CHAPTER 7

Entrepreneurshi
p and Starting a
Small Business

Prepared by Dr. C. McLarney, Dalhousie University

© 2022 McGraw Hill Limited

 Learning Objectives
1. Explain why people are willing to become
entrepreneurs, and describe the attributes of
successful entrepreneurs.
2. Discuss the importance of small business to the
Canadian economy.
3. Summarize the ways to learn how small-businesses
operate.
4. Analyze what it takes to start and run a small business.
5. Outline the advantages and disadvantages that small
businesses have in entering global markets.

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 Entrepreneurship
• 2.9 million people in Canada are self-employed
• Increasingly, young people are considering starting a
small business when they graduate.
• Schools are responding to this trend by offering more
courses on the subject of entrepreneurship.

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 Entrepreneurship, Pt. 2
• Entrepreneurship is accepting the challenge of starting
and running a business.
• The word entrepreneur originates from the French
word entreprendre, which means “to undertake.”
• In a business context, it means to start a business.

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 Entrepreneurship, Pt. 3
• While many people use the terms entrepreneurship
and small business interchangeably, there are
significant differences.
• Entrepreneurial ventures differ from small businesses
in four ways:
1. Amount of wealth creation
2. Speed of wealth creation
3. Risk
4. Innovation

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 Entrepreneurship Differs from
Small Business
• Entrepreneurship is not always small, and small
business is not always entrepreneurial.
• While most businesses start small, it’s the intent to
stay small that separates small business from
entrepreneurship.

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 Canadian Entrepreneurs
• Wallace and Harrison McCain
• Billes brothers (Canadian Tire)
• Ablan Leon (Leon’s Furniture)
• Jean Coutu and Louis Michaud
• J. W. Sobey
• Christine Magee (Sleep Country Canada)

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 Why People Take the
Entrepreneurial Challenge
• New Idea, Process, or Product.
• Some entrepreneurs are driven by a firm belief,
perhaps even an obsession, that they can produce a
better product, or a current product at a lower cost,
than anybody else.
• Profit
• Challenge.
• Many people thrive on overcoming challenges.

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 Why People Take the
Entrepreneurial Challenge, Pt. 2
• Family Pattern.
• Some people grow up in families who have started
their own businesses
• Independence.
• Many entrepreneurs simply do not enjoy working
for someone else.

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 What Does it Take to be an
Entrepreneur?
Entrepreneurial attributes to look for in yourself include
the following:
• Self-directed.
• You should be a self-starter, with a lot of confidence
in yourself.
• Self-Nurturing
• You must believe in your idea even when no one
else does, and be able to replenish your own
enthusiasm

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 What Does it Take to be an
Entrepreneur?, Pt. 2
Attributes:
• Action-Oriented
• Highly Energetic
• Tolerant of Uncertainty
• Able to Learn Quickly
• Making errors is inevitable. What is important is what you learn from them.

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 Turning Your Passions into
Opportunities
• While many entrepreneurs’ business ideas are inspired
by their passions, many see business opportunities in
their problems.
• To look at problems or passions and see opportunities
in them, ask yourself these questions: What do I want,
but can never find? What product or service would
improve my life? What really irritates me and what
product or service would help?

© 2022 McGraw Hill Limited

 Women Entrepreneurs
• According to Statistics Canada’s
Labour Force Survey report,
there were 950 000 self-
employed women in Canada,
accounting for approximately 36
percent of all self-employed
persons.
• A greater concentration of
women run small and medium-
sized enterprises (SMEs)

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 A Comparison of Canadian
Women and Men Entrepreneurs

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 Reasons for the Emergence of
Female Entrepreneurs
• Financial Need
• Lack of Promotion Opportunities
• Women Returning to the Workforce
• Family and Personal Responsibility
• Public Awareness of Women in Business
• Part-Time Occupations
• Higher Rate of Success for Women

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 Entrepreneurial Teams
A group of experienced people from different areas of
business who join together to form a managerial team
with the skills needed to develop, make, and market a
new product.

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 Entrepreneurship Within Firms
Intrapreneurs
• Creative people who work as entrepreneurs within
corporations.
• The idea is to use a company’s existing resources—
human, financial, and physical—to launch new
products and generate new profits.

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 Micropreneurs and Home-Based
Business
• The smallest of small businesses are called micro-
enterprises, most often defined as having fewer than
five employees.

• Many micropreneurs are owners of home-based

businesses.

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 Micropreneurs and Home-Based
Business, Pt. 2
Many home-based businesses are owned by people who are
trying to combine career and family.

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 Home-based Businesses
Reasons for the growth of home-based businesses:
• Computer Technology
• Corporate Downsizing
• Change in Social Attitudes

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 Online Businesses
There is a multitude of small businesses selling
everything online from staplers to refrigerator magnets
to wedding dresses.
These small businesses compete with other small
businesses as well as large web-based and bricks-and-
mortar businesses.

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 Why People Start Their Own
Businesses
• Opportunity
• New Idea, Process, or Product
• Profit
• Challenge
• Independence
• Family Pattern

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 Home-based Business Challenges
• Getting New Customers
• Managing Time
• Keeping Work and Family Tasks Separate
• Abiding by City Ordinances
• Managing Risk

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 Potential Home-based Businesses
1. Home Renovation Services
2. Pet Products and Services
3. Catering Services
4. Cleaning Services
5. Fall Prevention Products - Sales and Service
6. Wedding Planner Services
7. Ecommerce
8. In-Home Beauty Services
9. Sewing and Alteration Services
10. Business/Life Coach Services
Source: Susan Ward, “The Best Home Business Opportunities,” The Balance, July 20, 2017, https://www.thebalance.com/top-home-business-opportunities-2948561.

