Small Business Management - Course Manual - Nunavut Municipal ...

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Copyright


Copyright 2010 (Revised Edition) Nunavut Arctic College (NAC). All rights reserved.

Copyright 2006 Nunavut Municipal Training Organization (MTO). All rights reserved.



Nunavut Municipal Training Organization

PO Box 1000, Station 700

Iqaluit, NU

X0A
-
0H0



The MTO would like to acknowledge Genesis Group Ltd. for their assistance with coordinating and
developing curriculum materials for the Municipal Government Certificate
Program.



Organizations listed below may copy the materials for distribution and use in Nunavut and the Northwest
Territories only.


Use of the materials by any other organization or in any location other than Nunavut and
the Northwest Territories require
s the permission of the Nunavut Municipal Training Organization.



The following organizations have contributed to the development of these materials:



Nunavut Municipal Training Organization;



Nunavut Arctic College;



Government of Nunavut


Department of
Community & Government Services;



Indian and Northern Affairs Canada; and



Government of the Northwest Territories
-

School of Community Government.




Revised January 2011

Aarluk Consulting Inc.


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Table of Contents


Course Overview

................................
................................
................................
................................
.........

4

Chapter 1: Introduction to Small Business Management

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................................
.......

9

Chapter Objectives

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................................
................................
....

9

Topic
1: Small Business in Canada

................................
................................
................................
.........

10

Topic 2: Small Business in Nunavut

................................
................................
................................
........

18

Topic 3: Going into Business

................................
................................
................................
...................

34

Topic 4: Assistance Programs

................................
................................
................................
.................

55

Chapter 2: Financial Management

................................
................................
................................
...........

59

Objectives

................................
................................
................................
................................
................

59

Topic 1: Financing

a Business

................................
................................
................................
................

60

Topic 2: Financial Analysis and Planning

................................
................................
................................

69

Topic 3: Managing Taxes

................................
................................
................................
........................

83

Chapter 3: Managing a Small Business

................................
................................
................................
..

88

Chapter Objectives

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................................
................................
................................
..

88

Topic 1: Marketing

................................
................................
................................
................................
...

89

Topic 2: Managing Human Resources

................................
................................
................................
..

103

Topic 3: Operations Management

................................
................................
................................
.........

108

Topic 4: Growing the business and going out of business

................................
................................
....

116

Glossary
................................
................................
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................................
.................

125


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Course Overview

This course is designed as a g
eneral reference that will be supported by other resources, chosen by
instructors, to meet the needs of course participants, in specific Nunavut communities and regions. This
course provides the basic concepts for a solid foundation in small business manag
ement in Canada. It
will help develop more advanced skills that will enable Economic Development Officers in Nunavut to
submit funding proposals and evaluate business proposals and opportunities in Nunavut.


The course connects general principles of small business management with the Nunavut Economic
Development Strategy (NEDS), the Nunavummi Nangminiqaqtunik Ikajuuti (NNI) policy, and Article 24 of
the NLCA (NLCA) in order to harmonize small business manageme
nt to the agenda for development in
Nunavut. The learning exercises in the course will help participants practice skills and identify business
opportunities between government and small business (B2G), and between businesses (B2B), in
Nunavut.


Course O
bjectives

At the conclusion of this course, participants will be able to:

1.

Describe the nature of a small business and identify the skills required to operate a small
business.

2.

Identify the risks and pitfalls that can challenge small business.

3.

Identify t
he business structures available for small businesses.

4.

Demonstrate an understanding of the major considerations in starting and operating a business,
including a personal assessment of one’s suitability to manage a small business.

5.

Understand the Nunavut
Economic Development Strategy (NEDS) and its implications for small
business development.

6.

Understand the role of government programs in stimulating, supporting, and financing small
business initiatives.

7.

Understand Article 24 of the NLCA (contracts with t
he GN), and the NNI policy and its
implications for business to government relations.

8.

Understand the key concepts of developing a small business, either from scratch, by purchasing
a business, or opening a franchise.

9.

Understand important financial concep
ts, the principles, and tools of financial planning and
analysis; including the importance of accounting, ratio analysis, budgeting and forecasting,
taxation, and debt/equity financing.

10.

Develop a marketing and promotion plan for a small business.

11.

Identify

key concepts and tasks in human resource management for small business managers.

12.

Research, develop, and present a comprehensive business plan.



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Course Resources

1.

Nunavut Arctic College Course outline 031
-
252 Small Business Management, January 2011

2.

Nunavut Economic Development Strategy
, “Building a Foundation for the Future”, Sivummut
Economic Development Strategy Group, (SED) June 2003.

3.

Nunavut Land Claims Agreement
, Article 24

4.

Nunavummi Nangminiqaqtunik Ikajuuti (NNI Policy)
http://www.gov.nu.ca/
Nunavut/nni/

5.

Department of Economic Development and Transportation


Nunavut’s “How to Guide” to Starting
and Maintaining Your Own Business

(publication scheduled for November 2006 by Department
of ED &T)

6.

Balderson, Wesley D. Canadian
Entrepreneurship &
Small Business Management
, 6th Edition.
McGraw
-
Hill
-
Ryerson, Toronto, 2005. (ISBN 0
-
07
-
560770
-
0)

7.

Community Economic Development Officer’s Reference Manual
, Prepared for Department of
Resources, Wildlife and Economic Development Copyright © Consilium & Dep
artment of
Resources, Wildlife and Economic Development, 1997.

8.

MTO Course Guide: Basic Marketing, 2010

9.

MTO Course Guide: Business Math, 2010

10.

MTO Course Guide: Human Resources Management, 2010

11.

MTO Course Guide: Introduction to Community Economic Develo
pment, 2010

12.

Canadian Bankers Association, Getting Started in Small Business, Canadian Bankers
Association. July 1998.

13.

Elias, Peter,
Development of Aboriginal People’s Communities
, University of Lethbridge, Captus
Press, 1991. (ISBN 0
-
921801
-
51
-
3)

14.

Gallan
der, Benjamin, The Canadian Small Business Survival Guide, Hounslow Press, Toronto,
Canada Ninth printing December 1998 (ISBN 0
-
88882
-
094
-
1)

15.

Lamb, Charles W. Jr. et al.
The Subject is Marketing
, 2nd Canadian Edition. Thompson/Nelson
Publishers, Scarboroug
h, 2002. ISBN: 0
-
17
-
616955
-
5


Internet Resources

1.

Canada
-
Nunavut Business Services Centre
-

Starting a Business in Nunavut

http://www.cbsc.org/servlet/ContentServer?cid=1091019934320&pagename=CBSC_NU/CB
SC_WebPage/CBSC_WebPage_Temp&lang=en&c=CBSC_WebPage




Government programs and services



Helpful business information links



Nunavut Community Business Inventory



Nunavut Economic Outlook



Community Economic Development



Business
Start
-
up

Assistance


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Interactive Business Planner



Nunavut Economic Development Strategy



Nunavut Regulatory & Licensing Agencies Info
-
Guide


2.

Nunavut Tunngavik Incorporated links to Inuit organizations, governments, and economic
development agencies

http://www.tunngavik.ca/english/links.html


3.

Canada
-
Nunavut Business Services Centre


Starting a Business in Nunavut
http://www.nunavuteda.com/english/resources/business_files/start_business_E.pdf



4.

NTI links to Inuit organizations, economic development agencies etc.
http://www.tunngavik.com/links/



5.

Nunavut E
conomic Developers Association

http://www.nunavuteda.com/


6.

NTI Department of Economic & Business Development
http://ww
w.tunngavik.com/category/publications/economic
-
business
-
development/



7.

Business Development Bank of Canada

http://www.bdc.ca/en/Pages/home.aspx


8.

Canadian Federation of Independent Business

http://www.cfib
-
fcei.ca/english/index.html


9.

Baffin Regional Chamber of Commerce

http://www.baffinchamber.ca/


10.

Canadian Marketing Association Code of Ethics and Standards of Practice

http://www.the
-
cma.org/?WCE=C=47%7CK=225849



11.

Aboriginal Economic Development
-

Canadian Northern Economic Development Agen
cy Canada

http://www.cannor.gc.ca/pr/aed
-
eng.asp


12.

Nunavut Statutes and Regulations

http://www.nucj.ca/library/index.htm


13.

