Building Your Dream: A Canadian Guide to Starting Your Own Business

STAGE 1: Assessing Your Potential for an Entrepreneurial Career

Learning Objectives

  • LO1: Evaluate your potential of becoming a successful entrepreneur.

  • LO2: Identify the attitudes and behaviours that will help you turn your business dream into reality.

  • LO3: Analyze the type of entrepreneur that you want to be.

  • LO4: Develop the skills needed to manage and operate a successful business.

  • LO5: Understand, analyze, and evaluate the importance of social entrepreneurship, ethics, and social responsibility in the business world today.

Entrepreneurial Potential

  • Profile: There is no single profile that defines an entrepreneur; instead, common attributes, abilities, and attitudes exist.

  • Tools: An Entrepreneurial Quiz is available in Connect for self-assessment.

Common Attributes of Successful Entrepreneurs

  • Three Key Attributes:

    1. Responding positively to challenges and learning from mistakes.

    2. Taking personal initiative in actions and decisions.

    3. Exhibiting great perseverance in going after goals.

    • Source: Babson University Academy of Distinguished Entrepreneurs.

Assessing Personal Attributes for Success

  • Understand the personal attributes important for success in business.

  • Realistically assess your potential for an entrepreneurial career.

  • Evaluate your managerial skills to determine readiness.

  • Conduct a personal financial assessment to understand fiscal requirements.

  • Assess individual strengths and weaknesses impacting entrepreneurial goals.

  • Develop a personal balance sheet and a budget for financial planning.

Critical Factors for Entrepreneurial Success

  • Commitment, Determination, and Perseverance: Identified as the most critical success factors.

  • Success Orientation: Exhibiting a strong desire to achieve defined goals.

  • Opportunity and Goal Orientation: Focused more on opportunities than on constraints.

Common Entrepreneurial Characteristics

  1. Action Oriented: Immediate result production and initiative-taking.

  2. Problem Solvers and High Achievers: Resolve challenges with a view that impossible tasks take longer.

  3. Reality Oriented: Maintain a keen sense of personal strengths and weaknesses as well as market conditions.

  4. Self-Reliant: Personal ability dictates success—independence from luck.

  5. Self-Confidence: A belief that failure is not a potential outcome.

  6. Comfort with Ambiguity: Ability to decide amidst uncertain scenarios.

  7. Calculated Risk Taking: Willingness to take moderate risks based on calculated assessments.

  8. Resilience to Failure: Viewing mistakes as temporary setbacks.

  9. Low Need for Status and Power: A preference for achievement over recognition.

  10. Integrity and Reliability: Building trust through honesty and dependability.

  11. Team Builder: Recognizes the challenges of solo work and seeks to build effective teams.

Not-So-Learnable Characteristics

  • High energy, good health, and emotional stability.

  • Creativity and an innovative nature.

  • High intelligence and conceptual ability.

  • Ability to envision a better future and inspire others.

Entrepreneurial Attitude Orientation (EAO)

  • Definition: Attitudes represent the manner in which individuals interact with their environment (Robinson et al.).

  • Three Types of Reactions:

    • Cognition: Knowledge and thought processes.

    • Affect: Emotional responses.

    • Behaviour: Actions taken in response to stimulus.

Personal Self-Assessment

  • Complete the Personal Self-Assessment Questionnaire (available in Connect) to evaluate general readiness.

  • Conduct a Managerial Skills Inventory questionnaire to assess capabilities across the five management areas (planning, organizing, leading, controlling, and evaluating).

Entrepreneurial Archetypes

  • Based on interviews with over 500 small business owners, three entrepreneurial types are noted:

    1. Craftspeople:

    • Derive self-worth from mastery of their craft.

    • Emphasis on skill development rather than business focus.

    • Often solo operators.

    1. Freedom Fighters (Lifestyle Business):

    • Seek financial independence.

    • Represent about 28% of small businesses; typically have 3-50 employees and grow less than 30% annually.

    • Usually college-educated, with examples including 'Mompreneurs', consultants, and retailers.

