Lesson 5- Self-Employment and Entrepreneurship

- Do you know anybody who works for themselves or has started their own business?

- I do!

Self-Employment and Entrepreneurship

Self-employment and entrepreneurship are two popular ways to launch a career in Ontario.

People often mistake them for meaning the same thing, but they are not!

So what’s the difference?

Self-Employment Self-employed people get paid for their work, but not by an employer.

Instead, they contract with a business to provide a certain number of hours of work and are paid an hourly rate or a flat fee. ◦ Set amount of money charged for services provided

Some self-employed individuals work on site – that is, at the business.

Others work at home. Freelance work operates in much the same way, with a self-employed person charging an hourly rate for services, often working for many different companies at the same time.

Just some areas for the self-employed Freelance Writer, At-Home Call Center, Artist, Contract Work (see page 66)

- Do you know anybody who works for themselves or has started their own business?

- I do!

Definitions Self -Employed - people are not paid by an employer, instead contracting services to business

or individuals for an hourly rate or flat fee, e.g. plumbers, electricians and consultants.

Entrepreneurship: accepting the challenge of starting and running a business.

Entrepreneurs - People who take a risk by starting and running brand new businesses, paid through profits of a business, e.g. shop owner.◦ Business: any activity that seeks to provide goods and services to others while operating at a profit.◦ Profit: the amount a business earns above and beyond what it spends.◦ Revenue: the total amount of money a business takes in by selling◦ Loss: when a business’s expenses are more than its revenue◦ Risk: the chance an entrepreneur takes of losing time and money on a business that may not prove

profitable

So what’s the big difference between Self-Employment and Entrepreneurship?

Neither get paid by an employerSelf-employed people get paid

directly for their services. On the other hand, entrepreneurs are people who run their own business and get paid through the profits of the business.

ENTREPRENEURSHIP

Well-Known Canadian Entrepreneurs

John W. and Alfred J. Billes

J. W. Sobey

Ablan Leon

Why People Take the Entrepreneurship Challenge:

New idea, process or productIndependenceChallengeFamily patternProfitImmigrants

Source: Nickels et al. (2007), page 205

What does it take to become one?Self-DirectedDeterminedAction-orientedHighly energeticTolerant of uncertaintyAble to learn quickly

Source: Nickels et al. (2007), page 206

An Idea! Ron Foxcroft was a basketball referee with a

problem. The occasional malfunctioning of plastic pea-whistles, not to mention sometimes being drowned out by the noise of the roaring crowds, hindered the proper enforcement of the rules.

He worked through more than 14 prototypes before at last perfecting the Fox 40 pea-less whislte. Today, Fox 40 enjoys sales of 40,000 whistles daily in 140 countries, and has become the “world leader” in pea-less whistle design and innovation.

Source: Nickels et al. (2007), page 206

Pros and Cons of Entrepreneurship

PROS:• Excitement• Rules and regulations• Originality• Competition• Independence• Salary potential• Flexibility• Rational salary• Freedom

CONS:• Salary• Benefits• Work schedule• Administration• Incompetent staff• Procedures

TRENDS: Read p.64 - 65 and discuss growth of self-employment / entrepreneurship as others

industries disappear. Discuss issues.

A large number of women are becoming entrepreneurs.

Social Entrepreneurship: ◦ A social entrepreneur is an individual who applies business and

management skills to tackle chronic societal problems with sustainable solutions.

Internet Entrepreneurs◦ an entrepreneur, an owner or manager of an Internet based business enterprise

who makes money through risk and/or initiative. Outsourcing (see next slide)

Outsourcing- Companies move parts of their business

operations abroad to cut wage costs, e.g. Indian Call Centres.

- Outsourcing is assigning various functions, such as accounting, production, security, maintenance and legal work, to outside organizations.

SELF-EMPLOYMENT

Top 10 self-employment opportunities1. Home renovator2. Pet-related products and services3. Catering4. Cleaning5. Wedding planner6. Dietary consultant7. In-home beauty services8. Sewing and altercations services9. Services for seniors10.Life/business coach (page 66 of your textbook)

What can you earn?Hourly rates for self-employed individuals and

entrepreneurs start at around $18/hour, although some labour that is unskilled and performed by someone under 20 might get only $12 - $15 /hour.

In some cases, you might not charge an hourly rate. Instead, you would estimate how much the whole job is worth and quote a flat fee. Flat fees are often used for individual projects such as shoveling a driveway or typing a report.

(page 67 of your textbook)

Gross vs. Net Pay• Gross pay – The money you receive from your clients.

Your pay before the deduction of expenses or taxes, e.g. supplies, wages to workers (sub-contractors).

• Net Pay - Your 'take home' pay after all expenses are paid - profit.

In-Class Work:

1. What is the difference between being self-employed and an entrepreneur?

2. Why do people want to become entrepreneurs?3. What are the advantages of becoming an

entrepreneur that appeal to you?4. What are some of the disadvantages of being

an entrepreneur that scare you from being one?5. Are you interested in becoming an

entrepreneur? If so, explain. If not, explain why not.