Inuit Business Directory

http://www.itk.ca/inuit
-
business
-
directory


14.

Canada Business Service Centre: Market Development and Product Promotion
http://www.canadabusiness.ca/eng/88/


15.

Nunavut Arts and Crafts Association

http://nacaarts.com/english/


16.

Nunavut Trade Show

http://www.baffinchamber.ca/node/66



17.

Atuqtuarvik Corporation

http://www.atuqtuarvik.com/english/



18.

Municipal Training Organization


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http://www.nmto.ca/



19.

Industry Canada


Statistics on Small Business in Canada

http://www.ic.gc.ca/eic/site/sbrp
-
rppe.nsf/vwapj/KSBS
-
PSRPE_July
-
Juillet2010_eng.pdf/$FILE/KSBS
-
PSRPE_July
-
Juillet2
010_eng.pdf




Evaluation Guidelines



Projects, quizzes, and assignments 40%



Final exam 50%



Participation 10%



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Course Discussion Questions

1.

How can the use of Inuktitut and Inuinnaqtun in small businesses in Nunavut be increased?

2.

How does the Nunavut Ec
onomic Development Strategy affect small business management?

3.

How can Inuit values be expressed in small business practices?

4.

How do the unique characteristics of Nunavut (climate, geography, culture, language) influence
the forms that progress, productio
n, and the satisfaction of human needs can take? What are the
implications for marketing?

5.

How does the NNI policy affect small businesses in Nunavut?

6.

What are the opportunities for businesses to provide goods and services to the Government of
Nunavut?

7.

W
hat skills should a person have in order to succeed in starting and managing their own
business?

8.

What are the barriers to business development in Nunavut? In your community?

9.

What financial analysis and planning skills are required for success in small bu
siness
management?

10.

How can a small business determine the best approach to financing the business?

11.

What can be done by a small business manager to reduce taxes?

12.

What are the opportunities/challenges for marketing new products in Nunavut?

13.

What are the
opportunities/challenges for marketing Nunavut products and services to the rest of
the world?

14.

What government programs are available to assist small business in Nunavut?

15.

What are the major areas of economic and business growth for Nunavut, your region, y
our
community? What is needed to support this growth?



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Chapter 1: Introduction to Small Business Management

Chapter Objectives

Knowledge

1.

Understand the characteristics of small business in Canada.

2.

Understand the characteristics and challenges of small

business in Nunavut.

3.

Understand the role that Inuit values play in business in Nunavut.

4.

Understand the implications of the Nunavut Economic Development Strategy for small
businesses in Nunavut.

5.

Understand the implications of the NNI policy for small bu
siness in Nunavut.


Skills

1.

Evaluate a business opportunity.

2.

Develop a comprehensive business plan.

3.

Evaluate a fair price for purchasing a business.

4.

Assess one’s own suitability as an entrepreneur.

5.

Identify the skills and characteristics of entrepreneurs in Nunavut.

6.

Identify the requirements for operating a business.

7.

Advise others on what they need to know and do in order to go into business.

8.

Identify the advantages and disadvantages of small busi
ness structures.

9.

Identify the elements of a business plan.

10.

Identify programs in Canada and Nunavut that assist small business.


Values

1.

Appreciate the contribution of small business to economic development in Canada, and Nunavut.

2.

Appreciate the value

placed on representative Inuit participation in small business in Nunavut.

3.

Appreciate the capacity building elements of the NNI policy for Inuit participation in business.


Discussion Questions

1.

How should a small business be defined?

2.

Why is small business important for achieving the goals of the Nunavut Economic Development
Strategy?

3.

What does it take to start a small business?

4.

What is the difference between an entrepreneur and a manager?

5.

Who should I target as my market? Is there

an opportunity to export my goods or services?

6.

How do I know if the business is going to survive? What are my options if it doesn't?

7.

What programs are available in Canada, and Nunavut, to support small business?



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Topic 1: Small Business in Canada

Federal and territorial levels of government support small business with programs through Industry
Canada and other government departments. In all provinces, and in the three territories (NWT, Nunavut
and Yukon), there are Canada Business Service Centers.

The centre for Nunavut has a website, with
useful information for people who want to start a small business, “Canada
-
Nunavut Business Services
Centre


Starting a Business in Nunavut
.”


http://www.nunavuteda.com/english/resources/business_files/start_business_E.pdf



In newspapers, in magazines, and on the Internet, there are many articles, programs, and courses
available to teach entrepreneurs how to set up bu
sinesses, and to teach managers how to manage them
properly as they grow. “Small”, however, is a relative term, and can only be defined when people agree
about what defines a small business. In addition to self
-
employed people, there are increasing numb
ers
of employees in businesses that fall into the category of small business.



The majority of the population in Nunavut is Inuit. This fact allows us to locate business development in
Nunavut as part of Aboriginal business development across Canada.

N
unavut Population







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Defining small business

The wide variety of small businesses can be studied by looking at what they all have in common, and also
at what lending institutions, and government agencies, expect to see and measure, in any small business.
For example, sales levels, performance, and p
roductivity are common elements of all businesses studied
by government agencies and institutions.


In Nunavut, however, these indicators must be related to the economic development goals of Nunavut.
While some understandings about business activity ar
e universal (i.e., they are just as true for Nunavut as
for other parts of the world,), the special environment created for development by the Nunavut Land
Claims Agreement (NLCA) and the Nunavummi Nangminiqaqtunik Ikajuuti (NNI) policy requires attention
to the goals of Inuit people, and to their institutions, values, and approaches to business and economic
development. Consider the following points in preparation for understanding small business in Nunavut.
1



Supply and demand

Goods and services can be
either supplied or demanded. For example, when there is a demand for
country food, then a supply is needed to fill the demand. When there is no demand, then a supply of
country food will have no value. Traditional hunting, on the land, provided food that

met a demand for
individuals and families. When food is scarce, it has a higher value than when it is plentiful. This is an
example of the “law of supply and demand”. While the commodities and services in Nunavut may be
different than elsewhere, the law
of supply and demand operates everywhere.


Traditional/informal economies

An informal economy is one without formal means of exchange (i.e. currency, schedules, or regulations)
that are written down and administered by a government, or formal legal system
s. Informal and
traditional economies pre
-
date and co
-
exist with formal economies. There is no sharp line between
bartering and sharing vs. buying and selling using money. Rather, there is a spectrum of economic
activity that ranges from informal and pers
onal forms of trading to commercial activity based on a
common currency, a banking system, and a system of laws, administered by government. Both kinds of
economies are present in Nunavut today.


Inuit values also play an important role in determining approaches to business. These values include:



Inuit Qaujimajatuqangit (Inuit Societal Values);



Inuuqatigiittiarniq (Healthy Communities);



Pijarnirniqsat katujjiqatigiittiarnirlu (Simplicity and
Unity); and



Ilippallianginnarniq (Continuing Learning).





1

The following points have been adapted from MTO Course Manual “Community Economic Development” 20
10
.


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Product and production capacity

The ability to make something that is in demand is production capacity. What is produced is the product.
Economic development involves finding a product (good or service) that is in demand, or for which a
demand can be stimulated, and the ability (resour
ces, skills) to produce it. Building economic capacity
includes building production capacity. Questions about economic development will include:



What can be produced?



How can it be produced?



Who will want what is produced? and



How will people pay for

what is produced?


A business plan, in Nunavut, may answer these questions differently than a southern plan, but the
questions are the same, wherever a business opportunity is explored.


Markets and marketing

A market is a supply
-
demand relationship
. When there is a demand with a corresponding supply, a
market exists. Marketing is the activity of creating demand, or providing supply. Economic development
involves both identifying markets and creating them. Questions about marketing will include,
“How can a
demand be identified/stimulated?”, and “How can a demand be satisfied?” In Nunavut, these questions
may be answered differently than in the south.


Capital

Capital is any resource that can be used to create wealth, or a future profit. Capit
al can take various
forms, including financial, human, social, and physical. Notice that capital is not only money; it can
include any resource that has the potential to produce something of value. Financial capital is the most
commonly understood form o
f capital, but education, skills, social networks, facilities, and physical
environments are also potential resources that can create wealth, or a future profit. It is important to
recognize that governments invest in non
-
financial contributions to busine
ss development.


