteristics of successful entrepreneurs.
 ENTREPRENEURIAL OPPORTUNITY
• Economically attractive and timely
opportunity that creates value
• True opportunity exists only for entrepreneur
who has:
– interest, resources, and capabilities required to
succeed

LO 1
 ENTREPRENEURSHIP
AND SMALL BUSINESS
• Entrepreneurs:
– active owner-managers
– second-generation operators of family-owned firms
– franchisees
– owner managers who have bought out the founders of
existing firms
• Small business managers:
– receive specified compensation
– do not assume ownership risks

LO 2
 WHAT IS A SMALL BUSINESS?
• Criteria
– Financing supplied by one person or small group
– Localized business operations (except marketing)
– Business’ size small relative to larger competitors
– Fewer than 100 employees

LO 3
 WHAT IS A SMALL BUSINESS?
• According to Statistics Canada, in 2009:
– 1,114,915 small businesses in Canada
– 2.7 million self-employed workers
– 98 % have fewer than 100 employees
– contribute about 42 % to Canada’s GDP
– employ 48 % of total labour force in private sector
– 46 % have female ownership
– 87 % of Canadian exporters and make up 21 % of
Canada’s total value of exports
– 75 % operate in service industries
– 25 % in goods-producing industries
LO 3
Cont..
• As of December 2017, the Canadian economy totaled
• 1.18 million employer businesses.
• Of these, 1.15 million (97.9 percent) were small
businesses,
• 21,926 (1.9 percent) were medium-sized businesses and
2,939
• (0.2 percent) were large businesses.
• Between 2010 and 2015, the average number of SMEs
created annually was 95,000 and the average number of
businesses that disappeared annually was 85,000.
• On average, 47.8 percent of SMEs created in the goods-
producing sector survived at least 10 years, compared with
42.9 percent in the service-producing sector.
 THE MOTIVATORS OF
ENTREPRENEURSHIP

LO 4
 KEY SMALL BUSINESS STATISTICS
• How many people work for SMEs

LO 4
 DRAWBACKS OF ENTREPRENEURSHIP

LO 4
 CAUSES OF BUSINESS FAILURE
• 32 % inadequate research and development
• 23 % lacked competitive advantage
• 14 % due to uncontrolled costs
• 13 % due to poorly developed marketing
strategies
• 10 % poor market timing
• 8 % succumbed to competitor activities

LO 4
 VARIETIES OF ENTREPRENEURSHIP
• Founder (“Pure” Entrepreneur)
– brings a new firm into existence
• General Manager (“Second Stage”
Entrepreneur)
– directs the continuing operations of established
firms
• Franchisee
– power is limited by the contractual relationship
with a franchising organization

LO 5
 HIGH POTENTIAL VENTURES VS.
SMALL FIRMS AND MICRO BUSINESS
• High-Potential Venture (Gazelle)
– has great prospects for growth
• Attractive Small Firm
– provides substantial profits to its owner($100,000
to $500,000 or more annually)
• Micro Business (Lifestyle)
– provides minimal profits to its owner

LO 5
 CHARACTERISTICS OF
ARTISAN ENTREPRENEURS
• A person with primarily technical skills and
little business knowledge who starts a
business
– Paternalistic approach
– Reluctance to delegate
– Narrow view of strategy
– Personal sales effort
– Short planning horizon
– Simple record keeping

LO 5
 CHARACTERISTICS OF
OPPORTUNISTIC ENTREPRENEURS
• 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

LO 5
 ENTREPRENEURIAL TEAMS
• Two or more who work together as entrepreneurs
• Helpful to:
• Secure a broad range of managerial talents
• Enhance profits
• Useful in:
• High technology businesses
• Attractive small firms
• High potential ventures

LO 5
 GETTING STARTED IN ENTREPRENEURSHIP

• FOUR ROUTES TO ENTREPRENEURSHIP

1. Starting a new business
2. Entering a family business
3. Opening a franchised business
4. Buying an existing business

LO 6
 CHANGING FACE OF
ENTREPRENEURSHIP IN CANADA

LO 6
 YOUNGER AND OLDER
ENTREPRENEURS
• A recent Bank of Montreal survey reports-half
of Canadian students see them selves starting
a business after graduation.
• Approximately 12 percent of SME business
owners are under the age of
40.(https://www.cbc.ca/news/business/5-young-canadian-entrepreneurs-
reveal-secrets-to-success-1.1021852)

LO 6
 YOUNGER AND OLDER
ENTREPRENEURS
• According to CIBC Chief Economist Benjamin
Tal, the over-50 age group is responsible for
30 percent of all new start-ups.
• Older Canadians are more likely to start their
own business because they have extensive
work experience and access to greater
financial resources

LO 6
 IMIGRANT ENTREPRENEURS
• In 2010, about 5.8% of immigrants who had
been in Canada for 10 to 30 years owned a
private incorporated company (with employees)
compared to 4.8% of the Canadian-born.
• However, the firms immigrants own tend to be
smaller than those owned by the Canadian-born.
Furthermore, about 10.8% of such longer-term
immigrants were unincorporated self-employed
compared to 7.5% of the Canadian-born.
LO 6
 CORPORATE REFUGEE
& SOCIAL ENTREPRENEUR
• Corporate refugee
– leaves big business to go into business for
themselves
• Social entrepreneur
-entrepreneurial activity whose goal is to find
innovative solution to social needs , problems an
opportunities(http://www.csef.ca/canadian_social_entr
epreneurs.php)

LO 6
 PRECIPITATING EVENTS

• An event, such as losing a job, that moves an

individual to become an entrepreneur
– job termination
– job dissatisfaction
– unexpected opportunity

LO 6
 CHARACTERISTICS OF
SUCCESSFUL ENTREPRENEURS
• 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
• https://www.theglobeandmail.com/report-on-business/small-
business/sb-managing/remarkable/article20557482/

LO 7
 ENTREPRENEURIAL CHARACTERISTICS
1. Commitment and determination
2. Leadership
3. Opportunity obsession
4. Tolerance of risk, ambiguity and uncertainty
5. Creativity, self-reliance and adaptability
6. Motivation to excel

LO 7