Chapter Five

1
Chapter Five

• Small Business,
• Entrepreneurship, and Franchising

2
Entrepreneurship andSmall Business

• Entrepreneurship
• The process of creating and managing a business
  to achieve a desired objective.
• Small Business
• Any independently owned and operated business
  that is not dominant in its competitive area and
  employs fewer than 500 people.

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3
Small Business...

• Represents 99.8 of business establishments.
• Created more than 80 of all new jobs in fiscal
  1996-97
• Accounted for 50 of GDP in 1999
• Provided over half of the employment in Canada in
  1999

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Source Small Business Answer Card 1998, Small
BusinessAdministration Office of Advocacy,
http//www.sba.gov/ADVO/stats/answer.html,
August 23, 1998.
4
The Role of Small Business in the Canadian Economy
5-3

• Job creation
• Innovation
• Exporting

5
of Firms byEmployment Size
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Source Key Small Business Statistics, May 2003,
p.12. Retrieved from www.strategis.gc.ca/statisti
cs.
6
Establishments by Industry
5-5
ALL INDUSTRIES
No. of employees
a
GOODS PRODUCING SECTOR
SERVICE PRODUCING SECTOR
0 4
PRIMARY INDUSTRIES
5 - 49
CONSTRUCTION
50 - 99
MANUFACTURING
100
WHOLESALE TRADE
RETAIL TRADE
FINANCE, INS. RE
BUS PERSONAL SERVICES
20
40
100
80
60
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Top Five SmallBusiness Industries
5-6
SourceKey Small Business Statistics as reported
at www.strategis.gc.ca/sbstatistics..
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Advantages of Small Business Ownership

• Personal
• independence
• Business
• startup costs
• flexibility
• focus
• reputation

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9
Disadvantages of Small Business Ownership

• High stress level
• High failure rate
• Undercapitalization
• Managerial inexperience or incompetence
• Inability to cope with growth

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10
Roads to Successor Paths to Failure
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11
Small Business Life Expectancy

• Percentage of
• firms
• Less than 1 year 33
• 1 to 2 years 50
• 5 or more years 33

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12
Financial Resources

• Equity financing
• owners funds
• venture capitalists
• Debt financing
• loans
• lines of credit
• trade credits

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13
Top Global Franchises 2003
5-12
Sourcewww.entrepreneur.com/franzone
14
Top 10 Fastest-Growing Franchises for 2002
5-13

• Growth during 2001
• Kumon Math Reading Centers 2,259
• 7-Eleven Inc 1,654
• Curves for Women 555
• Coverall North America Inc. 1,675
• Subway 1,356
• Jani-King 681
• Jackson Hewitt Tax Service 483
• KFC Corp 996
• McDonalds 895
• Budget Rent A Car Corp. 97

Sourcewww.entrepreneurmag.com/Franchise_Zone
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Small Business and Internet Use

• 78 of Canadian SMEs use the internet
• Online activity by SMEs in 2001 equaled 2
  billion

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