    1. Empire Builders:

    • Motivated by achievement and exhibit high growth rates (over 30% annually).

    • More than 75% have college degrees and are characterized by long working hours and high expectations.

    • Examples: Larry Rossy (Dollarama), Sandra Wilson (Robeez).

Vesper’s Entrepreneurial Typology

  • Categories of entrepreneurs include:

    • Solo, self-employed.

    • Deal-to-Dealers.

    • Team Builders.

    • Pattern Multipliers.

    • Economy-of-Scale Exploiters.

    • Capital Aggregators.

    • Acquirers.

Skills Required for Small Business Owners

  1. Setting up a Business: Knowledge of business structures and registration processes.

  2. Managing Money: Financial literacy and budgeting skills.

  3. Directing Sales and Marketing Operations: Strategies for attracting and maintaining customers.

  4. Managing People: Leadership and human resource management capabilities.

  5. Directing Business Operations: Overseeing day-to-day functions effectively.

Acquiring Necessary Skills

  • Sources:

    • Previous job experience.

    • Volunteer activities to gain practical insight.

    • Education paths that enhance skills.

    • Networking through friends and family.

    • Life experiences that provide practical knowledge.

Personal Financial Situation Assessment

  • Creating a Personal Balance Sheet:

    1. Estimate market value of all assets.

    2. Sum the total asset value.

    3. List all liabilities (debts).

    4. Sum total liabilities.

    5. Determine net worth by deducting total liabilities from total assets.

Financial Planning

  • Personal Living Expenses: Assessing living costs is essential to determine necessary business financing.

  • The Personal Living Expenses Worksheet (available in Connect) can help estimate current living costs and identify income sources needed to sustain business startup.

Credit Rating Importance

  • Regular payment of bills builds credit rating; poor credit can hinder business financing opportunities.

External Role Demands of Entrepreneurs

  • Total Commitment: Emphasis on dedication to the business.

  • Stress Management: Ability to handle entrepreneurial stressors.

  • Adherence to Economic and Social Values: Consciousness of broader implications of business decisions.

Understanding Social Entrepreneurship

  • Definition: The discovery, evaluation, and pursuit of opportunities for social change that also generate profit.

    • Focus: Social entrepreneurs prioritize the triple bottom line:

    1. People (Social)

    2. Planet (Environment)

    3. Profit (Economic)

Ethical Challenges in Business

  • Main Issues:

    • Privacy issues.

    • Conflicts of Interest.

    • Temptations to provide undue gifts.

    • Expensive entertainment influences.

    • Bribes/Kickbacks.

    • Use of proprietary information to impact business outcomes.

Ethics in Business

  • Definition: A set of principles that outlines a behavioural code, determining what is considered right or wrong, and indicating obligations to both individuals and organizations.

  • Legal vs. Ethical Considerations: Understanding that legality does not always equate with ethicality.

Ethical Decision-Making Process

  • To address ethical challenges, consider these three guiding questions:

    1. Is it legal?

    2. Is it balanced?

    3. How will it make you feel about yourself?

Social Responsibility in Business

  • There is a growing expectation for companies to act in socially responsible ways, going beyond mere compliance.

  • Benefits of Social Responsibility:

    • Positive financial effects on business.

    • More stable profits over time.

    • Enhanced stakeholder well-being.

Chapter Summary

  • LO1: Use quizzes, surveys, and forms for self-evaluation of entrepreneurial potential.

  • LO2: Recognize common entrepreneurial personality attributes consisting of perseverance and total dedication.

  • LO3: Familiarize with the three types of entrepreneurs: craftspeople, freedom fighters, and empire builders; also recognize social entrepreneurs who focus on the triple bottom line.

  • LO4: Understand that essential skills for an entrepreneur span from financial management to people management and operational capabilities, alongside the need for a robust support network.

  • LO5: Recognize the interplay between social entrepreneurship, ethics, and social responsibility, emphasizing social change beyond profit-making alongside maintaining a code of ethics.