Everything you need to know about the functions of an entrepreneur. Entrepreneur is a person responsible for setting up a business or an enterprise. Entrepreneur is one who has the initiative, skill for innovation and who looks for high achievements.
He works for the good of the people. He open up many employment opportunities and leads to the growth of other sectors. He is a person who brings in overall change through innovation for the maximum social good. In this process, he accelerates personal, economic as well as human development. He is a man with outstanding leadership qualities.
The functions of an entrepreneur may grouped into three categories:- 1. Risk Bearing Functions 2. Administrative and Decision-Making Functions 3. Distributive Functions.
Some of the functions of an entrepreneur are:- 1. To Prepare Plan 2. Selection of the Site 3. Provision of Capital 4. Provision of Land 5. Provision of Labour 6. Purchase of Machines and Tools 7. Provision of Raw Materials 8. Co-Ordination of the Factors of Production 9. Division of Labour 10. Quality of Product 11. Sale of Goods 12. Advertisement 13. Search for Markets 14. Supervision 15. Contact with the Government 16. Payment to Factors of Production 17. Quantity of Production 18. Risk-Taking 19. Innovation and Few Others.
Functions of an Entrepreneur
Functions of an Entrepreneur – Risk Bearing, Administrative, Decision-Making and Distributive Functions
An entrepreneur frequently has to wear many hats. He has to perceive opportunity, plan, organize resources, and oversee production, marketing, and liaison with officials. Most importantly he has to innovate and bear risk.
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The main functions of an entrepreneur are grouped in three categories:
1. Risk bearing functions,
2. Administrative and decision-making functions, and
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3. Distributive functions (responsibility of the organizer).
1. Risk Bearing Functions:
It is the most important and specific function of an entrepreneur. Every business involves some amount of risk. The production of goods and services is always related to future demands. The future demand is uncertain and unpredictable, because it is influenced by the changes in fashion or taste and liking of the consumers.
The price structure, value of money, climatic conditions and government policies are some other important factors that affect the demand of a commodity. All these factors are variable and as such an exact estimation of future demand is a difficult exercise to work out.
Since this unpredictable task is undertaken by the entrepreneur, he has to bear the risk. If his estimations prove to be wrong, then in the entire business sphere, no other factor of production shares the loss incurred by the entrepreneur.
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It is the main reason why the entrepreneur becomes entitled for the surplus that is remaining with him from the sale proceeds of the product, after distributing the shares to other factors. This surplus is termed as profit of the business.
2. Administrative and Decision-Making Functions:
i. Conceiving the Idea of Business:
The entrepreneur conceives the idea of a particular business which suits his nature, skill and resources. He makes a thorough (intensive and extensive) study of the condition of market and business prospects. After making a thorough study of economic viability, he decides the business that he has to start.
ii. Estimation of Details of Business and Implementation of the Same:
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After arriving at a conclusion about the nature of business, the entrepreneur works out the details of business, i.e., what, how and when to produce and from where the resources are to be arranged. With all these estimations, he makes an all-out effort to give a practical shape to his plans, organizes various factors of production and sets them to function in proper harmony.
iii. Supervision and Control of Business Activities:
The entrepreneur has to supervise and control the day-to-day business activities to accomplish the business objectives. For this he properly coordinates between various factors of production. As the risk (success or failure) of business operations directly affect his economy, he keeps a vision and control on the business affairs and avoids unnecessary expenditures.
He is required to take a numerous decisions and has to get these decisions properly implemented.
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iv. Innovation:
Innovation is one of the most important functions of an entrepreneur. An entrepreneur uses information, knowledge and intuition to come up with new products, new methods of reducing costs of a product, improvement in design or function of a product, discovering new markets or new ways of organization of industry. Through innovation, an entrepreneur converts a material into a resource or combines existing resources into new and more productive configurations.
It is the creativity of an entrepreneur that results in invention (creation of new knowledge) and innovation (application of knowledge to create the new products, services or processes).
3. Distributive Functions:
The entrepreneur organizes different factors of production and sets them to work. It, therefore, becomes his responsibility to make proper allocation of funds for each factor of production, i.e., each factor of production must be properly remunerated.
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The remuneration here refers to an important decision as to what should be the share of each factor of production in the sale proceeds of the entire product. The remuneration should be just and equitable and the payment to each factor should be commensurate, so that each factor is fully satisfied.
