UNIT 3 Entrepreneurship

Entrepreneur DefinedEntrepreneur Defined

A person who takes risks A person who takes risks and starts a venture and starts a venture (profit or not-for-profit) to(profit or not-for-profit) to solve a problem or to take solve a problem or to take advantage of an opportunity; advantage of an opportunity; a person who provides an a person who provides an innovative product or service innovative product or service to meet a consumer to meet a consumer want or need.want or need.

Entrepreneurial CharacteristicsEntrepreneurial Characteristics

Most entrepreneurs possess the following Most entrepreneurs possess the following characteristics:characteristics:

1. Risk Takers1. Risk Takers 2. Perceptive2. Perceptive 3. Curious3. Curious 4. Imaginative4. Imaginative 5. Persistent5. Persistent 6. Goal-Setters6. Goal-Setters 7. Hardworking7. Hardworking 8. Self-Confident8. Self-Confident 9. Flexible9. Flexible 10. Independent10. Independent

Risk TakerRisk Taker

There is no sure thing in business. AThere is no sure thing in business. A failed business could mean bankruptcy failed business could mean bankruptcy or near bankruptcy. Not everyone can or near bankruptcy. Not everyone can cope with that stress cope with that stress

Successful entrepreneurs minimize Successful entrepreneurs minimize andand manage risk through proper business manage risk through proper business planning and assessment of the planning and assessment of the venture’s prospects for success. venture’s prospects for success.

PerceptivePerceptive

Entrepreneurs do not avoid problemsEntrepreneurs do not avoid problems

Problems are perceived asProblems are perceived as opportunities to learn, improve, opportunities to learn, improve, grow,grow, create and develop new ideas create and develop new ideas

CuriousCurious

Entrepreneurs like to know how things Entrepreneurs like to know how things work, could things work, and answer work, could things work, and answer questions such as what if? questions such as what if?

And I wonder…and they do And I wonder…and they do

the research to find out the the research to find out the

answersanswers

ImaginativeImaginative

Entrepreneurs imagine solutions toEntrepreneurs imagine solutions to problems and create new products problems and create new products

oror generate new ideas generate new ideas

They have a vision (visionaries)They have a vision (visionaries)

PersistentPersistent

Successful entrepreneurs Successful entrepreneurs face constant challenges – face constant challenges – mistakes made, money mistakes made, money

and and family stress, confronting family stress, confronting criticism, unforseen events, criticism, unforseen events, and don’t give up.and don’t give up.

Goal SetterGoal Setter

Successful Successful entrepreneurs are entrepreneurs are motivated by setting motivated by setting new goals and new goals and

mapping mapping out the steps to out the steps to take to take to get there.get there.

HardworkingHardworking

No success comes easy. There is noNo success comes easy. There is no easy way to be successful. easy way to be successful.

The road to excellence is not pavedThe road to excellence is not paved by a single act, but rather a series by a single act, but rather a series

ofof acts. acts.

Self-ConfidentSelf-Confident

Entrepreneurs believe in Entrepreneurs believe in themselves – they have a themselves – they have a

postive postive self-worth (self-esteem), self-worth (self-esteem), and self-and self- imageimage

Believe their efforts will pay offBelieve their efforts will pay off

FlexibleFlexible

The only constant in life andThe only constant in life and business is change business is change

Entrepreneurs view change as anEntrepreneurs view change as an opportunity opportunity

Must be able to be flexible and adaptMust be able to be flexible and adapt to changing trends in the market, to changing trends in the market, technology, economic environment technology, economic environment and competitive environments. and competitive environments.

IndependentIndependent

Entrepreneurs have a needEntrepreneurs have a need to be in control of their own to be in control of their own destiny. destiny.

They don’t like to work in aThey don’t like to work in a controlled environment controlled environment being told what to do. being told what to do.

Entrepreneurial SkillsEntrepreneurial Skills

Skill means having the knowledge and ability to do Skill means having the knowledge and ability to do something specific.something specific.

Skills are easier to develop than characteristics.Skills are easier to develop than characteristics.

Entrepreneurs have a variety of skills including:Entrepreneurs have a variety of skills including:

1.1. ResearchResearch2.2. Leadership and Management SkillsLeadership and Management Skills3.3. Relationship SkillsRelationship Skills

1. Research Skills1. Research Skills

One of the most important research skills One of the most important research skills is knowing what questions to ask.is knowing what questions to ask.

The first step in acquiring knowledge and The first step in acquiring knowledge and information is asking a good question.information is asking a good question.

Research SkillsResearch Skills

May begin with questions such as:May begin with questions such as:

1. “Why is that?” 1. “Why is that?”

2. “What if?”2. “What if?”

3. “How does that work?”3. “How does that work?”

4. “How could I make it easier to..”? etc4. “How could I make it easier to..”? etc

Research ProcessResearch Process

1. Ask the questions1. Ask the questions 2. Gather research2. Gather research 3. Organize data3. Organize data 4. Analyze/Interpret data4. Analyze/Interpret data 5. Draw conclusions5. Draw conclusions 6. Map out next steps6. Map out next steps

Gathering Information DataGathering Information DataResearch Data falls into two categories:Research Data falls into two categories:

Primary ResearchPrimary Research Information is collected first hand by an Information is collected first hand by an

individual or group for a specific purpose.individual or group for a specific purpose. For example, questionnaires or surveysFor example, questionnaires or surveys

Secondary ResearchSecondary Research Information that others have collected and Information that others have collected and

made available to the publicmade available to the public For example, Statistics Canada.For example, Statistics Canada.

Primary Research Primary Research

Because of the cost and time involved in Because of the cost and time involved in conducting primary research, entrepreneurs will conducting primary research, entrepreneurs will often begin looking for answers by conducting often begin looking for answers by conducting secondary research.secondary research.

Should the results of the secondary research Should the results of the secondary research prove favourable, an entrepreneur will often use prove favourable, an entrepreneur will often use primary research later in the business creation primary research later in the business creation process.process.

Secondary ResearchSecondary Research

Examples of Secondary Research ToolsExamples of Secondary Research Tools Books from the library or bookstoreBooks from the library or bookstore Periodicals such as magazines, newspapers, Periodicals such as magazines, newspapers,

and newsletters, trade journalsand newsletters, trade journals The internet The internet Business consultants – For example, Business consultants – For example,

government departments, and your local government departments, and your local chamber of commercechamber of commerce

Professionals – lawyers, accountants, etc.Professionals – lawyers, accountants, etc. Educational Institutions – colleges, universitiesEducational Institutions – colleges, universities Indexes and Databases Indexes and Databases

Secondary ResearchSecondary ResearchIndexes and Database Examples:Indexes and Database Examples:1.1. Statistics CanadaStatistics Canada Povides a wealth of information through articles, charts, Povides a wealth of information through articles, charts,

graphs, trends, on everything Canadian.graphs, trends, on everything Canadian.

2.2. CanCorp Financial websiteCanCorp Financial website Provides detailed information on more than 8000 Provides detailed information on more than 8000

Canadian CompaniesCanadian Companies

3. 3. The Thomas Resister of American ManufacturersThe Thomas Resister of American Manufacturers Provides information on 156 000 North Provides information on 156 000 North

Americanmanufacturers and more than 450 000 Americanmanufacturers and more than 450 000 products.products.

Indexes and Databases Con’tIndexes and Databases Con’t

4 4 Industry Canada WebsiteIndustry Canada Website Provides a comprehensive list of Canadian companies Provides a comprehensive list of Canadian companies

and additional information to help entrepreneurs.and additional information to help entrepreneurs.

5. 5. Frasers WebsiteFrasers Website Provides detailed information on about 30 000 Provides detailed information on about 30 000

Canadian industrial suppliers.Canadian industrial suppliers.

Note: Some databases require a fee to use, butNote: Some databases require a fee to use, but most provide some data for free. Libraries may most provide some data for free. Libraries may have access to the information because they pay for have access to the information because they pay for

the services for the public.the services for the public.

Information UsefulnessInformation Usefulness

Not all information will prove to be useful Not all information will prove to be useful Some information may lead to new Some information may lead to new

questions and answers to be solved which questions and answers to be solved which may lead to more researchmay lead to more research

Some Information may lead to other Some Information may lead to other venture ideas venture ideas

An entrepreneur needs to sort through and An entrepreneur needs to sort through and assess what information to use, discard, assess what information to use, discard, and continue to explore.and continue to explore.

Using the InternetUsing the Internet

AdvantagesAdvantages DisadvantagesDisadvantages

2. Management Skills2. Management Skills

Role of Management in BusinessRole of Management in Business To achieve the goals of the organization byTo achieve the goals of the organization by

directing the allocation and use of the directing the allocation and use of the organization’s human, financial, and material organization’s human, financial, and material resources. resources.

Management performs four major functions for Management performs four major functions for any business venture:any business venture:

1.1. PlanningPlanning2.2. OrganizingOrganizing3.3. DirectingDirecting4.4. ControllingControlling

ManagementManagement

PlanningPlanning

Business PlanBusiness Plan Financial PlanningFinancial Planning Marketing PlansMarketing Plans Production PlanningProduction Planning Human Resource Human Resource

PlanningPlanning

OrganizingOrganizing

Use time planners, to Use time planners, to do lists, reminder do lists, reminder files, personal planner files, personal planner assistantsassistants

ManagementManagement

DirectingDirecting

Empowering Empowering employees to share in employees to share in the goals of the the goals of the companycompany

Delegate, assist and Delegate, assist and encourage initiative encourage initiative and self-direction in and self-direction in staff.staff.

ControllingControlling

Budgets are needed Budgets are needed to control expenses, to control expenses, inventory, and other inventory, and other material resources.material resources.

Accurate book Accurate book keeping and effective keeping and effective accounting systems accounting systems are imperative.are imperative.

