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Ch. 4: The Entrepreneur

Ch. 4: The Entrepreneur. Gr. 11 Economics M. Nicholson. Entrepreneurship. Entrepreneurs are individuals who start their own businesses or aggressively expand existing ones Organize productive resources (human, natural, capital) to make goods or services Assume risk of financial failure .

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Ch. 4: The Entrepreneur

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  1. Ch. 4: The Entrepreneur Gr. 11 Economics M. Nicholson

  2. Entrepreneurship • Entrepreneurs are individuals who start their own businesses or aggressively expand existing ones • Organize productive resources (human, natural, capital) to make goods or services • Assume risk of financial failure

  3. Entering The Market • Decide what, how and for whom to produce based on signals from the market  potential profits • Correct decisions  big rewards (profits = revenues - costs) and incorrect decisions  big losses (debt) • Consumers benefit from high quality, affordable goods of great variety

  4. Characteristics Of Successful Entrepreneurs • Go-getter attitude – recognize opportunities, optimistic • Risk taking – moderate • Hard work – don’t notice the passage of time

  5. Characteristics Of Successful Entrepreneurs • Motivation – work for themselves, make money • Self-confidence – rely on yourself rather than luck or friends • Objectivity – realize strengths and weaknesses and get expert help for weaknesses

  6. Why Do Businesses Fail? • 80% of businesses fail in the first five years of existence • personal characteristics of entrepreneurs  lazy, unknowledgeable, unskilled, poor planning, inexperienced • misunderstand market – unpopular product, priced too high or low, market too small • insufficient start up money

  7. The Venture Centre: An Industrial Incubator • Pasadena, Newfoundland  Federal government started in 1986  favourable environment for businesses to grow • Low rent – Year 1-2 (25%), Year 3 (50%), Year 4 (75%), Year 5 (110%)

  8. The Venture Centre: An Industrial Incubator • Development officer – financing, business plans, cash-flow forecasts • Cost of sharing services – secretarial, photocopying, computers • Business advisory committee – lawyer, banker, accountant, business people

  9. Franchises • Franchise is a license from a corporation (franchiser) to a another corporation or individual (franchisee) to sell a particular good or service with an advertised trade name • Franchisee a semi-entrepreneur because less risk, less innovation, less self-reliance

  10. Franchises • Franchiser benefits from others money investment and hard work which allows them to expand business greatly • Franchisee benefits from proven business with less chance of 80% failure rate, but less freedom and must pay fees and % of profit to franchiser in return for trade name and assistance

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