Decisions about what will have value for an economic activity (i.e. a business) have to be made first, then
what will count as capital can be determined. For example, if tourism, based on introducing visitors to the
Inuit way of life,
is valued for a business that will provide this service to a southern market, then people
who understand Inuktitut, and
Inuit Qaujimajatuqangit

(the way of understanding the land and our
relationship to it, Inuit societal values) will provide important hum
an capital that support this value and
make this business feasible.
2





2

Inuit Qaujimajatuqangit is a concept that describes the whole body of Inuit knowledge that governs all aspects of life, as we
ll as
the centrally important relationship to the land. It is discussed more fully in
Nunavut Economic Development Strategy
, Sivumm
ut
Economic Development Strategy Group, June 2003


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Perspectives on economic development

Economic development can mean different things, depending on the perspective taken towards
commercial activity, livelihood, consumerism, and the nee
ds for an income, adequate to meet financial
goals.
3

Business activity will reflect a perspective on what counts as economic development. Usually,
economic development refers to business development, job creation, and the expansion of production
and exchan
ge to build wealth. Economic development can also describe any program of exchange, or
investment in people, that supports self
-
sufficiency (income meets expenses), or that allows a lifestyle to
be funded. For example, education can be considered an esse
ntial part of an economic development
strategy.


Inuit values, however, are not the same as the values that operate in southern
-
based business. An Inuit
perspective towards economic development may involve significant differences which will affect how
small businesses are set up and managed.


It is im
portant to broaden the meaning of economic development, so that it is not interpreted solely in
terms of one cultural orientation to work and productivity. In Nunavut, economic development for a
household can mean owning and maintaining a rifle, a snow ma
chine, a global positioning system for
navigation, and camping gear, because these things provide the means for hunting, and hunting is a
preferred way of life and an important contributor to Inuit diet.


Like social development, economic development req
uires definition in a cultural context, because values
are involved. Fishing, hunting, trapping, and a migratory life on the land, make up the context for
traditional economies in Aboriginal societies. The meaning of land itself was a function of these
pr
actices.
4

The quality of life that is desired determines the standards of living that are relevant. Economic
development also requires people who can participate in their society by following a culturally appropriate
work ethic, and who have overcome socia
l and health barriers to participation in the economy.



This approach is developed in the
Nunavut Economic Development Strategy
5

(2003)
. In order to set the
stage for how small business can be understood in Nunavut, we continue this topic with a review
of the
categories used by lending institutions, governments, and agencies to define what counts as a small
business.
6





3

See pps. 196
-
213 in Elias for a discussion of culturally appropriate standards of living, and economic and social development
indicators.

4

See Elias p.1
-
35, The history of approaches to economic developm
ent in aboriginal communities

5

http://www.nunavuteconomicforum.ca/public/files/strategy/NUNAVUTE.PDF

6

See Balderson, (2005) pps. 10
-
11 for sources for the following points.


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1.

Number of employees

Definitions of small business vary between agencies. Industry Canada specifies a small business
as one that employs fewer than 100 people in a manufacturing industry, and fewer than 50 in a
non
-
manufacturing industry. The Ministry of State for Small Busine
ss and Tourism also uses the
guideline of 50 employees. The Business Development Bank of Canada (BDC) uses 75
employees as a level for businesses qualifying for small business
counselling

assistance.



2.

Total revenue

The Ministry of State for Small Busin
ess and Tourism uses $2,000,000 total revenue, and the
Small Businesses Loans Act applies to businesses with less than $2,000,000 in revenues.


3.

Profits

Revenue Canada defines businesses with operating profits of $200,000 or less as qualifying for
the s
mall business deduction. The small business deduction applies to the first $200,000 in
profits and allows a reduction in tax payable.


4.

Type of Management
-
ownership structure

The extent that the owner is also the day
-
to
-
day manager of the business can
also be used to
determine which businesses are small businesses. The majority of small business owners are
also the managers. Often, the owner of the business is the same as the person operating
the
business. The knowledge of how to manage the operations

of the business may be the reason
that the person went into business in the first place
.
Such individuals, often, have a history of
being competent at doing something in a previous job, then decide to take advantage of an
opportunity to start their own bu
siness.



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In addition to the criteria noted above, small business can be further described by the following
characteristics, which are shared by most small businesses:


1.

Limited share of the overall market

Because the business i
s limited in its capacity, scope, and in market size, as is often the case in a
community, the small business owner must seek out and exploit a niche in the marketplace. This
works out well for the very small community business, as larger businesses are l
imited in their
ability to survive in a small market, where a one or two person business can do reasonably well
-

if they are able to control their costs. In fact, because of size, the entire community can
sometimes be considered the niche. This is true
for many communities in Nunavut.



2.

Ownership and risks are shared

Depending on the legal structure of the business, one person may be assuming all of the risks,
including the financial risks. The income from the business is the income of the owner, and

the
owner is also responsible for all of the debt. As the business grows, alternate structures are
available to facilitate sharing of risk; for example, with partners and lending institutions.



3.

Labour intensity

A large number of small businesses are in
the service industry. They are labour intensive, as
opposed to capital
-
intensive, manufacturing businesses.



4.

Flexibility

Current State of Small Business in
Canada (
2009)

Based on criteria used by Statistics Canada and Industry Canada small business is a
significant part of the Canadian economy.



987% of all businesses in Canada employ fewer than 10050 employees, and
78% have fewer than 5 employees



458% of the labour force is employed in small business



2950% of gross domestic product is provided by small business



16% of all employed workers in Ca
nada were self
-
employed



32% of all business profits are made in small businesses


(Source: Key Small Business Statistics, July 2010. Industry Canada 2010, Balderson,
2005, p.11).



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By virtue of their size and organizational structure, small businesses are very flexible and can
react quickly to changes in their in
ternal and external environments. This is a characteristic
admired and often copied by the larger more structured organizations.



5.

Young entrepreneurs

There are an increasing number of businesses being started by young people. In many cases, it
is see
n as an attractive career option for young people, and in other cases, it is the only option
available to young people, where there are limited opportunities for employment. Nunavut has a
larger percentage of young people than other parts of Canada.



Cate
gories of small businesses: adding value

Generally, small businesses fall into the following categories; manufacturing, service, retail and
wholesale. To some extent, all categories are at different points on the value
-
added chain in the market.


A go
od example of types of businesses on a value
-
added chain is the diamond industry, where the value
added chain is called the Diamond Pipe Line. Primary manufacturing in the diamond industry begins with
mining the new raw materials, which are the raw diamon
ds that are extracted from the ground. A small
business in the NWT and/or Nunavut does not usually handle this. The raw diamonds are carried through
the next stages in the manufacturing industry, which require sorting, and then cutting and polishing.
Th
ese are all manufacturing processes that may be carried out by small businesses in the North. A
wholesaler could then sell the cut and polished stones to a retailer, or to a
jewellery

manufacturer, and so
on, until the
jeweller

in a small retail outlet se
lls the stones as finished
jewellery
. Some value is added at
each step in the process.


Manufacturing businesses

Manufacturing businesses are divided into primary and secondary manufacturing. Both convert inputs to
outputs, with secondary manufacturing

usually using the outputs of the primary manufacturing as their
inputs. Manufacturing businesses tend to be larger businesses, although there are exceptions. They also
tend to be very capital intensive compared to service businesses. For example, a car
manufacturing
plant is very capital intensive with large capital costs associated with the cost of the assembly line.


Service Businesses

The majority of small businesses in the North tend to be in the service industry. In the services sector,
people like camp cooks, tour operators, guides, and taxi operators sell their skills. Service businesses
tend to be more labour intensive. A restau
rant, while having some expensive equipment tends to have a
lot of staff. A bed and breakfast has a small amount of equipment relative to the amount of labour
performed.


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Retail wholesale businesses

Retailers buy from wholesalers and sell to consumers
. Wholesalers buy from manufacturers who
package goods in sizes suitable to be sold to the wholesalers. Wholesalers package goods in sizes
suitable to be sold to retailers. Retailers break down products into package sizes that are suitable to be
sold to
consumers, or end users. Retailers probably make up the largest number of small businesses, all
the way from the community pool hall to the large retail store (i.e. Arctic Ventures in Iqaluit).


Learning Activities

1.