3. Relationship Skills3. Relationship Skills

As an entrepreneur you have different As an entrepreneur you have different relationship with:relationship with:

1.1. StaffStaff

2.2. SuppliersSuppliers

3.3. CustomersCustomers

Staff RelationshipsStaff Relationships To maintain good relationships with their staff, To maintain good relationships with their staff,

entrepreneurs need to recognize what motivates their entrepreneurs need to recognize what motivates their staff.staff.

Recognizing each employee is different andRecognizing each employee is different and has different interests, needs, and ideas has different interests, needs, and ideas about about fair and equal treatment.fair and equal treatment.

Motivation skills rely on matching rewards to Motivation skills rely on matching rewards to an employee’s needs and personality.an employee’s needs and personality.

Empathy – the ability to understand what Empathy – the ability to understand what other people think and feel, is a key other people think and feel, is a key

characteristic in an entrepreneur with good characteristic in an entrepreneur with good relationship relationship skills.skills.

Customers should not be treated better thanCustomers should not be treated better thanyour staff.your staff.

Supplier RelationshipsSupplier Relationships

Suppliers may be in the form of the government,Suppliers may be in the form of the government,service providers, merchandise suppliers, or materialservice providers, merchandise suppliers, or materialand equipment sellersand equipment sellers

Communication is the most important skillCommunication is the most important skill when dealing with suppliers when dealing with suppliers

Paying bills on time is one way to maintainPaying bills on time is one way to maintain good relationships with suppliers good relationships with suppliers

Consider carefully elements of your contractConsider carefully elements of your contract with your supplier if applicable. (i.e. credit, with your supplier if applicable. (i.e. credit,

payment and deliver and return terms, etc.payment and deliver and return terms, etc.

Customer RelationshipsCustomer Relationships

Key Questions For Entrepreneurs to Ask Themselves:Key Questions For Entrepreneurs to Ask Themselves:

What can I do to make my customers feel positive about What can I do to make my customers feel positive about doing business with me?doing business with me?

What example can I set for my staff when dealing with both What example can I set for my staff when dealing with both customers and staff.customers and staff.

Key sentiments to demonstrate to customers and staff Key sentiments to demonstrate to customers and staff include: respect, consideration, appreciation, and integrity include: respect, consideration, appreciation, and integrity and honestyand honesty

Venture Evaluation CriteriaVenture Evaluation Criteria

Want to start a business? Before risking all Want to start a business? Before risking all your cash, energy, and confidence, be sure to your cash, energy, and confidence, be sure to evaluate your product or business idea first. evaluate your product or business idea first.

Below are key areas to evaluate before Below are key areas to evaluate before proceeding:proceeding:

1.1. Feasibility – Can you really do this?Feasibility – Can you really do this?

2.2. Marketability – Can you really sell this?Marketability – Can you really sell this?

3.3. Profitability – Can you make a profit on this?Profitability – Can you make a profit on this?

1. Feasibility Study1. Feasibility StudyFinancingFinancing List the amount List the amount

required in the form of required in the form of a budgeta budget

Include the source of Include the source of the capital with details the capital with details

(bank terms, etc)(bank terms, etc)

LocationLocation Explain your choice of Explain your choice of locationlocation

Outline details Outline details regarding location regarding location

(address, rent, taxes, (address, rent, taxes, utilities, etc.)utilities, etc.)

Licences and PermitsLicences and Permits List the licences and List the licences and permits you require.permits you require.

State where, when, State where, when, and how you will and how you will

obtain them.obtain them.

SuppliersSuppliers Make a list of Make a list of everything you need.everything you need.

Next to each of the Next to each of the items on your items on your

inventory needs list, inventory needs list, name the supplier, name the supplier, price, and terms.price, and terms.

StaffStaff Describe your staffing Describe your staffing needsneeds

What is your detailed What is your detailed plan for obtaining the plan for obtaining the

necessary employees.necessary employees.

2. Marketability2. MarketabilityAsk yourself the following questions about your Ask yourself the following questions about your product, service or charity:product, service or charity:

1.1. Does your target market want this product? Prove it.Does your target market want this product? Prove it.2.2. Who is your competition? How much of the market do Who is your competition? How much of the market do

they possess already? How ill you take it away from they possess already? How ill you take it away from them?them?

3.3. Are you competitively priced?Are you competitively priced?4.4. Is this a short-term venture? How long will it last?Is this a short-term venture? How long will it last?5.5. What does your product, service, or charity offer that What does your product, service, or charity offer that

no other product, service, charity offers? Why would a no other product, service, charity offers? Why would a customer pay money for whatever your provide?customer pay money for whatever your provide?

ProfitabilityProfitability

Financial information Financial information needs to be assessed:needs to be assessed:

1.1. Costs to run and Costs to run and operate the businessoperate the business

2.2. Sale projectionsSale projections

3.3. Projected Income Projected Income Statements and Cash Statements and Cash Flow StatementsFlow Statements