Contemporary Business

Third Canadian Edition

Boone, Kurtz, Khan, Canzer

Chapter 6

Starting your own Business: The

Entrepreneurship Alternative
Copyright ©2020 John Wiley & Sons, Inc.
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.
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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

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Categories of Entrepreneurs

• Classic entrepreneurs
• Serial entrepreneurs
• Social entrepreneurs

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Test Your Knowledge (1 of 4)

What kind of entrepreneur starts many businesses in succession?

a) Classic entrepreneur
b) Social entrepreneur
c) Serial entrepreneur
d) Intrapreneur
Answer: c

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Reasons to Choose Entrepreneurship as a
Career Path (1 of 2)
• In an average month, Canadians start approximately 10,000
new businesses
• Recent decades have shown a heightened interest in
entrepreneurial careers
• People choose entrepreneurship for many reasons:
o Dissatisfaction with traditional work
o Their ideas fulfill customer needs
o Freedom to make own decisions

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Why People Become Entrepreneurs
FIGURE 6.2
Why People Become
Entrepreneurs

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Reasons to Choose Entrepreneurship as a
Career Path (2 of 2)
• Being Your Own Boss
o Self-management is the motivation that drives many entrepreneurs
• Financial Success
o Entrepreneurs are wealth creators and idea generators
• Job Security
o Over the past ten years, large companies have eliminated more jobs
than they have created
• Quality of Life
o Starting a business gives the founder some choice over when,
where, and how to work
Copyright ©2020 John Wiley & Sons, Inc. 8
Test Your Knowledge (2 of 4)

What is the overriding responsibility of an entrepreneur?

a) to manage people
b) to make as much money as possible
c) to use the company resources to accomplish goals
d) to be ethical and socially responsible
Answer: c

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

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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

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Education/Information Technology

• Education
o 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
o Many schools offer internships with startups.
• Information Technology
o Technology has given entrepreneurs tools that help them compete
o Entrepreneurs have used information technology to revolutionize
industries

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Demographic and Economic Trends

• Two groups are most likely to start their own businesses

o Immigrants to North America
o 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

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Characteristics of Entrepreneurs (1 of 2)

FIGURE 6.4 Characteristics of Entrepreneurs

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Characteristics of Entrepreneurs (2 of 2)

• 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

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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

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Starting a New Venture

• Selecting a Business Idea

o Find something you love to do and are good at doing
o 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

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Buying an Existing Business

• Advantages:
o Established customers
o Deal with familiar suppliers
o Good/service known in marketplace
o Necessary permits and licenses are already secured
o Financing may be easier
• Seller financing

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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
Resource URL and what to Look for
AllBusiness.com www.allbusiness.com
Under the “Finance” tab, select “Business Planning” for links to business plan examples, templates,
and tips.
Inc. www.inc.com
Search for “business plans” to get access to articles on how to structure a business plan and how to
write a mission statement.
MoreBusiness.com www.morebusiness.com
To see sample plans, go to “Templates” and then “Business Plans.”

Table 6.2 Online Resources for Preparing a Business Plan

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Finding Financing

• Seed capital: The initial funding needed to launch a new vendor

• Debt Financing
o Credit cards
o Family and friends
o Bank loans
o Finance companies
• Equity Financing
o Venture Capitalists
o Angel Investors

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Government Support for New Ventures

• Business incubators are a key way government supports new

ventures
• Enterprise zones
o Encourage entrepreneurship in specific geographic areas set
aside for economic renewal
• Urban reserves
o Economic zone within a municipality set aside as First Nations
reserve land for Aboriginal commercial ventures

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Test Your Knowledge (3 of 4)

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

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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
o Skunkworks
o Pacing Programs

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Test Your Knowledge (4 of 4)

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

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Copyright

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