Research the statistics for business
in Nunavut, using the Government of Nunavut (GN) Bureau
of Statistics (
http://www.eia.gov.nu.ca/stats/
)), other sources provided by your instructor, or the
local economic development officer, to develop a tab
le on Nunavut small businesses. Include
things such as; how many small businesses are currently in operation, their contribution to
employment, and the gross domestic production, and break down by economic sector.



2.

Describe a small business in your commu
nity, or in a Nunavut community of your choice, by
applying the categories used to describe small business in this topic.



Type of business

o

Number of employees

o

Total revenue



Profits



Type of management
-
ownership structure




3.

Describe a value added chain
, in each of these sectors, in Nunavut: manufacturing, service, retail
and wholesale.


4.

Identify two ownership structures in small businesses in your community, or a Nunavut
community of your choice. What led to the choice of these structures?



5.

Identify non
-
financial forms of capital investment that could assist a new business in Nunavut.
Consider an expediting business, a food business (wholesale), and a business that provides
services to the GN.



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Topic 2: Small Business in Nunavut
7

The background for small business development in Nunavut requires an understanding of the Nunavut
Land Claims Agreement (NLCA). The Nunavut government wants to pursue economic development in a
sustainable way, while respecting Inuit culture. This requires
the provision of services in Inuktitut and
Inuinnaqtun.


The NLCA is the outcome of twenty years of negotiations by Inuit who wanted not only a financial
settlement, land title, and harvesting rights, but also control over their own government. From the
beginning, the Inuit position was that the land claims agreement would include a guarantee that Nunavut
-

the Territory
-

would be created.


Nunavut is not, strictly speaking, a self
-
government. Nunavut is a public government. The Tunngavik
Federation of

Nunavut (TFN), the Inuit organization that negotiated the NLCA on behalf of Inuit in
Nunavut, did not negotiate Aboriginal self
-
government. They negotiated a public government, in which
Inuit beneficiaries are the majority. However, NTI beneficiaries are

one of only two Aboriginal groups in
Canada who will:



Have a majority of the votes (85%) in a territory (the Dene, Métis and Inuvialuit in the NWT still
have a slim majority of the population in the NWT);



Elect a government that reports to a public made
up of a majority of native people;



Continue (in the foreseeable future) to be a majority of the population;



Effectively control resource and wildlife management, as a result of the Inuit majority in the
legislature, and guaranteed representation on the Nu
navut Wildlife Management Board; and



Receive funding to maintain existing levels of government services.


No other Canadian province, or territory, has such a large majority of native people. Inuit in Nunavut see
themselves as a community. Usually, a
community makes its own decisions on how it operates and plans
for its future. Inuit form a community because they share a language, culture, and history. The GN is
expected to be more responsive to their needs for several reasons:



Inuit are the majority

of the electorate in Nunavut and will most likely continue to be so for the
foreseeable future;



The goal of the GN is to ensure that 85% of staff are Inuit;



The Legislative Assembly, and the headquarters of the public service, in Nunavut, is
geographical
ly closer and more accessible to the people; and



A Nunavut government, with responsibility for wildlife management for almost two million square



7

P
ortions of this section are adapted from MTO courses, “Community Economic Development” 2005, and
Introduction to
Northern Government (2005)
, For more background on the NLCA See
Introduction to Northern Government

Chapter 6,
Aboriginal Rights in Canada
,

Chapter 7,
Inuit Land Claims in Canada
, and Chapter 8,
Nunavut: Self
-
determination through
public government



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kilometres, or one
-
fifth of Canada, can support the important wildlife harvesting provisions of the
land claim
s agreement.


The NLCA was signed on May 25, 1993. It was precedent setting in many ways, including the fact that
within the land claims agreement was a political commitment to bring forward parallel legislation, to create
a new public territory.


Art
icle 4 of the Agreement states that: the Government of Canada would recommend to parliament
legislation establishing a Nunavut Territory, with its own Legislative Assembly and public government.
The
NLCA Act

and the
Nunavut Act
, establishing a new territor
y in 1999, were passed by Parliament in
the late summer of 1993.


Economic Development Officers (EDOs)), and others concerned with economic development, need to be
aware of the GN’s priorities, with respect to Inuit employment and Inuit participation in small business
development.


Article 24 of the NLCA addresses gove
rnment contracts. Its purpose is to help Inuit firms compete for
contracts in Nunavut.


The main role of NTI’s Department of Economic and Business Development is to ensure that Article 24 of
the NLCA is implemented by the Government of Nunavut, and the
Federal Government of Canada.


The Policy Objective of Article 24 is detailed in paragraph 24.3.6 of the NLCA:

Procurement policies and implementing measures shall reflect, to the extent possible, the following
objective:



Increased participation by
Inuit firms in business opportunities, in the Nunavut Settlement Area's
economy
8
;



Improve capacity of Inuit firms to compete for government contracts; and



Employment of Inuit, at a representative level, in the Nunavut Settlement Area work force; to
ensure

this objective is met, NTI's Department of Economic and Business Development is
responsible for maintaining the Nunavut Tunngavik Incorporated
Inuit Firm Registry
. The
registry is the only authorized listing of Inuit firms in Nunavut.









8

An Inuit firm is defined as one having at least 51% Inuit ownership


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The implementati
on of Article 24 is developed in the Nunavummiut Nangminiqaqtunik Ikajuuti (NNI
Policy). This policy deals with awarding contracts, government purchasing policies, and government to
business relationships.


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The Policy has the following objectives:

1.

Good V
alue and Fair Competition

To secure goods and services for the Government of Nunavut, at the best value, recognizing the
higher cost of doing business in Nunavut, and using a contracting process that is clear, fair, and
equitable.

2.

Strengthening the Nunav
ut Economy

To build the economy of Nunavut, and its communities, by strengthening business sector capacity
and increasing employment.

3.

Inuit Participation

Subject to ss.16(2), to bring about a level of Inuit participation, in the provision of goods and
s
ervices to the Government of Nunavut that reflects the Inuit proportion of the Nunavut
population.
9

4.

Nunavut Education and Training

Subject to ss.16(2), to increase the number of trained and skilled Nunavut Residents, in all parts
of the workforce and busi
ness community, to levels that reflect the Inuit proportion of the Nunavut
population.


The GN is the largest purchaser of supplies and services in Nunavut. Programs are needed to help small
businesses in Nunavut create a strong, locally owned and operate
d, business sector that reflects the
population of Nunavut and the priorities of its government. The business sector includes Nunavut
businesses, Inuit
-
owned businesses, community
-
based corporations, and co
-
operatives. Not all of these
qualify as small b
usiness, but small business will have a role to play in business to business marketing
and in business to government marketing.


The NNI policy has provisions for bid adjustments and evaluation processes that support the policy’s
objectives. There are
also requirements for the provision of training, to Inuit, on projects of certain sizes.
These requirements should be studied in detail under Section 11 of the policy.


Businesses that compete for government contracts can be organized in many ways: in diff
erent forms of
private
-
ownership, as co
-
operatives, and as community development corporations. A community plan
can identify the specific needs of community members, in relation to business development, which are
being met by existing organizations, as we
ll as highlight those which are not being met.


At the community level, any planning for a development corporation should examine how its role could
complement the role of regional Inuit organizations, as well as the Hamlet and local Community Economic



9

Section 16.2 states, “It is further recognized that the achievement of o
bjectives may be most realistically and reliably secured by
measured progress over time.”


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De
velopment Officer in providing business development services, or the role of the local co
-
operative and
private businesses in pursuing business opportunities.



