Functions of An Entrepreneur

Functions of An Entrepreneur

            An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. He carries out the whole set of activities of the business for its success. He recognises the commercial potential of a product or a service, formulates operating policies for production, product design, marketing and organisational structure. He is thus a nucleus of high growth of the enterprise.

According some economists, the functions of an entrepreneur is classified into four broad categories:

@ Entrepreneurial Functions

@ Promotional Functions.

@ Managerial Functions.

@ Commercial functions.

Entrepreneurial Functions :

            As an entrepreneur , he/she performs the following activities;

§  Innovation

It is the basic function of an entrepreneur. As an innovator he has to bring new product, new market, new source of raw materials ,etc. He foresees a potentially profitable opportunity and tries to exploit it.

§  Risk taking

Risk taking refers to taking responsibility for a loss . A good entrepreneur reduces the risk in his business. He is a self-confident and highly optimistic person and willing to assume the risk involved in his enterprise.

§  Organization Building

Organization and management are the main functions of an entrepreneur. He brings together the various factors of production. It helps to allocate the productive resources in order to minimize losses and reduce cost in production. He takes the entire decisions like expansion of business , amount of capital ,etc. of his business. Thus he is the final judge of his business.

Promotional Functions

§  Discovery of an Idea

There are lots of opportunities / ideas available in our world to set up an enterprise. But it is the ability of a good entrepreneur to discover a suitable idea that helps to develop profitable ventures. He / she has to develop the discovered idea with the support of experts in the field.

§  Detailed Investigation

The entrepreneur will conduct a detailed analysis about the demand for his product in the market. There after he will analyse  the availability of finance, power, labour, raw materials and machinery, etc.

§  Assembling the Requirements

After making sure that the idea is practical and profitable one, he will acquire some patent rights , if he has invented something. Then the entrepreneur selects the factory site, decides about plant and machinery, contacts suppliers of raw materials. Preliminary contracts are finalized and projects set to begin.

§  Financing the Proposition

The entrepreneur decides about the capital structure of the enterprise. Estimating the required finance and analyzing  the sources for its collection. Long term and short term financial requirements are estimated first and the type of source of funds is also decided share, debenture, loan,etc.

3. Managerial Functions

§  Planning

It is the basic and foremost managerial function of an entrepreneur .  It helps in determining the course of action to be followed to achieve various entrepreneurial objectives. It is decision making in advance , what to do, when to do it, how to do it and who will do a particular task.

§  Organising

The entrepreneur sets up the objectives or goals to be achieved by its personnel. The function of organising is to arrange, guide, co-ordinate, direct and control the activities or the factors of production.

§  Staffing

It is concerned with the human resources of an enterprise. It consist of manpower planning, recruitment, selection , placement, human resource development, promotion, transfer, appraisal and determination of employee’s remuneration.

§  Directing

It is concerned with carrying out the desired plans with the support of proper instructions. It ensures effective performance of planned activities by the subordinates,

§  Leadership

It is the process of inspiring or influencing the workers by satisfying their needs for the fulfillment of organisational objectives.

§  Communication

It refers to the exchange of ideas , feelings, emotions, knowledge and information between two or more persons. For effective running and accomplishment of organisational goals , proper communication at all levels is a necessary one.

§  Motivation

The performance of an employee depends upon the monetary and non-monetary benefits got from the Organisation. A sound motivational system must be productive, competitive, comprehensive and flexible, and it must consider psychological, social safety, ego and economic needs of the worker.

§  Supervision

Supervision refers to the job of overseeing , subordinates at work. It ensures maximum utilization of resources, to the proper and timely completion of work, and to correct the workers whenever they go wrong.

§  Co-ordination

It is the channelization of activities of all individuals in the organization , for the achievement of common goals. The entrepreneur must check the work of different segments based on the predetermined objectives and make correction , if any deviations occurred.

§  Controlling

The controlling process begins with establishing standards of performance, measuring actual performance, comparing actual with standard performance, finding variations and taking corrective actions.

Commercial Functions

§  Production

It is the key function of an entrepreneur. It is the creation of goods and services. It consists of manufacturing, ancillary and advisory activities. In a small organisation it will be undertaken by an individual, but in a large concern, it may be undertaken by various individuals or a separate team.

§  Finance

Money is the life blood of every business organisation. The need for money is continuous. It starts with the setting up of an organisation and remains at all time. It is the duty of an entrepreneur, to find out various sources of finance and appropriately arrange them as and when required.

§  Marketing

It involves the process of movement of goods and services from the producer to the consumer. It plays a significant role in promoting the successful running of business enterprise.

§  Personnel

This function is concerned with employment, development, and compensation for the personnel, the provisions of working conditions, and welfare measures to maintain a good work force in the organisation.

§  Accounting

It is the process of systematic recording of  entrepreneurial transactions of an enterprise and the financial position of the enterprise. The entrepreneur should look thoroughly the record keeping of transactions and should aware about the financial position of the firm.