Business environ: Chapter 7

What is survival influenced by? (SB)

the business' geographic location the industry in which the business operates the size of the business *The age of the business* changes in the marketplace (e.g., economic conditions, number and size of competitors and new entrants, etc.)

What does Stats Can define the self employed as?

working owners of an unincorporated or incorporated business persons who work on their own account but do not have a business persons working without pay in a family business

What do SME's refer to?

(Small and medium-sized enterprises): Refers to all businesses with fewer than 500 employees.

Why is it important to have these diff components in a business?

- A entrepreneur cannot oversee all actions in a business. This means that hiring, training and motivating employees is critical. - Thus, a marketing consultant with small-business experience can be of great help to you to figure out target markets, especially one who has had experience with internet and social media. - It also is wise to seek the counsel of other small business owners. Other sources of advice include local chambers of commerce, better business bureau, national and local trade association (such as the Canadian federation of independent business), the business reference section of your library and small-business related sites on the internet.

What are some causes of small-business failure? (Diagram)

- Buying too much credit or extending credit too freely - Expanding credit too rapidly - Starting with too little capital - Stating with too much capital and being careless in its use - Not allowing for setbacks and unexpected expenses - Not understanding business cycles Etc.

What are some causes of small-business success? (Diagram)

- Customer requires a lot of personal attention, as in a beauty parlour - Product is not easily made by mass-production techniques - Sales are not large enough to appeal to a large firm - A large business sells a franchise operation to local buyers (Franchising is an excellent way to enter the world of small businesses) - Owner pays attention to new competitors - Business is in a growth industry

What is entrepreneurship?

- 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. - Entrepreneurial ventures differ from small business in 4 ways: - Amount of wealth creation, Speed of wealth creation, Risk, Innovation. Ex of Canadian entrepreneurs: Leon's, Canadian tire, Sobeys.

What are some challenges with home-based businesses?

- Getting new customers, Managing time, Keeping work and family tasks separate, Abiding by city ordinances. (a piece of legislation enacted by a municipal authority), Managing risk. - One of the easiest ways to start a web-based business is through affiliate marketing (an online marketing strategy in which a business rewards individuals or other businesses (affiliates) for each visitor or customer the affiliate sends to it's website).

How can you learn about SB operations?

- Learn from others - Get some experience (ex: 3 years in a comparable business) - Buy an existing business - Buy a franchise - Inherit/take over a family business

What advantages do small businesses have in international trade?

- Overseas buyers enjoy dealing with individuals rather than corporate bureaucracies. - Small companies can usually begin shipping much faster. - Small companies can support a wide variety of suppliers and - Small companies can give customers more personal service and undivided attention.

What are 5 functions of business in a small business setting?

- Planning your business - Financing your business (finance) - Knowing our customers (marketing) - Managing your employees (HR) - Keeping records accounting Although all of the functions are important in both the start-up and management phases of the business, the first two functions-planning and financing-are the primary concerns when you start your business. The remaining functions are the heart of your operations once the business is underway.

How much does a business between 600-800 square feet have to make to break even in a year? Is it close?

700 thousand to breakeven

Explain planning your business

A business plan is 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 resource and qualifications of the owner(s).

What can a small business be defined as?

A business that is independently owned and operated, is not dominant on the field, and meets certain standards of size in terms of employees or annual revenues. Many institutions define business according to their own needs.

Explain 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.

Explain financing your business

Angel investors are private individuals who invest their own money in potentially hot new companies before they go public. 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.

Are the dragons venture capitalists or angel investors?

Angel investors bc they're investing their own money

What are business incubators?

Business incubators are centers that provide space, services, advice and support to assist new and growing businesses to become established and successful.

Ali accepted retirement package from employer, wants to invest this money to his small business. He has experience with established products. He has no experience in running a business. As a result he would be well advised to...

Buy a franchise

Why do people take the challenge of starting a business?

Decision to leave corporate life (by choice or after downsizing), a sudden inheritance that allows individuals to try something different.