The
Nunavut Economic Development Strategy

emphasizes the importance of the concept of “savings” for
business development. Savings is the most import
ant form of financing for a business, because the
business development cycle depends on savings.
10

The provision of financial resources from incentives,
business support programs, and government policy all strongly affect the private sector, by building on



10

p.40
Nunavut Economic Development Strategy
, “Building a Foundation for the Future”, Sivummut Economic Development
Strategy Group, (SED) June 2003

What planners need to know:

Private businesses can be very entrepreneurial, identifying and quickly capitalizing on
opportunities for the benefit of their owners and of the community. Co
-
ops have also
played an important role in Nunavut’s economic history, providing goods and service

湥敤敤 by c潭m畮ity m敭扥rsⰠli湫i湧 慲瑩s慮s 慮搠數瑥牮tl m慲k整eⰠ慮搠pr潶i摩湧
敭灬oym敮琮t Co
J
潰s 慮d comm畮ity 摥v敬o灭敮琠 c潲灯o慴a潮s 畳畡lly hav攠 b潴o
散潮潭ic⁡ 搠d潣i慬 潢j散瑩v敳⸠


A vi扲b湴n 扵sin敳s s散瑯爠s敲e敳 two im灯r瑡t琠灵rp潳敳⸠cirst
Ⱐi琠扲b湧s t潧整桥r 潵r
慳s整e

skill敤 p敯pl攬 fi湡湣i慬 慮搠 灨ysical r敳潵rc敳Ⱐ 瑥t桮潬潧yⰠ a湤 m慲k整
潰灯rt畮i瑩敳

瑯t cr敡t攠 val畡扬攠 灲潤畣瑳 a湤 s敲eic敳⸠ p散潮dlyⰠ i琠 pr潶i摥s
inv敳瑭敮琠潰灯rt畮i瑩敳⸠䱯c慬 灥o灬攠慲攠慢l攠瑯t 灵琠瑨敩r savi湧s from

em灬oym敮t
i湣潭攠e慣k⁩湴n⁴ eir⁣潭m畮ityⰠIy⁩湶敳瑩湧 i渠n畳i湥ss⸠


As 瑨t 灲pv慴攠s散瑯爠杲g睳 慮搠inv敳瑭敮琠潰p潲瑵oi瑩敳 敭敲来Ⱐ慤敱u慴a inv敳瑭敮t
c慰i瑡l m畳琠扥 m慤攠慶aila扬攮e 䡯畳敨ol搠savi湧s 慲攠愠key so畲u攠f潲o 瑨t c慰i瑡l
湥敤敤 瑯ts異p
潲琠灲pv慴a
J
s散瑯爠杲潷瑨⸠p漠瑯t is i湳瑩瑵ti潮al risk c慰i瑡t⸠v整ef慣iliti敳 瑯
s異灯r琠瑨攠慣c畭畬慴ao渠a湤 i湶敳瑭敮琠潦 s慶i湧s i渠潵r c潭m畮i瑩敳 慲攬a睩t栠愠f敷e
數c数瑩o湳ⰠI潭灬整ely 慢s敮琮t


B畩ldin朠愠s畣c敳sf畬 灲pv慴攠慮搠co
J
潰敲慴av攠s散t潲o
r敱uir敳 煵alifi敤 l慢潵r⸠䥮f敮瑩v敳
need to be adjusted to encourage skilled people to seek careers in Nunavut’s business
s散瑯牳⸠ ti瑨t畴u s畣栠 敮c潵r慧敭敮琬t c潭m畮i瑩es will 桡v攠 diffic畬ty li湫i湧 瑨tir
散潮潭i敳 瑯t 瑥牲i瑯ti慬 潰灯rt畮i瑩敳⸠ Ep潵rc攺

k畮av畴u bc潮潭ic 䑥aelo灭敮琠
p瑲慴agyF



23

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private and family savings. Government programs may require an investment of personal savings, for
example 10% of the start
-
up investment, before grants and loans are made available.


The principle at work is a public/private partnership that can yield g
reater social benefit than would be
possible were private and public interests to work independently of each other. Society has an interest in
providing employment and increasing the tax base (among other things), to improve everyone’s standard
of living.

Individuals have an interest in improving their standard of living, as they define their personal
and financial goals. As the following diagram shows, government and Inuit organizations are ready to
facilitate the ability of savings to generate more cap
ital for investing in production of goods and services.

















Greater Inuit participation in business development can be facilitated by information provided in
communities, about what it means to start and operate a business, how procurement

and tendering
systems work, and how a business can be sustained. As noted in the Nunavut Economic Development
Strategy, this information, whether delivered in written form, on the web, or in person, must be available in
Inuktitut and Inuinnaqtun. The top
ics that lie ahead will address these objectives.


Small business and the Nunavut Economic Development Strategy
11





11

A
dapted from M
TO course “Community Economic Development” 20
10



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Inuit are embarking on a new era of opportunity in their economic and social development. Changes are
occurring to how government is accompli
shed, how business is done, and what the future will offer, in the
way of education and opportunity.


Inuit living in Nunavut have a unique perspective on economic activity. Traditional economic activity is a
special topic in its own right, because it
has a justification in non
-
economic terms, as well as commercial
terms. Economic development for Inuit is not synonymous with jobs or materialism as a value system.
While jobs and material welfare are important components of self
-
sufficiency and prosperity
, several
factors will be significant in determining what counts as a job and what counts as adequate material
welfare, needed to live a chosen way of life, in Nunavut. For example, seasonal guiding and hunting may
count as a job, and a small business mig
ht be the way that a sole proprietor can meet his financial goals,
by offering guiding and hunting services.


The SED Strategy Group notes that, “Today the rate of change in Nunavut’s mixed economy is very fast.
Modern transportation systems have reduced
dependence on country food. Although survival is now
easier than it was for Inuit traditionally, the Nunavut cash
-
based economy also provides less work for
people than the traditional economy, in which everyone had a job (to use a modern term).“
12


The Grou
p further notes that, “The population is growing faster than the current economy can sustain.
Forty per cent of Nunavummiut are under the age of fifteen, ensuring that the labour force will continue to
grow over the next decade, with more young people rea
ching working age each year. A growing economy
will ensure that that everyone can have a livelihood and play a productive role in his or her community.”
13



Economic development in these circumstances can be accomplished through a combination of traditional

economic activity, resource management, joint ventures, skilled employment, and corporate formation
and investment. Small business can have a part to play in each of these areas.


Community Economic Development Officers (CEDOs) have a special responsib
ility for social and
economic development. Community government services and programs will facilitate both social and
economic development. The challenge is how to coordinate these two areas of planning and
investment,
while preserving cultural concerns
and goals for self
-
government. This is the context within which small
business development must be understood in Nunavut.




12

Nunavut Economic Development Strategy
, “Building a Foundation for the Future”, Sivummut Economic Development

Strategy Group DRAFT, June 2003.

13

Ibid. p.1


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At the heart of the economic development strategy for Nunavut is the goal of maintaining a mixed
economy.

Background for Nunavut Economic Development Strategy

On April 1, 1999, in accordance with the terms of the Nunavut Land Claims Agreement (NLCA),
Nunavut became a new political jurisdiction within Canada’s confederation.


䥮f瑨t firs琠y敡r 潦 i瑳 數is瑥湣攬e瑨t dov敲湭敮琠潦 乵湡v畴uEd丩 桥l搠愠C慢i湥琠r整牥
慴a瑯ta杲敥g潮
愠visi潮 f潲o 瑨t q敲ei瑯tyⰠ慮搠瑯t i摥湴nfy 灲楯ri瑩敳 f潲o 慣瑩潮 i渠瑨t firs琠fiv攠y敡rs⸠
The Bathurst
Mandate
documented these decisions, including a commitment to prepare an economic strategy for
Nunavut.


In September 2001, Cabinet met
at Repulse Bay (Naujaat) to specific directions for a Nunavut
Economic Development Strategy. Through
The Naujaat Challenge

that emerged from that meeting,
public consultations were undertaken and a series of background papers were prepared.


