04+-+Chapter+3 - MGTA03 – Intro to Management – Week 4...

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Unformatted text preview: MGTA03 – Intro to Management – Week 4 MGTA03 Please read Chapter 3: Please Entrepreneurship and Small Business and Lecture Outline – Main Points Lecture Small business: Scale and Importance Small business: Failure and Success Entrepreneurs: Demographic Characteristics Entrepreneurs: Psychological Characteristics Introduction Introduction Canada is market economy Anyone may start a business NO fees, NO forms, NO licences NO government permission To start a new business: just.... begin Textbook: 380 new businesses every day! Small Business Small Hard to define Hard Textbook: Textbook: "Owner-managed business / less than 100 "Owner-managed employees" employees" Some problems with the definition..... Small Business in Canada Small Impossible to know many there are We can only estimate Recent government estimate: 2.1 million Small Business in Canada - Size Distribution Small number of number of number businesses employees % of total 1.1 million 1.1 678,000 175,000 43,000 43,000 13,900 9,334 2,029 2,029 55% 33% 8.5% 8.5% 2.1% 0.7% 0.4% 0.4% 0.1% self-employed self-employed 2-5 6 – 19 20 – 49 50 – 99 50 100 – 499 500 + 500 cumulative % 55 55 88 88 96.5 96.5 98.6 98.6 99.3 99.3 99.7 99.7 99.8 However many there are: > 99% can be called "small" Workers in Small Businesses Workers busineses band avg. band size workers 1,146,000 1 1,146,000 680,000 2-5 680,000 175,000 6 - 19 175,000 43,500 20 - 49 13,900 49 - 99 1 2.5 9 25 60 Note: estimates by Prof. Bovaird total total workers 1.14 million 1.70 million 1.58 million 1.09 million 834,000 % cumul. % 9.6 14.2 13.1 9.1 7.0 9.6 23.8 36.9 46.0 53.0 Conclusions: Conclusions: 2 million + businesses in Canada 98% of Canadian businesses are “small” 10% of Canadians are self-employed 25% of Cdns work in business with < 5 employees 50% of Cdns work in business with <50 employees Small Business - Survival Rate Small Year Failure Rate % Year Failure 1 23 2 22 3 18 4 16 5 14 6 13 7 12 8 11 9 10 10 10 Survival rate % 77 61 50 42 36 31 27 24 22 20 "failure rate" = % of remaining survivors which fail in any given year. During year 1 23% of 100 firms fail, leaving 77. Year 2, 22% of the 77 survivors (16 firms) fail, leaving 23% 61 of the original 100. Year 3, 18% of the 61 survivors (11 firms) fail, leaving 50. 61 Survival Rates – Start-Ups in USA Survival By end Year By 2 5 10 % that fail that 40 60 90 Source: US Commerce Department, US SBA; Dun & Bradstreet, Enterprise Source: Planning System, Canadian Industrial Innovation Centre, Module 1, p. 4 Who Starts A Business? - Entrepreneur Who Individual who organises and co-ordinates the activities required to start new business "Entrepreneur" from French: entrer: to enter entrer: prendre: to take prendre: Interesting Fact About Entrepreneurs Interesting Prof. Jeffrey Timmons (Harvard Univ.) is Prof. authority on new business start-up authority Researched attitudes and beliefs of wouldbe entrepreneurs. Most people think the odds are even worse! Entrepreneurs: Personality Traits Entrepreneurs: High NAch (Need for Achievement) Internal locus of control Internal Comfortable with uncertainty Comfortable Willingness to take calculated risks Self Confident Entrepreneurs: Demographic Traits Entrepreneurs: Children of entrepreneurs ("Pull" factors) Immigrants/children of immigrants ("Push" factors) Between ages 30 - 40 (Managed risk) Not academically inclined (Doers not thinkers) Women less likely to fail (Better risk managers) ...
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