Chapter 4.1

Interrelationship of Small Business, New Venture Creation, and Entrepreneurship

Meaning and Interrelationship

  • Objective: Explain the interrelationship of the terms small business, new venture creation, and entrepreneurship.

  • Examples of Companies: The chapter discusses various companies in Canada showcasing diverse aspects of business.

    • Established Companies with an enduring entrepreneurial spirit:

    • Jim Pattison Group

    • Tim Hortons

    • Growth-Oriented Newer Companies:

    • Shopify

    • Mid-Day Squares

    • Manitobah Mukluks

    • Enduring Family Organizations:

    • Kal Tire

    • Small Organizations with Aspirations: Various smaller firms demonstrating dreams in the business landscape.

  • Significance of Small Business:

    • Accounts for 13% of the workforce in Canada as of 2023, a decline from 15% pre-pandemic.

    • Approximately 380 businesses are started every day in Canada, primarily small firms that create most new jobs.

  • Distinction of Terms:

    • Despite their close linkage, small business, new venture, and entrepreneurship are distinct concepts.

Small Business

  • Definition Challenges:

    • Small businesses are typically easy to identify, like local restaurants, but defining them quantitatively is complex.

    • Considered small based on various criteria such as:

    • Number of employees

    • Sales revenue

    • Size of investment required

    • Type of ownership structure

  • Government Definition:

    • Innovation, Science and Economic Development Canada primarily defines small businesses.

    • A business must fulfill one of three conditions to be considered in statistics:

    • Have at least one paid employee

    • Annual sales revenue of $30,000 or more

    • Be incorporated

    • For categorization:

    • Goods-producing businesses considered small if fewer than 100 employees

    • Service-producing businesses considered small if fewer than 50 employees

  • Statistics:

    • In 2023, 2.65 million Canadians identified as self-employed.

    • Small businesses contributed approximately 38% of Canada's GDP over the past decade, with variations across provinces:

    • Prince Edward Island: Highest concentration of businesses at 46.2 per 1,000 people

    • Alberta: Second at 45.7 per 1,000 people

The New Venture/Firm

  • Criteria for Formation: New ventures defined based on several factors:

    • Operational for the previous 12 months

    • Adoption of main organizational forms (proprietorship, partnership, corporation, cooperative)

    • Engaging in the sale of goods and/or services.

    • Thus, a new venture is defined as a recently formed commercial organization that provides goods and/or services for sale.

Entrepreneurship

  • Definition: Entrepreneurship is the process of identifying opportunities in the marketplace and accessing the necessary resources to capitalize on them.

  • Motivation: Entrepreneurs often start businesses to:

    • Control their own destiny

    • Prefer risk-taking over job security.

  • Example:

    • Mark Zuckerberg created Facebook in 2004, growing it to over 3 billion active users by 2023.

    • The company's rebranding to Meta and its range of platforms illustrates entrepreneurial growth.

Social Responsibility & Social Justice

  • Company Example: Manitobah Mukluks demonstrates social responsibility through its linkage to Métis heritage and Indigenous roots in its products.

  • Products:

    • Mukluks and moccasins, designed for extreme cold, reflecting ancestral craftsmanship.

  • Community Contribution: The company focuses on:

    • Respecting traditions, empowering Indigenous resources,

    • Creating jobs predominantly for Indigenous peoples (approximately 70% of the workforce).

  • Company Leadership:

    • Sean McCormick (founder) and Tara Barnes (VP of Marketing), both committed to community support and Indigenous empowerment.

  • Financial Growth Strategy:

    • Major investment from Endeavour Capital in 2021 and expansion strategies into the USA.

Entrepreneurial Goals

  • Diverse Aspirations: Entrepreneurs pursue businesses for various reasons:

    • Independence from employees

    • Financial security without the intention of large-scale growth

    • Growth-focused entrepreneurs aiming to expand their business significantly (e.g., Howard Schultz with Starbucks).

  • Uncertainty and Risk: Entrepreneurs often navigate uncertain outcomes and evolving goals during business developments.

Entrepreneurial Characteristics

  • Common Traits: Successful entrepreneurs share traits like:

    • Resourcefulness

    • Strong customer relationship skills

    • Desire for control and business independence.

  • Behavior Types:

    • Behavioral (initiative)

    • Personality traits (independence)

    • Skills (problem-solving)

Intrapreneurship

  • Definition: Intrapreneurs are individuals within a large organization who act like entrepreneurs, innovating and creating new products without having to secure external resources.

  • Company Examples:

    • Numerous firms like Procter & Gamble and 3M encourage intrapreneurship, developing successful products internally.

  • Difference with Entrepreneurs:

    • Intrapreneurs operate within an existing corporate framework, having access to the necessary resources for development without the risks of starting from scratch.

  • Historical Data: Percentage of top inventions:

    • In the last 30 years, 8 inventions by entrepreneurs, and 22 by intrapreneurs.