In a complem
entary effort, NTI sponsored the
Piliriaksaliuqatingiikniq Conference

at Gjoa Haven in
June 2002. This conference helped identify common ground and priorities for Nunavut’s economic
摥v敬潰m敮琮t䥮 r敳灯湳攠t漠a 灲潰潳慬 from 乔䤠瑯tc潬l慢潲慴a 潮 摥vel潰i
n朠a c潬l散tiv攠t敲ei瑯物慬
s瑲慴agyI 瑨攠d丠C慢i湥琠a杲敥搠t漠i湩瑩a瑥t睩瑨 乔䤠瑨t piv畭m畴ubc潮潭ic 䑥a敬o灭敮琠p瑲慴agy
EpbapF 灲潣敳s⸠q桥 pbap dr潵瀠a湤 pt敥ri湧 䍯Cmi瑴t攠w敲攠慳k敤 瑯tl敡搠t桩s 瑥牲i瑯物慬 敦f潲琮o
䵥m扥rs桩瀠潦 瑨攠pbap dr潵瀠e湣潭
passes the full range of organizations engaged in Nunavut’s
散潮潭y⸠


䥮f 䵡rc栠㈰M㌬P瑨t piv畭m畴u䥉 bc潮潭ic 䑥a敬opm敮琠p瑲慴agy 䍯湦敲敮ee w慳 桥l搠i渠o慮ki渠
䥮fe琮tqaki湧 i瑳 湡m攠晲om 愠灲敶i潵s c潮f敲敮e攠h敬d i渠剡湫i渠䥮f整ei渠ㄹV㌬P瑨is m敥瑩湧 p
rovi摥d
cl敡r dir散瑩潮 o渠how t桥 p瑲慴敧y s桯畬d f潣畳 c潬l散瑩v攠r敳潵rc敳⸠q桥 p瑲a瑥ty s整e潵琠i渠瑨ts
灡灥r r敦l散瑳 瑨攠i摥慳 g敮敲慴敤 t桲潵h栠瑨敳攠灲潣敳s敳⸠䥴f r敦l散瑳 愠扲潡搠c潮s敮s畳 潮 瑨t
direction needed for Nunavut’s economic development



E䥮fr潤畣ti潮Ⱐ
Nunavut Economic Development Strategy
, Sivummut Economic Development Strategy
Group, June 2003)

Note:

The Nunavut Economic Forum replaced the Sivummut Economic Development Strategy Group that
was formed in 2002 to draft the Nunavut Ec
onomic Development Strategy.


26

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This view of economic development in Nunavut requires that people themselves must investigate ways to
maintain and build a mixed economy, based on the Inuit r
elationship to the land.


The CEDO manual states:

“In this view of community development, the process is at least as important as the goal. By being
involved in the struggle for change and by increasing control over their lives, the people themselves
will
experience personal change. They will move from a state of dependence and powerlessness to one of
independence and empowerment. By being involved in community economic development, the people
became agents for social change. When they start to look
at the issues of underdevelopment or lack of
development, they have credibility and understanding as members of the community, which outsiders
cannot have. In their growing awareness of the issues and their attempts to address them they become
Maintaining Our Mixed Economy

Nunavut’s economy
is lik攠愠瑡t敳瑲y⸠䥴fis m慤攠異 潦 瑲慤iti潮慬 f湵i琠慣瑩vi瑩敳 瑨慴ac潭灲楳攠愠l慮d
J
扡s敤 散潮潭yⰠ睯w敮 to来瑨敲ewit栠m潲攠r散敮琬ts散瑯t
J
s灥cific 慣瑩viti敳 a湤 in摵s瑲i敳 t桡t make
異⁴ 攠wa来
J
b慳敤⁥ o湯my⸠K桥⁲敳ul瑩湧⁦慢ric is⁡ix敤⁥ 潮潭yK




q桥s攠 瑷漠 散潮潭i敳 i湴nr慣琠 瑯t s異灯r琠 e慣栠 潴桥r⸠ c潲o 數慭灬攬e families will p畲u桡s攠 瑨t
敱ui灭敮琠慮搠s異pli敳 湥敤敤 瑯tg整e潵琠o渠瑨t lan搬d畳i湧 m潮ey 敡rn敤 fr潭 j潢s i渠瑨t 睡来
J
散潮潭y⸠pimil慲ayⰠm慮y 乵湡v畭mi畴us異灬敭敮琠t桥ir wa来
J
散潮潭y
i湣潭es by 桡rv敳瑩n朠f潯d


慣瑩vity 睩瑨t渠t桥 la湤
J
b慳敤 散o湯myK At 瑨攠s慭攠瑩m攬e来t瑩n朠潵琠潮 瑨t l慮搠桥l灳 ev敲y潮e
m慩湴ni渠桩s爠 敲⁳敮s攠of⁰ rs潮慬⁢慬慮c攠慮搠d敬i敶敳⁴桥⁳瑲敳s⁥ 灥ri敮ce搠dn
J
瑨e
J
j潢K



q桥 l慮d
J
b慳敤 散潮潭y is 瑨t
灲業慲y s潵rc攠潦 c潵湴ny f潯d

a m慩湳瑡y 潦 䥮fi琠c畬t畲攬us潣i慬
r敬慴i潮shi灳Ⱐa湤 g潯搠桥慬瑨⸠q桥 c潮湥cti潮 t漠瑨攠l慮搠扵il摳 s潣i慬Ⱐfamily a湤 c潭m畮ity 瑩敳⸠䥴f
is 慬s漠慮 im灯r瑡t琠s潵rc攠潦 慲瑩s瑩c i湳灩r慴ao渮n 䥴 灲潶id敳 i湣潭攮e m慲瑩cip慴ao
渠i渠la湤
J
b慳敤
慣瑩viti敳 桥l灳 畳 rem慩渠c潮湥c瑥搠瑯t 潵r 灡s琠慮d 瑯t 灡ss 潮 w桡琠w攠h慶e l敡r湥搠瑯t 瑨t 湥x琠
来湥r慴a潮K



te mus琠 c潮瑩湵攠 瑯t inv敳琠 i渠 o畲u la湤
J
b慳敤 散潮潭y⸠ vo畴u 湥e搠 潰灯r瑵titi敳 瑯t le慲渠 瑯
灡r瑩ci灡t攠i渠慣tiviti敳 潮 t桥 la湤

s慦敬y 慮搠wit栠c潮fi摥湣攮e䥮fl畤i湧 t桥 l慮d
J
扡s敤 散o湯my 慳 a
灲潭i湥湴nel敭敮琠i渠t桥 e摵c慴a潮 潦 潵r yo畮g 灥o灬攠睩ll p敲ei琠杲敡瑥r p慲瑩ci灡ti潮 by 敬摥rs⸠䥴f
睩ll als漠 灲潭潴o 瑨t rec潧湩tio渠 潦 瑨t 瑲a摩ti潮慬 散o湯my a湤 f湵i琠 n慵jim慪慴a煡湧
i琬t as
k湯wle摧e⁴ a琠ts湧潩n朮g


27

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powerful ro
le models for other members of the community in the struggle for social change or making
decisions for the community themselves.”
14

This account links social development with economic development, and describes what an integrated
approach will look like.
It also suggests that small business owners will be called to take on a leadership
role in a community, so that the goals of economic development for Nunavut can be supported by their
role
-
modeling and demonstrations of independence and empowerment. In th
e next topic, we will explore
some of the personal attributes that contribute to the success of entrepreneurs engaging in small
business activity.


Building a comprehensive strategy

Small business in Nunavut faces significant challenges that require a c
omprehensive approach in order to
be overcome.



In the presence of these challenges, Nunavut Tunngavik Incorporated (NTI) reports a steady growth in
registered Inuit firms. By the middle of 2002, government business support programs, the small business
loan programs
operated by the regional business development centres, and by the regional Inuit
community economic development organizations, were fully subscribed.




14

Community Economic Development Officer’s
Reference Manual
, Prepared for Department of Resources, Wildlife and

Economic Development Copyright
©
Consilium & Department of Resources, Wildlife and Economic Development, 1997.

Business in Nunavut faces many challenges



Labour costs are high and governments and Inuit organizations regularly outbid business for
talent;



M
any larger private
-
sector opportunities require skills and capital that small and Inuit
businesses do not currently possess;



Many public sector tenders are too large for local businesses to bid on them;



Nunavummiut trades people have difficulty qualifyi
ng as journeyed trades people
,

because of
language and literacy barriers in current testing methods;



Nunavut has a small population and therefore, a very small base of customers for business
;




The inadequacies of infrastructure
-

communication networks an
d transportation links, for
example
-

also limit the growth of small businesses
; and



Small businesses too often find it difficult to obtain venture capital in Nunavut
,

because of the
lack of personal savings and the absence of community lending institution
s. This can prevent
entrepreneurs from developing their businesses and limits local participation in larger public
sector contracts
.


(SED)


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Growth in Inuit Registered Firms

(Number of Firms)


Chart
Rise in Inuit Private Businesses, 1994 to present
Application Date
Number of Firms
1994
74
1995
100
1996
140
1997
163
1998
188
1999
210
2000
238
2001
267
2002
279
0
50
100
150
200
250
300
350
1994
1996
1998
2000
2002
2004
2008


There is reason to be optimistic about prospects for business in Nunavut. Successful avenues for
business include: supplying government needs, especially in decentralized government communities,
concentrating on export markets, such as tourism, food proces
sing, and the arts sector and cultural
industries. As Nunavut businesses mature, they will become stronger competitors with their southern
counterparts, taking greater advantage of the incentive programs in government procurement and the
opportunities nego
tiated in Inuit Impact Benefit Agreements (IIBAs).


