SESSION 1

Importance for community

Session Outline

Objective

The intention of this session is to have the participants understand the importance of entrepreneurship for sustainable development in native communities. Understanding the challenges of entrepreneurship in a native context, the participants will then be given an introduction to the requirements for successful entrepreneurship. The participant can then make a commitment toward an entrepreneurial lifestyle and develop a plan to make the changes necessary to pursue an entrepreneurial career.

Learning points

• To understand the importance of entrepreneurship for Kahnawake and other First Nation economies
• To understand key concepts of sustainable development, and the barriers to that goal
• To gain an understanding of First Nation entrepreneurs
• To understand what is required to be a successful entrepreneur
• To assess your own qualifications as an entrepreneur
• To develop a plan of action to become an entrepreneur ( or improve your existing business )

KAHNAWAKE ENTREPRENEURS

Kahnawake has had a long history of entrepreneurial activity. Fur trading, agriculture, cigarettes, golf courses. Arts and crafts are but a few of the initiatives developed by Kahnawake entrepreneurs over the history of the community.

One key characteristic of entrepreneurs is their willingness to change, to adapt to opportunities in the environment. Kahnawake entrepreneurs have shown that they have this key characteristic. The fur trade, at one time, was an excellent opportunity for entrepreneurship. Now, the same entrepreneurial spirit that motivated the entrepreneurs then is directed towards current opportunities like Golf courses and Internet related initiatives.

There has been a reluctance recently, on the part of Kahnawake entrepreneurs, to trade in external markets. What was once a natural tendency to trade with external communities during the fur trade has now become somewhat curtailed by language and legal issues.

Nonetheless, the entrepreneurial spirit still thrives and we will be highlighting Kahnawake entrepreneurs throughout the course, some of whom have overcome the geographical barriers and are successful entrepreneurs in the Montreal region.

The course will help you to understand the importance of entrepreneurial activity to the community, help you explore your own entrepreneurial style and help you develop a business idea into a business plan. Tewatohnhi’saktha will then provide support, for successfully completed plans, to help the entrepreneur launch and manage his/her business.

We hope you enjoy this voyage of discovery into your entrepreneurial potential. If you provide the willingness and determination we will provide the map to help you carry on the tradition of the entrepreneurial spirit in Kahnawake.

ECONOMIC DEVELOPMENT

Concept

Economic development occurs when a community begins to retain and spend money within the community and generates inflows of money from outside the community through tourism, exportation or investments. A community is economically healthy when the inflows into the community are greater than the outflows ( economic leakage ). Jobs are created and the income from these jobs is spent within the community creating more revenue for others who spend the money within the community, etc. The creation of money through external inflows, the retention of money through preventing economic leakage and the velocity ( speed ) of that money being spent within the community, generates a vibrant economy. The ability to do this results in benefits such as self governance, meaningful career opportunities and retention of community members, particularly youth.

Entrepreneurs are usually the drivers of economic development in communities. They perceive the opportunities and implement businesses which reduce leakage or generate inflows.

The easiest way to begin a business is to find an opportunity to reduce economic leakage in the community. Start the business and see if the community purchases your product/service. Modify your business until successful. This gives a business the opportunity to test the concept and improve the product/service to a point where the business can now offer products and services to external communities.

There are some mega opportunities where you could start a business as a large scale operation right from the start. These opportunities have often been pursued by Band Council as a joint venture with external investors. Individual Aboriginal entrepreneurs often don’t have the access to capital necessary to launch mega ventures. John Montour ( one of our entrepreneurial cases ) has said that a restriction to economic development in Native communities has been the lack of access to significant funding for individual Aboriginal entrepreneurs to start mega projects. This is now being addressed by the Native Venture Capital Fund, in Quebec, that provides Native businesses with access to venture capital to fund the mega projects. The only perceived weakness in this fund is the connection to traditional venture capital funds (SOCCA e.g.). Thus, if a Native business applies for funding in an industry that already has a business funded by SOCCA, then it is unlikely the Native business will get funding.  For example, if SOCCA is funding a bottled water business in Montreal, they would be reluctant to fund a Native start-up that would become a competitor. Venture capital tends to be established in high growth industries so it will be difficult to come up with a large scale, viable opportunity that is not already being funded by venture capital.

Alternatively, Aboriginal entrepreneurs can begin with small scale opportunities that are targeting the local population to reduce leakage. As the business succeeds, the opportunity can be expanded, incrementally, to eventually become large. At some point the growth can encompass other Native communities through franchising or export and ultimately growth to the non-aboriginal, large market communities. There are considerable legal obstacles to expand the trading area beyond Native communities but we will deal with these challenges ( and provide recommendations ) later in this course.

The Need

The need for Aboriginal entrepreneurs is huge. Your instructor will guide you through some of the statistics that highlight the need for Aboriginal Economic Development and entrepreneurs. The course you are taking is designed to guide you through the process and hopefully get you to realize that you can become an entrepreneur and make a significant contribution to the economic development of your community by doing so.