What disadvantages do small businesses have in international trade?

Difficulty finding financing May not know how to get started May not understand cultural differences in other countries May be too much paperwork

How have technological advances helped increase small business operating?

Eg, PayPal makes it possible for small businesses to get paid automatically when they conduct global business online. Exporting can absorb excess inventory, soften downturns in the domestic market and extend product lines.

Having your own idea may have the opportunity to:

Filling customers needs. Having the resources and skills to start a business. You can sell the product or service at a price to customers that are willing and able to pay- and still make a profit. You can get your product or service to customers before your window of opportunity closes or before competitors with similar solutions beat you to the market place and; Keep the business going.

How is entrepreneurship seen within firms?

Intrapreneurs are creative people who work as entrepreneurs within corporations. The idea of using a company's existing resource- human, financial and physical- to launch new products and generate new profits.

Explain knowing your customers (marketing)

Know the market. A market consists of people with unsatisfied wants and needs who have both the resource and willingness to buy.

Explain home-based businesses

Many home-based businesses are owned by people who are trying to combine career and family.

Explain micro-enterprises & micropreneurs

Micro-enterprises: A small business defined having 1-4 employees. Micropreneurs: Small business owners with fewer than 5 employees who are willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers a balanced lifestyle.

What criteria must a business meet?

Must have at least one paid employee. Must have annual sales revenue of $30,000. It must be incorporated and have filed a federal corporate income tax return at least once in the previous three years.

How do small businesses affect Canada?

Nearly all small businesses are Canadian-owned and managed. Meaning that most of jobs in Canada are from small businesses. Small businesses can offer more personal customer service and the ability to respond quickly to opportunities. They help maintain the Canadian identity and Canadian economic independence. Small businesses also contribute to be feeders for future large businesses. Can establish a good track record.

Is entrepreneurship always small?

Not always small and small business is not always entrepreneurial while most businesses start small, it's whether the *intent is to stay small* that separates them from entrepreneurship

Who is self employed?

People who earn income directly from their own business, trade or profession rather than earn a specified salary or wage from an employer

What does it take to be an entrepreneur?

Self-directed: You should be self-disciplined and thoroughly comfortable being your own boss. You alone will be responsible for your success or failure. Self-nurturing: Have to believe in yourself in your idea when other people do not. Action-oriented: Have to take initiative to make your idea come to reality. Highly Energetic: Must be emotionally, mentally and physically able to work long and hard. Tolerant of Uncertainty: Entrepreneurs mainly take calculated risks, but still take risks. Able to learn quickly: Learn from mistakes.

How long do SBs survive?

Survival is defined as the percentage of new firms that continue to operate when they reach a given age Survival rates for small and medium-sized businesses decline over time about 85% of businesses that enter the marketplace survive for one full year 70% survive for two years 51% survive for five years

Explain the employment by class of worker - dec 2018 diagram

Total Employed, All Worker Classes = 18.8 million a. Private Sector - 12.1 million (those who work as employees of a private firm or business) b. Public Sector - 3.8 million (those who work for a local, provincial or federal government, for a government service or agency, a crown corporation, or a government funded establishment such as a school [including universities] or hospital) c. Self-Employed - 2.9 million (includes both incorporated and unincorporated working owners, self-employed persons who do not have a business and persons working in a family business without pay)

Explain investors and capitalists involved when financing your business

approx. 41% of start-up (< 2 years) SMEs rely on financial institutions (see Fig. 7.5) angel investors - usually successful businesspeople who *invest their own personal funds* hold private equity from having made investments directly into private companies Venture capitalist - money invested by firms that use *other people's money* hold private equity from having made investments directly into private companies crowdfunding

Give the approx amounts for importance of SB's

approx. 54.1% have < 5 employees (micropreneurs) approx. 95.1% have < 50 employees 99.9% are SMEs (less than 500 employees) SBs thus plays a major role in helping to maintain the Canadian identity and Canadian economic independence