The trend is encouraging, and challenges to small business can continue to be addressed when the three
areas of economic opportunity, shown in the diagram below, are included in a comprehensive strategy
for
community economic development. Small business development should be understood as part of this
larger picture.


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Economic development can take advantage of three kinds of opportunities: natural resource
development, business development, and employ
ment development. Both traditional subsistence
economic activity and contemporary industrial activity can provide opportunities in these three areas of
economic development planning. The community planning process can begin by increasing awareness
of the

kinds of opportunities that may be considered in a plan.


Labour market inventories, human resource surveys, and information about supply and demand create
the information basis for planning and investment. Making use of programs that support business a
nd
employment development will facilitate economic development, in line with cultural values. Natural
resources can be developed in a number of ways, including, co
-
management, equity participation, and
joint ventures.


All approaches will be guided by a
concern for sustainable development, so that the needs of future
generations can also be met. The ideal economic development strategy is one that will enable people to
develop a mixed economy, and overcome any obstacles between their communities and sustai
nable
economic development.


The three main goals of sustainable development are equity, integrated decision
-
making, and quality of
life. Combining employment and business development, with direct participation in profits realized from

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natural resource e
xtraction or harvesting, will contribute to the goals of sustainable development. The
Nunavut Economic Developers Association (NEDA) was formed to support the key role that Economic
Development Officers play in advancing the goals of the Nunavut Economic
Development Strategy.


NEDA has created a resource toolkit for EDOs, to help them more effectively meet the demands of their
jobs. It contains information and application forms on various funding programs, a guide to writing
funding proposals and analyzing financial statements
and an interactive business planner, among other
resource material.


NEDA launched its web site in 1999, prior to its 2000 incorporation.
15

The site provides access to
community and business development information, resources, and tools for EDOs in the fi
eld
.




Community
-
based development corporations provide another way for communities and regions to pursue
business development. As a tool for development, they respond to the particular development needs of



15

http://www.nunavuteda.com/

The Nunavut Economic Developers Association

Building Stronger Communities through the Support of Community Economic Developers

What we do?

NEDA is a strong advocacy group for EDO's. It is committed to lobbying on behalf of its members, by:



Voicing EDO's concerns
,
;



Emphasizing the value of their jobs
,
;



Making others aware of the EDO's role
,
;



Making others aware of EDO's potential to contribute to Nunavut's economy
; and



Seeking more understanding and input into economic development funding


Download the
EDO Contact list

Nunavut Economic Developers Association

1104B Inuksugait Plaza, Phase II

PO Box 1990

Iqaluit, Nunavut X0A 0H0

Tel. (867) 979
-
4620

Fax (867) 979
-
4622

info@nunavuteda.com




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the community or communities they serve.

A development corporation at the community level can serve
as a tool for community members to pursue collectively their business development objectives.


As explained in the CEDO manual, there are two basic models to consider, the
Business Assistance
Mo
del and the
Equity

Model
.


For example, within the Kivalliq Region, Inuit
-
owned organizations representing these two models operate
at the regional level. Sakku Investments Corporation has pursued business development on behalf of
Inuit in the region,
through investment in and management of a large number of businesses.
16


Partners in Development is a program that provides assistance to micro and small businesses in the
communities, in the form of grants and loans for business development and training pr
ojects, as well as
technical advice in financial management and other areas of business planning and operations.




16

http://inuit.pail.ca/sakku
-
investments.htm

Business Assistance Model

This type of Development Corporation provides grants, loans and loan guarantees, technical
assistance, and training services to support the development of small businesses in the community
or region. The goal of the corporation is to provide assistance, to

help its members be successful in
establishing and operating their businesses. The corporation focuses on general business
development, and on ensuring it has sufficient income to continue providing its services to
members.


Equity Model

This type of De
velopment Corporation is active in business development, through establishing or
investing in businesses, which are owned by the development corporation itself. The goal of the
corporation is to build an equity base and business assets that are under its o
wn control. The
corporation focuses on investing in and managing businesses, producing profits for further business
development or to distribute to its shareholders, and on creating jobs through its business
development.


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The

mission statement

for KPID:



KPID’s mission is to promote/provide the support and delivery of education, training, and support for
散潮潭ic⁤ v敬o灭敮琠t渠n桥⁋iv慬li焠牥qio測no渠n敨alf ⁴ 攠eivalli焠q湵i琠tss潣i慴ao渮n



q桥
vision statement
:



KPID’s vision is to help to create a capable and skilled workforce able to meet the demands of the
散潮潭ic s散瑯爠i渠慬l 慲敡aⰠs畣栠慳 mi湩湧Ⱐ敤畣慴ao測n 杯v敲湭敮琬t 桥al瑨t 慮搠扵si湥ssⰠi渠瑨t
hivalli焠牥杩o渠n湤⁴桥⁎畮慶u琠t敲ei瑯tyⰠ慮搠扥y潮搮d




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Within the limits of the mandate given to a development corporation, a development corporation must
prepare its own strategic and operational plans. These plans should set out in detail:



How the corporation will operate;



The specific business development goals and objectives the corporation will pursue, on behalf
of the community; and



If the corporation has a mandate to provide business assistance services, then its plan should
identify the specific services to be provide
d, the staff necessary to deliver the services, and any
training requirements of Board and staff.


Organizational Structure for Development Corporations Ownership by a Political Body

An example of this would be ownership and control by the Hamlet government. The Hamlet would
represent the

needs and interests of community members in appointing the Board of the development
corporation. The main challenge, in this type of ownership, is to balance political control over the
corporation exercised on behalf of community members, with independenc
e of the corporation to
pursue specific business ventures without excessive political interference.



Direct Ownership by Community Members

Community members can exercise direct control over a development corporation through a structure
of individual shar
eholding. Shareholders elect the Board of Directors at an annual meeting. The
reasons for establishing this type of ownership could be to provide for direct control over the
corporation’s activities, by community members, or to allow for the possibility of

灲潶i摩湧 摩vi摥湤s⁴
mem扥rs⁩f⁴ 攠e潲灯o慴i潮 is⁰牯 i瑡tl攮



For
-
Profit Corporation

Incorporation as a for
-
profit corporation means that the corporation is taxable on the profits it makes
from business activities. Because of this, any profits may e
ither be re
-
invested in the business
development activities of the corporation, or may be distributed to shareholders, whether the
shareholder is another organization or the shareholders are individuals.



Non
-
Profit Corporation

A non
-
profit corporation c
an be involved in business activities, as part of its overall role. However,
since it is not taxable on income from these activities, the income must be re
-
invested in activities of
the corporation, which further the objectives of the corporation. Income c
annot be distributed to the
members who own the corporation.


(CEDO Manual)


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If the corporation has a mandate to establish and invest in business ventures of its own control, then its
plan should establish:




Objectives and strategi
es for venture development, including key sectors of the economy in
which to invest;



Policies governing the selection of business ventures by the corporation, including both
business criteria and criteria for community benefits;



The process for identifyi
ng and evaluating business opportunities, including the role of staff and
Board in the process; and



Staffing and staff training requirements, as well as any need for additional business expertise.



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Learning Activities

1.

Express the purpose of the NNI poli
cy in your own words, and outline the most important
provisions in Section 11 that small business managers should be aware of.


2.

Interview a small business manager in a Nunavut community, using the chart of challenges to
business in Nunavut given in this t
opic. Ask the manager to comment on how they are meeting
these challenges.


3.

Contact one or more of the firms listed on the directory of Inuit firms in Nunavut. Ask the manager
to explain how the NNI policy has been working in their efforts to market the
ir business to
government. Summarize your conclusions on how the policy is working in a brief report.


4.

Explain the concept of “savings” in the Nunavut Economic Development Strategy. How can
savings for business investment be facilitated? What is in pl
ace? What is needed?


5.

Describe how a lack of savings can impact the economic development of a community?