The Requirement

In order to become an entrepreneur you first have to understand the requirements for success in that field. You need to know yourself as an entrepreneur so you can be sensitive to opportunities that will fit with your style and expectations. The best idea in the world will not be good for you unless it is something that you love to do. Entrepreneurship will consume your life. Your family and friends will have to adapt to your role as an entrepreneur because it has to become the number one priority in your life to have significant success. If you are going to devote hours of your time and energy toward something that you will put ahead of family and friends, then it better be something you love to do. Match that passion for entrepreneurship with a market driven opportunity and you have a winner.

CASE

Eileen’s Bakery

Eileen perceived an opportunity to provide special occasion cakes from her home. She enjoyed making and decorating cakes and took a course on cake decorating. She loved what she was doing. She loved it so much that you’ll still see her decorating cakes at the bakery.

There was also a market need for a bakery in Kahnawake. When you combine the market driven opportunity with Eileen’s love for what she does you have a business opportunity with a high probability for success.

ECONOMIC OVERVIEW

Presented by John McCallum, Chief Economist, Royal Bank

CANDO conference, October,1997

The following statistics highlight the situation in Native populations within Canada. Among the recommendations for action is one that identifies entrepreneurial activity as a means to overcome these conditions.

• Income levels only 60% of the Canadian average
• Unemployment rate of 2.5 times the Canadian average
• Welfare recipients 5 times the Canadian average
• High school graduates only 70% of the Canadian average
• Tuberculosis incidence 15 times the Canadian average
• Diabetes incidence 2 times the Canadian average
• Sub standard housing at 2 times the Canadian average
• Incarceration rate ( prison ) at 5 times the Canadian average
• Suicide rate of 2.5 times the Canadian average
• Homicide ( murder ) rate of 6 times the Canadian average

Strong Economic Development provides the funding necessary to deal with these social conditions and strong economic development provides the opportunities and optimism for Native Youth. This Economic Development is fueled by entrepreneurs who create businesses that reduce cash outflows from the community ( leakage ) and/or encourage cash inflows to the community through Tourism, investment or export. The wealth that is retained within the community can then be re-circulated and provide jobs and support for social programs. More importantly, economic development provides opportunity for Native youth to be active participants in a vibrant community through job opportunities or entrepreneurial pursuits of their own.

You have a unique potential to help economic development by becoming an entrepreneur. You would also be a role model for native youth and possibly provide job opportunities for them at some point in the future. An interesting statistic from the same research indicates that Native youth populations are growing by 20% while the Canadian population is not experiencing any growth in the youth population.. This growth rate is a challenge for Native communities to provide opportunities for the youth to find jobs and opportunities that will retain their identity with the community and give them optimism for their future. Entrepreneurial activity is one path towards this objective. Creating an economically viable, sustainable business opportunity is a positive step toward community development.

Culture and Entrepreneurship

William O’Hare in “Reaching for the dream” compiled the following statistics on the percentage of entrepreneurs in cultural populations:

Korean                10%

White American    7%

Japanese                7%

Chinese                  6%

Vietnamese            5%

Blacks                    2%

Native American    1%

It is not the intent of this training to determine the causes of these statistics. It is solely to illustrate that there needs to be a higher percentage of Native entrepreneurs to fuel economic development.

Economic Development and Unemployment

There is a strong correlation between economic development and unemployment rates. Economic development creates jobs which retains money in the community. When jobs are outside the community then a portion of the income is spent outside the community and the cash inflows are whatever is sent or brought back to the community.

The development of jobs in a community is a function of the entrepreneurial activity within the community. There are only a certain number of government administrative jobs available, the rest have to be created by entrepreneurial activity that leads to job creation for others.

One weakness in the aboriginal situation is the lack of financing available to create significant entrepreneurial ventures which will result in sustainable job creation and development. Funding is available for “mom and pop” start-ups and these can create some low skilled jobs, but, the real opportunity comes from threshold size ( mega ) opportunities that have significant implications for job creation and development. At present these opportunities are limited to Band Council level, joint ventures and Development Corporations.  Individual aboriginal entrepreneurs are limited to low level start-ups that have little opportunity for job creation.

There are a few aboriginal entrepreneurs who have developed significant job opportunities through their own investment. Five Nations Boutique and the Golf Courses have received some funding but the majority of the investment has come from their own financing. The jobs created are seasonal, directed toward tourism ( cash inflows ) and sustainable.

Entrepreneurs

Entrepreneurship is a state of mind. There are no specific skills required nor any academic requirements. There are no interviews needed and no one has the right to tell you that you can’t be an entrepreneur. Naturally, when you want to use money from others to start or run your business they will have input as to whether they will provide you the funds or not. If you do start a business, and only use your funding, then no one can stop you. Every external investor wants to see the entrepreneur take risk first. Funding agencies like Aboriginal Business Canada and private investors will all want to see entrepreneurial risk ( usually through cash outlay in the business ) before they will get involved.

