The Role of Entrepreneurship and Small Business in Canada

1
The Role of Entrepreneurship and Small Business
in Canada

• Chapter 1

2
The Entrepreneurial Revolution

• The entrepreneur is the most important player in
  the building of the global economy, so much so
  that big companies are decentralizing and
  reconstituting themselves as networks of
  entrepreneurs.
• John Naisbitt in Global Paradox

3
The Entrepreneurial Revolution cont

• After 2nd World War bigger is better
• Mid-1970s reawakening of interest in
  entrepreneurship
• Governments looked to small businesses to provide
  a catalyst for their stagnant economies
• 80s and 90s rapid growth
• During the economic slowdown of 2001, small
  business activity outpaced the rest of the
  economy.

4
The Entrepreneurial Revolution cont

• Ernst and Young survey 8 out of 10 influential
  North Americans indicated they believed
  entrepreneurialism will define 21st C. business.
• Canada is 2nd in the World in entrepreneurial
  activity
• Half a million new businesses are started each
  year (Statistics Canada)
• 22 of small businesses are started as a result
  of downsizing.

5
The Entrepreneurial Revolution cont

• 97 of all existing businesses have fewer than 50
  employees (Statistics Canada)
• 2003 2.41 million self-employed persons and
  increase of 43 since 1990
• Micro-businesses accounted for 20 of new jobs in
  Canada in 2002 (fewer than 5 employees)
• Entrepreneurship and Small Business Office in the
  Department of Industry Canada coordinates and
  administers programs to aid small businesses at
  the federal level http//www.ic.gc.ca/eic/site/ic
  1.nsf/eng/h_00140.html

6
The Entrepreneurial Revolution cont

• Intrapraneurship encouraging creativity,
  entrepreneurship and individual initiative within
  a business
• Examples Bombardier https//bombardierc.wordpress
  .com/2013/07/02/b4/
• Canadian Federation of Independent Business
  100,000 membership increase in political power
  of small businesses

7
What is Small Business?

• Defined by
• Revenue or net sales
• Number of employees
• Profits
• Type of management-ownership structure

8
What is Small Business?

• Revenue or net sales limits vary by industry
• Average net sales of 1 million or less
  (Statistics Canada)
• 2 million in revenue (Ministry of State for
  Small Business and Small Business Loans Act in
  Canada)
• US
• retailing 3.5 million to 13.5 million
• Services 3.5 million to 14.5 million
• Construction 7 million to 17 million

9
What is Small Business?

• Number of employees
• fewer than 50 employees in nonmanufacturing and
  100 employees in manufacturing industries
• Fewer than 75 to be eligible for Counselling
  assistance for Small Business Program
• Some agencies may use larger numbers upwards of
  250 1500 depending on the industry

10
What is Small Business?

• Profits
• Net operating profit of 200,000 or less.
• CCRA uses this to determine which businesses
  qualify for a reduced tax rate
• Type of management-ownership structure
• The degree to which the owner is also the day to
  day manager
• Independent management owner-supplied capital
  local area of operations small size within
  industry

11
Small Business vs Big Business

• Class brainstorming activity

12
Current State of Small Business in Canada

• In 2003, 19 of the self-employed were under the
  age of 35 showing that it is an attractive career
  option
• Young Entrepreneurs Association www.yea.ca and
  ACE in Canada provide networking and information
  for young entrepreneurs
• Lending programs from BDBC as well as Canada
  Youth Business Foundation
• More prevalent among young men than women

13
Current State of Small Business in Canada cont

• Women now account for 40 of one-person
  businesses WEC and WPO
• Majority of self-employed work in the service
  industry, some in goods sector
• Men in construction, women in agriculture
• 1 in 5 self-employed is an immigrant
• The economies of all provinces are dominated by
  small businesses Alberta and Ontario have seen
  most rapid growth

14
Contributions of Small Business

• More labour intensive than large companies
• Create more jobs than they lose
• Responsible for a majority of innovations and
  inventions that we benefit from today
• Productivity and Profitability
• Bias for action
• Close to the customer
• Autonomy
• Employee stake
• Hands on managers
• Less buraucracy

15
Contributions of Small Business cont

• Flexibility able to respond more quickly to
  changes in the economy
• Canadian ownership- fewer than 1 are foreign
  owned
• A country has a better chance of achieving
  economic well-being if entrepreneurial activities
  are supported by that society
• Long term interest in the community in which
  their business operates

16
Small Business and The Future

• Changes are occurring in technology, consumer
  demographics and buying patterns, and the
  competitive aspects of markets
• Small business flexibility can capitalize on this
• Computers allow entrepreneurs to manage large
  amounts of information as effectively as a larger
  business
• New technology has allowed small businesses to
  obtain subcontracts of many services
• Opportunities for entrepreneurs in both obtaining
  and information and marketing products and
  services to both domestic and global markets are
  limitless

17
Small Business and The Future cont

• Retail expenditures are key to growth of the
  small business sector and current demographics
  show Canadian consumers are aging and their
  disposable incomes are growing
• Video 7 small business ideas.mp4
• The larger number of working women has created
  greater economic clout for females as well as a
  heavier demand for time saving products and
  convenience
• Erosion in the domestic and international market
  boundaries means that smaller businesses have
  increased opportunities to source, produce, and
  deliver to international markets
• NAFTA, defeat of communism in the Eastern Bloc,
  EU, opening of Chinas borders

18
Small Business and The Future cont

• Difficulties small businesses may face?
• Competing with large businesses for capital, raw
  materials, and labour
• Financing problems
• Labour shortages
• Losing flexibility and independence due to
  outsourcing (complying to larger businesses)
• Changes in the economy recession, social crisis,
  changes in the canadian dollar

19
Small Business and The Future cont

• Difficulties small businesses may face?
• Political climate
• Burdens of paperwork, taxes, regulations
• Immigrant visas
• GST
• Ineffective government programs
• Federation of Independent Businesses
• collective lobbying efforts to achieve a
  political environment more conducive to their
  operations

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Small Business and The Future cont

• Social climate
• High level of respect
• Strong culture of individualism and
  self-betterment
• 10 ideas for small businesses for students
• http//sbinfocanada.about.com/od/businessideas/a/s
  ummerjobbiz.htm
• Chapter 1 Online Quiz http//glencoe.mcgraw-hill.
  com/sites/0078613035/student_view0/unit1/chapter1/
  practice_test.html