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Topic 3: Going into Business

There are many advantages and disadvantages of small business ownership. When a person owns a
small business, they
are in charge of their own time. Being a master of one’s own time requires self
-
discipline. Owning a small business, as a sole proprietor, means that you make all of the decisions, and
with that authority comes accountability for those decisions. Runnin
g a small business requires a lot of
time and that time is time away from the family, unless the family members also participate in the
operation of the business.


On a more positive note, there are many advantages to owning a business and these advantages benefit
the owner, and society as a whole. You are your own boss and the profits all belong to you. You get to
choose whom you work with. If the business is star
ted and operates from the home, some of the costs of
the home can be charged to the business as expenses. There is a sense of pride in operating the
business and in feeling good about the successes.


On the larger scale, small businesses, by virtue of
being labour intensive, employ more people to produce
a given level of output than do larger businesses. Small businesses are flexible and innovative and are
responsible for many innovations and improvements in business processes. Small businesses stay ve
ry
close to the customer and can react to changes in customer needs, more quickly than larger businesses
can. Small businesses are an integral part of small communities, in which they operate, and they
contribute to the well being of the community. The m
oney stays in the community, at least until the
owners and employees have it in their hands.


Business development is an important economic development strategy. Business can provide services
and products that meet a demand. Businesses can be organi
zed as partnerships, cooperatives, limited
companies, and corporations.


Successful northern businesses can result from initial investments by entrepreneurs. The personality of
the ideal entrepreneur combines characteristics of sound judgment, and soli
d management, with courage,
daring, boundless energy, and willingness to take reasonable risks. The entrepreneur is a self
-
starter and
has been compared to the successful Inuit hunter and trapper. Business development can take
advantage of traditional ski
lls, or new skills that allow people to participate in the larger economic
environment.


Entrepreneurial traits and managerial skills

Generally, entrepreneurial skills are used at the startup of a business and managerial skills are used to
keep it going.




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The successful owner
-
manager is an entrepreneur with personality traits that include self
-
confidence,
achievement orientation, ability to take risks, and independence. The entrepreneur is a businessperson
who had an idea and made it happen. Whenever

they hit a roadblock, they solved the problem, stayed
on course and kept going. There are checklists in many publications and on many internet sites to help
evaluate a person’s entrepreneurial tendency.
17

Entrepreneurs are not always good at keeping a
b
usiness operating efficiently, although their skills are used again when planning growth strategies after a
business is up and running.


A manager, on the other hand, is good at maintaining and operating a business. The manager can
develop things like st
rategies, marketing plans, and budgets and then make them happen.


Characteristics for success

There are a number of characteristics, both from a personal point of view and a business perspective that
a small business owner should possess. Some of the
se are:



A great sense of independence;



A strong sense of enterprise;



A sense of balance between personal and family considerations and professional choices;



In business by design, rather than by chance;



Ability to manage time effectively;



Some formal education;



Expect quick and concrete results;



Ability to effectively manage your resources;



Experience in the type of business you are entering;



Confidence in yourself and your ideas;



Planning properly before and after starting your business;



Ability to analyze the market; and



Choosing a proper location.





17

See pps.32ff in Balderson


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Generating ideas for small businesses

Once the decision is made to go into business, the entrepreneur needs to know where to start. Good
businesses begin with a good idea. The idea is then researched and carried on to a market focus, where
feasibility of the future business is determined. Pl
ans are then made for the business to be adequately
capitalized (funded). The business is eventually opened and the focus of the entrepreneur changes to
that of a manager, to operate and grow the business. The owner watches the business and as it moves
t
o maturity. He/she requires entrepreneurial skills to come up with new ideas to keep it going and
growing. But where do the ideas come from?


Some entrepreneurs just dream up ideas that they develop and implement. Others need some help and
they actively

search out opportunities at trade fairs or in other markets. Getting a team together and
brainstorming to identify opportunities and generate ideas can sometimes help. Just having the idea
however, is not enough to ensure success. Once you have the idea

the research begins; research on
how to turn the idea into an opportunity, and research on other concepts, in case your initial idea is not
feasible.

Common Mistakes



Lack of experience;



Lack of money
;




Improper pricing (too high
-

too low)
;




Poor inventory mismanagement
;




To
o much capital going into liquid assets
;




Poor credit granting practices
;




Taking too much money out for yourself
;




Unplanned expansion
;




The wrong attitude
;




The wrong location
;




Domestic family pressure
;

and



The wrong product
.



Pitfalls to avoid



Know your limitations;



Plan ahead, think about what could happen
;




Keep proper records
;




Watch the balance sheet, not just the profits
;




Investigate all aspects of the business regularly
;




Work closely with suppliers and bank managers
;




Keep learning
;




Seek professional assistance

; and



Watch your health
,



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There are 3 common forms of getting into business: Starting from scratch, buying a business and opening
a franchise.


Starting from scratch

This form is the most risky. It has the most independence in design and the fewest constraints. It is the
most difficult to get financing in place for.


Buying an existing business

This method is somewhat less risky, but there are some tradeoffs in ind
ependence. It is somewhat less
difficult to get financing.


Buying a franchise

This method is generally the least risky, but there can be constraints in small markets. It is sometimes
easier to get financing, because it is a proven system; however, it o
ften requires a large capital
investment.


Each method has its advantages and disadvantages, and as illustrated, it is about tradeoffs, and to a
great extent, about market. When a business is started from scratch, the owner often begins with a clean
slate and has the freedom to be creative and inn
ovative, and to make all of his or her own decisions. On
the positive side, the potential rewards are greater. There are disadvantages, however, as the risks tend
to be the highest and many start
-
ups fail.


The CEDO manual provides the following business development advice that can be
provided by an EDO:




Encourage clients to do a self
-
assessment on themselves and list what
they think are their strengths and weaknesses;



Ask clients if they have done an initial feasibility study
,

on their business
idea;



Ask clients how they plan to finance their business
;



Ask clients if they have checked out the regulatory and licensing
requirements for the business they are considering.



If you think the client has thought about these basic elements
,

and he/she
has the confidence that these ideas are sound, then the nex
t consideration
would be to have the client develop a business plan.


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Starting a business from scratch is generally
a higher risk because it is a new unproven concept in the
community. It may, however, be the only choice, as there may not be other businesses for sale and there
may not be an adequate market for a franchise. Because there is no history, there is potenti
ally more risk
and this often means that it will be difficult to get financing in place. When starting from scratch, however,
it is your own concept, your own design and you get to start with a fresh inventory.


The Internet as a tool for small business

The Internet has become a critical tool when starting up and operating a small business. While there are
some less reputable sites on the Internet, there are many excellent sources of information for business
owners, such as colleges and universities, gov
ernment business sites, publications, and sites set up
specifically to deal with small business.


The Internet not only serves as a resource for the small business owner, but it serves as a link for other
resources. It will help connect owners to the or
ganizations like Aboriginal Business Canada, Industry
Canada, Canada Business Services Centres, funding agencies such as Kakivak, KPID and KEDC and
businesses who provide advice and services to other businesses, for a fee. Internet access also enables
busi
nesses to use email and systems such as Skype to increase communication, while reducing costs.
Internet
-
based banking can also provide an important tool for small businesses to speed up receipt of
payments and payment of bills. The Internet can also connec
t persons with similar interests in discussion
forums and newsgroups, where business problems can be discussed and resolved. A couple of hours
spent learning to search for data, and identifying sources of government information, will pay back many
times o
ver.



Buying an existing business

The second way of getting into business is to buy an established business in the community. It may be a
business that is doing well, or it may be one that is not and that you feel you have the necessary
resources to b
ring back to life. This, however, is often difficult. The advantages to buying an existing
business are that the business is already set up, the client base is established, and there is already some
name recognition and goodwill. The infrastructure is a
lready in place, as are the employees, and the fact
that there is a history may make it easier to get financing. It is somewhat less risky than starting from
scratch. As well, the seller may be willing to give you assistance in running the business, an of
fer to take
advantage of only if the business has been very successful. Inventory may even come with the business.
You are in business as soon as you can arrange financing.


The disadvantages of buying an existing business are sometimes similar to the

advantages. Some to the
disadvantages of buying an existing business are that there may be hidden problems, like financial

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difficulties or the business may have a bad reputation in the community. The old owner may not be telling
the whole story about why