The business opportunity is less important than the power behind it. The business is powered by the entrepreneur and a good entrepreneur with a bad opportunity is better than a bad entrepreneur with a good opportunity. The energy, enthusiasm and vision that an entrepreneur has will create business activity and encourage others to follow.

If you can generate the internal passion towards a business opportunity then no one can stop you. That internal “fire” will enable you to position your business for survival  – much like bringing up children, you will be motivated to protect your business and ensure its survival through dedication, hard work and a love for the business.

Businesses, like children, are more work than anticipated. Long hours, frustrations, problems, concerns and inevitable heartaches will occur. But there is also joy, pride, excitement and much happiness in the process as well. It’s amazing how a few moments of joy were worth hours of work. The same is true in sports. I know golfers who will practice and spend an enormous amount of time devoted to golf for the memories of a couple of excellent shots. This is just one example of many hours of dedication for brief periods of joy.

So, it’s all about the process not the results. It’s the trip not the destination. Every day is a successful day for an entrepreneur because they are doing what they love. Having children, playing golf and becoming an entrepreneur are not for everyone. They are for those who want it so much that they will commit the time and resources necessary to withstand all the setbacks and problems. There will always be more problems than the financial rewards will justify. There is considerable risk, the hours are long, there is no guarantee of success, and others will be critical and jealous of any success you have. So why do it?

The rewards are the freedom to make your own decisions, the independence from a boss controlling your behavior and the pride of developing something on your own. Now, you will be harder and more critical of yourself than any boss would be and your customers are your new bosses, demanding a lot from you and your business; but it is still freedom from a job that you do not love and the satisfaction that you will benefit directly from doing a good job.

Successful entrepreneurs need to have this driving ambition but they also need to have a market driven opportunity and support ( financial resources, training, mentoring ).

Here’s the deal:

1) You provide the enthusiasm, commitment, drive and persistence to do your best in this training to explore your potential in entrepreneurship.

2) This training will provide the help to get you focused on an idea, the guidance to do your business plan and the skills to implement your business idea.

3) You make a financial and emotional commitment to your business

4) Tewatohnhi’saktha will provide the training, BSO support, some financing, on-going financial and after-care support.

SUMMARY

• Sustainable economic development is essential for First Nation independence and self government.

•  Economic development works toward reducing cash outflows from a community ( leakage ) and encouraging cash inflows into a community ( Tourism, investment, export, e.g. ).

•  It is particularly difficult for Native entrepreneurs to develop opportunities that have the scope necessary for significant cash inflows and job creation ( given the growth of the youth population in Native communities and the need for jobs for many of these youth – projected requirement for job creation, annually in Kahnawake, is 100 jobs )

•  The driving force behind many economic development initiatives is the entrepreneur, who sees opportunity, takes risk and commits himself/herself fully to the successful development of their business.

•  Entrepreneurs need to acquire key characteristics that have been proven to lead to successful start-ups.

•  Entrepreneurs provide significant community benefits while enjoying independence and satisfaction as the two key personal benefits.

EXERCISE #1

FINDING TIME

Being an entrepreneur is a lifestyle, not a job. There is no “off-duty”, you make the business your life and find time to do other things.

Naturally, to be an entrepreneur you need to free up some time from the life you are living now. Everyone only has 24 hours in a day. Some is required for sleeping, eating and maintenance ( hair, dentist, doctor appointment, etc)

Some time is required for socialization ( family, friends, children). Some is needed for school or work. Some is needed for hobbies, events, and leisure.

Itemize the time spent now on these activities ( 24 hrs ) and indicate where you will take the time to be an entrepreneur.

                                   Time spent now                                Time spent after

Sleep/eat/maintain  ___________________                    ________________

Socialize                      ___________________                    _______________

School/work             ____________________                   _______________

Leisure                         ____________________                  _______________

Other                           ____________________                   _______________

TOTAL (24hrs)   _____________________           _______________

Balance for entrepreneurship                                     _______________

Exercise # 2

CHARACTERISTICS

We discussed some of the characteristics necessary to be a successful entrepreneur. Now it’s time to see how you rate on some of those characteristics. Circle the number that is most representative of your own level on those characteristics:

1= low    2= high

Ability to adapt to change                   1  2  3  4  5  6  7  8  9  10

Ability to tolerate risk/uncertainty      1  2  3  4  5  6  7  8  9  10

Perseverance                                       1  2  3  4  5  6  7  8  9  10

Ability to tolerate rejection                 1  2  3  4  5  6  7  8  9  10

Ability to put the business as # 1        1  2  3  4  5  6  7  8  9  10

Discussion Questions

• Are entrepreneurs born or can you develop the characteristics needed to be a successful entrepreneur?

•  What are some solutions to reduce economic leakage from a community?

•  What could be done to have Native businesses sell more products and services outside the community?