2. Starting Your Own Business: The Entrepreneurship Alternative6
Chapter
Starting Your Own Business: The Entrepreneurship Alternative

3. Learning Objectives
LO 6.1 Describe what is an entrepreneur and the different types of entrepreneurs.
LO 6.2 Explain why people choose to become entrepreneurs.
LO 6.3 Discuss factors that support and expand opportunities for entrepreneurs.
LO 6.4 Identify the traits of successful entrepreneurs.
LO 6.5 Summarize the process of starting a new venture.
LO 6.6 Explain intrapreneurship.

4. What is an Entrepreneur?
Entrepreneur: A person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business
Differ from many small-business owners in their strong desire to make their business grow
Differ from managers through their overriding responsibility to use the resources of the organization to accomplish their goals
Willing to take risks

5. Categories of Entrepreneurs
Classic entrepreneurs
Serial entrepreneurs
Social entrepreneurs

6. Test Your Knowledge
What kind of entrepreneur starts many businesses in succession?
a) Classic entrepreneur
b) Social entrepreneur
c) Serial entrepreneur
d) Intrapreneur
Answer: c

7. Reasons to Choose Entrepreneurship as a Career Path
In an average month, Canadians start approximately 23,000 new businesses
Recent decades have shown a heightened interest in entrepreneurial careers
People choose entrepreneurship for many reasons:
Dissatisfaction with traditional work
Their ideas fulfill customer needs
Freedom to make own decisions

8. Why People Become Entrepreneurs
FIGURE 6.2
Why People Become Entrepreneurs

9. Reasons to Choose Entrepreneurship as a Career Path
Being Your Own Boss
Self-management is the motivation that drives many entrepreneurs
Financial Success
Entrepreneurs are wealth creators and idea generators
Job Security
Over the past ten years, large companies have eliminated more jobs than they have created
Quality of Life
Starting a business gives the founder some choice over when, where, and how to work

10. Test Your Knowledge
What is the overriding responsibility of an entrepreneur?
to manage people
to make as much money as possible
to use the company resources to accomplish goals
to be ethical and socially responsible
Answer: c

11. The Environment for Entrepreneurs
FIGURE 6.3
Factors Supporting and Expanding Opportunities for Entrepreneurs

12. Globalization
The rapid globalization of business has created many opportunities for entrepreneurs
Most of the fastest-growing small Canadian companies have international sales (most to the United States)
Entrepreneurship is growing worldwide; levels vary by country

13. Information Technology
Education/
Information Technology
Education
Students at many colleges and universities can take a major in entrepreneurship. Dozens of other colleges and universities offer an emphasis in entrepreneurship and hundreds more offer one or two courses in how to start a business
Many schools offer internships with startups.
Information Technology
Technology has given entrepreneurs tools that help them compete
Entrepreneurs have used information technology to revolutionize industries

14. Demographic and Economic Trends
Demographics on Entrepreneurships and Small Business
Two groups are most likely to start their own businesses
Immigrants to North America
People between the ages of 55 and 64 (have access to retirement savings/home equity; want to keep working after retirement)
Flexible, adaptable entrepreneurs will have most success

15. FIGURE 6.4 Characteristics of Entrepreneurs

16. Characteristics of Entrepreneurs
Vision: an overall idea for how to make business ideas successful
High energy level: a willingness to work hard
Need to achieve: want to excel and achieve difficult goals
Self-confidence: fearlessness in the face of difficult odds
Tolerance for failure: not easily discouraged
Creativity: devise innovative ways to overcome difficult problems and situations; have new ideas for good and services
Tolerance for ambiguity: take business uncertainties in stride
Internal locus of control: belief in control of own fates

17. Guidelines for Selecting a Business Idea
List your interests and abilities. Include your values and beliefs, your goals and dreams, things you like and dislike doing, and your job experiences
Make another list of the types of businesses that match your interests and abilities
Read newspapers and business and consumer magazines. Learn about demographic and economic trends that discuss future needs for products that no one yet offers
Carefully evaluate existing goods and services. Look for ways to improve them
Decide on a business that matches what you want and offers profit potential
Do marketing research to decide whether your business idea will attract enough customers to earn a profit
Learn as much as you can about the industry in which your new venture will operate, your product or service, and your competitors. Read surveys that project growth in different industries

18. Starting a New Venture Selecting a Business Idea
Find something you love to do and are good at doing
Find an idea that can satisfy a need in the marketplace
Entrepreneurs must be sure that the idea they choose has interest in the marketplace.
Business Plan

19. Buying an Existing Business
Advantages:
Established customers
Deal with familiar suppliers
Good/service known in marketplace
Necessary permits and licenses are already secured
Financing may be easier
Seller financing

20. Table 6.1 Online Resources for Preparing a Business Plan
Creating a Business Plan
In the past, many entrepreneurs launched businesses without a formal business plan
Business plans help contemporary entrepreneurs prepare enough resources and stay focused on key objectives
Table 6.1 Online Resources for Preparing a Business Plan

21. Finding Financing
Seed capital: The initial funding needed to launch a new vendor
Debt Financing
Credit cards
Family and friends
Bank loans
Finance companies
Equity Financing
Venture Capitalists
Angel Investors

22. Government Support for New Ventures
Business incubators are a key way government supports new ventures
Enterprise zones
Encourage entrepreneurship in specific geographic areas set aside for economic renewal
Urban reserves
Economic zone within a municipality set aside as First Nation reserve land for Aboriginal commercial ventures

23. Test Your Knowledge
Which of the following is the least likely source of financing for new ventures?
a) venture capitalists
b) debt capital
c) equity capital
d) angel investors
Answer: a

24. Intrapreneurship
The process of promoting innovation within the structure of an existing organization
An idea to promote creativity
Companies promote in a variety of ways
Skunkworks
Pacing Programs

25. Test Your Knowledge
Bootlegging is a 3M Corp. effort to promote intrapreneurship by allowing
a) employees to borrow time from other projects to develop new products.
b) employees to take a sabbatical to work on new products.
c) employees to take frequent vacations to inspire new product ideas.
d) employees to copy competitors’ product ideas and claim credit.  
Answer: a

26. Copyright
Copyright © 2016 John Wiley & Sons Canada, Ltd. All rights reserved. Reproduction or translation of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein.