Self-Employment and Entrepreneurship

Advantages/ Disadvantages of Self-Employment

• Advantages1) Independence

2) Pride of ownership

• Disadvantages1) time commitment2) uncertain income3) possible loss of investment ( approx. 60,000 businesses fail in Canada each year)

Financing a Small Business

• Funds are needed to buy advertising, to pay employees, to purchase supplies, and to acquire equipment.

• One of the most common causes of business failure is lack of money to pay company expenses.

• Constantly changing exchange rates are an additional problem for small companies involved in international business.

Analyzing Costs

• Start-up costs are those expenses that occur when a company is new. ( i.e. purchasing equipment, legal fees, etc.)

• Continuing expenses are business operating costs that occur on an on-going basis. ( i.e. rent, salaries, etc.)

Analyzing Costs

• Variable costs are business expenses that change in proportion to the level of production. ( i.e. materials, Hydro, etc.)

• Fixed costs are expenses that do not change as the level of production changes. ( i.e. salaries, rent, etc.)