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 Incubators
Entrepreneurs and new start-ups can also find
assistance from incubators.
• provide hands-on management assistance,
education, information, technical and vital business
support services, networking resources, financial
advice, as well as advice on where to go to seek
financial assistance.

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 Government Support for
Indigenous Businesses
• Indigenous economy contributes $31 billion to
Canada’s GDP. It is estimated to reach $90 billion by
2025
• There are over 50,000 Indigenous businesses in
Canada of which 99 percent are SMEs.
• Budget 2021 proposed a $42 million investment
over three years to expand the Aboriginal
Entrepreneurship Program.

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 Getting Started in Small Business
• Definition: business establishment
• Has at least one paid employee
• Annual sales revenue of $30,000, or is
incorporated
• Has filed a federal corporate income tax return at
least once in the previous three years.

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 Importance of Small Business
• Nearly all small businesses are Canadian-owned and
managed.
• This is in contrast to large businesses, of which many
are foreign-owned and -managed.
• Small business thus plays a major role in helping to
maintain the Canadian identity and Canadian
economic independence.

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Small Business Success and Failure
• The following are some of the causes of small-
business failure:
• Plunging in without first testing the waters on a
small scale.
• Underpricing or overpricing goods or services.
• Underestimating how much time it will take to
build a market.
• Starting with too little capital.

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 Small Business Success and Failure, Pt. 2
• Starting with too much capital and being careless in its
use.
• Going into business with little or no experience and
without first learning something about the industry or
market.
• Borrowing money without planning just how and
when to pay it back.

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 Small Business Success and Failure, Pt. 3

• Not allowing for setbacks and unexpected expenses.

• Buying too much on credit.
• Extending credit too freely.
• Expanding credit too rapidly.
• Failing to keep complete, accurate records, so that the
owners drift into trouble without realizing it.

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 Ways to get into Your First
Business Venture
1. Start your own company.
2. Buy an existing business.
3. Buy a franchise unit
4. Inherit/take over a family business.

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 Ways to get into Your First
Business Venture, Pt. 2
Get Some Experience
• Many small-business owners got the idea for their
businesses from their prior jobs.

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 Managing a Small Business
The functions of business in a small-business setting:
• planning your business
• financing your business
• knowing your customers (marketing)
• managing your employees (human resource
development)
• keeping records (accounting).

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 Planning a Business Plan
• A detailed written statement that describes the nature
of the business, the target market, the advantages the
business will have in relation to competition, and the
resources and qualifications of the owner(s).
• A business plan forces potential owners of small
businesses to be quite specific about the goods or
services they intend to offer.

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Writing a Business Plan

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Sample of Outline of Business Plan
• Cover Letter
• Executive Summary
• Company Background
• Management Team
• Financial Plan
• Capital Required
• Marketing Plan
• Location Analysis
• Manufacturing Plan
• Appendix

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 Financing Your Business Getting
Money to Fund a Small Business
• supplier credit • loans from friends and
• personal savings relatives
• personal credit cards • government lending
• retained earnings agencies
• angel investment
• business credit cards
• personal lines of credit
• leasing
• personal loans

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 Getting Money to Fund a Small
Business
Angel Investors
• Private individuals who invest their own money in
potentially hot new companies before they go public.
• Angel investors usually target their support (generally
$20,000 to $500,000) to pre-start-up and early-stage
companies.

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 Getting Money to Fund a Small
Business, Pt. 2
Crowdfunding
• Crowdfunding is the raising of funds through the
collection of small contributions from the general
public (known as the “crowd”) using the Internet and
social media.
• Examples of crowdfunding platforms where individuals
can ask for or donate money include Kickstarter and
Indiegogo.

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 Knowing Your Customers
Market
• People with unsatisfied wants and needs who have
both the resources and the willingness to buy.
• One of the greatest advantages that small businesses
have over larger ones is the ability to know their
customers better and to adapt quickly to their ever-
changing needs.

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 Managing Employees
Hiring, training, and motivating employees are critical.
• It is not easy to find good, qualified help when you
offer less money and fewer benefits.

The gig economy (also called the on-demand economy

or the contingent workforce) is work based on people
having temporary jobs or doing separate pieces of
work, each paid separately, rather than working in a
permanent job for an employer.

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 Going Global: Small Business &
International Prospects
Positives Negatives
1. World Market 1. Financing Difficult
2. Absorb Excess Inventory 2. How to Get Started?
3. Soften U.S. Downturns 3. Lack of Cultural
4. Extend Product Life Understanding
4. Paperwork

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 International Small Business
Advantages Information
• Deal With Individuals • Canadian Trade
Commissioner Service
• Faster Shipping
• Variety of Suppliers
• Professional Service

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 Chapter Summary
1. Why people are willing to become entrepreneurs
• New idea, independence…
• the attributes of successful entrepreneurs.
• Self-directed, action oriented….
2. Importance of Small business and the Canadian
economy.
• 2.6 million workers in the Canadian economy were
self-employed.

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 Chapter Summary, cont’d.
3. Summarize ways to learn about how small
businesses operate
4. Analyze what it takes to start and run a small
business
5. Outline the advantages and disadvantages that
small businesses have in entering global markets .

© 2022 McGraw Hill Limited 46