What is an entrepreneur?
An entrepreneur is a person who starts and runs a business, taking on risk in hope of profit. Entrepreneurs identify problems or opportunities and create products or services to meet them.
Entrepreneurs drive innovation, create jobs and change industries. Small and medium-sized businesses employ a large share of private-sector workers in Canada and the United States.
Qualities of successful entrepreneurs
- creativity and problem-solving
- willingness to take calculated risks
- persistence and resilience after failure
- leadership and communication
- financial understanding
- willingness to learn from customers
Types of entrepreneurship
- Small business: a local bakery, plumbing company or online shop
- Scalable startups: aim for rapid growth, often in technology
- Social entrepreneurship: businesses that address social or environmental problems as a central goal
- Intrapreneurship: innovating within an existing company
From idea to business
1. Find an opportunity
Look for problems people have, unmet needs, or ways to do something better or cheaper.
2. Research the market
- Who is your target market, the customers you’ll serve?
- How big is it?
- Who are your competitors?
- What makes your idea different: your value proposition?
3. Write a business plan
A business plan typically includes:
| Section | Content |
|---|---|
| Executive summary | overview of the business |
| Product or service | what you offer and why it’s valuable |
| Market analysis | target market, competitors, trends |
| Marketing plan | the 4 Ps: product, price, place, promotion |
| Operations | how you’ll produce and deliver |
| Management | who runs the business |
| Financial plan | startup costs, revenue forecasts, break-even point |
4. Find financing
- personal savings ("bootstrapping")
- family and friends
- bank loans
- government programs, such as the Business Development Bank of Canada or the U.S. Small Business Administration
- investors: angel investors and venture capital
- crowdfunding
Business structures
| Structure | Ownership | Liability | Notes |
|---|---|---|---|
| Sole proprietorship | one person | unlimited: personal assets at risk | simple and cheap to start |
| Partnership | two or more people | usually unlimited for general partners | shared skills and costs; potential disagreements |
| Corporation | shareholders | limited: owners risk only their investment | more paperwork and regulation; easier to raise money |
| Co-operative | members | limited | owned and run by members, such as credit unions |
Understanding the numbers
- Revenue: total money from sales
- Expenses: costs, both fixed (rent) and variable (materials)
- Profit = revenue − expenses
Break-even point
The break-even point is where revenue equals expenses.
Break-even units = fixed costs ÷ (price per unit − variable cost per unit)
Example: A T-shirt business has $1,200 in monthly fixed costs. Each shirt sells for $25 and costs $10 to make. Break-even = $1,200 ÷ ($25 − $10) = 80 shirts per month.
Cash flow
Even profitable businesses can fail if they run out of cash. Managing cash flow, the timing of money coming in and going out, is critical.
Risks and rewards
| Rewards | Risks |
|---|---|
| independence, being your own boss | financial loss |
| potential for high income | long hours and stress |
| creating something meaningful | uncertain income |
| creating jobs and helping communities | many new businesses close within a few years |
Failure is common, and many successful entrepreneurs failed before succeeding. Learning from failure is part of the process.
Ethics and responsibility
Responsible businesses consider workers, customers, communities and the environment, not just profits. This includes fair wages, honest marketing, safe products, environmental sustainability and respect for Indigenous rights and communities.
Try it yourself
- Identify a problem in your school or community and brainstorm three business solutions.
- Write a one-page business plan for your best idea.
- Calculate the break-even point for your business.
- Research a Canadian or American entrepreneur and analyze the keys to their success and failures.
Quick recap
- Entrepreneurs start businesses, taking risks to meet needs and earn profit.
- A business plan covers the product, market, operations and finances.
- Business structures include sole proprietorships, partnerships, corporations and co-operatives.
- Profit equals revenue minus expenses; the break-even point and cash flow are key.
- Entrepreneurship brings rewards and risks, along with ethical responsibilities.