If the factors of production remain dissatisfied, they will not be able to deliver their best to the entrepreneur. So, it is the entrepreneur, who has to ultimately suffer. Hence, it is very essential for the entrepreneur to perform distributive functions with extreme care and caution.
Functions of an Entrepreneur – Top 19 Functions of an Entrepreneur
1. To Prepare Plan:
The first and foremost function of an entrepreneur is to prepare the plan or scheme of production i. e. the scale of production, types of goods to be produced and its quantity.
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2. Selection of the Site:
The entrepreneur makes the selection of the site for the factory to be installed. The place should be near the market, railway station or bus stand. The selection of the place may be near the source of raw materials also. The selection of the place has an important bearing on the cost of production.
3. Provision of Capital:
Capital is required to install a factory or an industry. Capital is required at all the stages of business. It is not necessary that the entrepreneur should invest his own capital. Therefore, he has to trace out a capitalist, to make provision for capital for the investment. He tries to obtain capital at the lowest possible rate of interest.
4. Provision of Land:
After making provision of capital and selection of site, he has to arrange for land. Land is either purchased or hired.
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5. Provision of Labour:
In modern times; different types of labour are required to produce one type of commodity. The entrepreneur has to make provision for labour from different places.
6. Purchase of Machines and Tools:
It is the function of the entrepreneur to purchase machines and tools in order to start and continue the production.
7. Provision of Raw Materials:
It is the entrepreneur who makes provision for raw materials. He purchases the best quality of raw materials at the minimum cost. He also knows the sources of raw materials.
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8. Co-Ordination of the Factors of Production:
One of the main functions of the entrepreneur is to coordinate different factors of production in proper combinations, so that the cost of production is reduced to the minimum.
9. Division of Labour:
The splitting up of production into different parts and entrusting them to different workers is also the function of an entrepreneur. Thus, the entrepreneur decides the level and type of division of labour.
10. Quality of Product:
Keeping in view the competition in the market, the entrepreneur has to determine the quality of his product. He is to decide whether the goods produced should be of superior quality only or both of superior and ordinary qualities.
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11. Sale of Goods:
The responsibility of the entrepreneur is not only to produce goods but also to sell his produce He employs a good number of salesmen to market the goods. He makes arrangement for publicity to push up the sales. He adopts both informative and persuasive methods to achieve his goal.
12. Advertisement:
It is the duty of an entrepreneur to do advertisement explaining the superiority and quality of his goods through newspapers, magazines, radio, TV, etc. Advertisement is done to create and increase the demand or sale of his goods.
13. Search for Markets:
The entrepreneur has to explore markets for his products. He produces goods in accordance with the consumers’ tastes which can be known from market trends.
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14. Supervision:
One of the main jobs of an entrepreneur is to supervise all the factors engaged production process. He has to supervise every little detail so as to ensure maximum production and economy.
15. Contact with the Government:
The entrepreneur has to make contacts with the government because the modern production system is controlled by the government in several ways. A licence is taken before the start of production. The entrepreneur has to abide by certain rules and regulations of production and has to pay taxes regularly.
16. Payment to Factors of Production:
The rewards of the various factors of production have to be decided by the entrepreneur. He makes payments to the landlord, labour and capitalist in the form of rent, wages and interest. Since payments to these factors of production constitute cost, so no entrepreneur wants to pay to a factor more than its productivity.
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17. Quantity of Production:
The entrepreneur determines the quantity of production keeping in view the demand for goods and the extent of market. How much goods are to be produced is the mam decision taken by the entrepreneur.
18. Risk-Taking:
Risk-taking is the most important function of an entrepreneur. He has to pay to all the other factors of production in advance. There are chances that he may be rewarded with a handsome profit or he may suffer a heavy loss. Therefore, the risk-bearing is the final responsibility of an entrepreneur.
19. Innovation:
Innovation plays an important role in modern business. The entrepreneur makes arrangements for introducing innovations which help in increasing production on the one hand and reducing costs on the other. Innovations may take the form of the introduction of new methods in the process of production or introducing improvements in the existing methods.
It also includes discovery of new markets, raw materials and new techniques of production.
Functions of an Entrepreneur – With Roles
The functions of the entrepreneur are varied. Sometimes, an entrepreneur has to play multi-faceted roles. Let us compare an enterprise or an industry with a tree. The entrepreneur is the person who is associated with the idea of sowing the seed of the tree, taking care and protecting the sapling, providing manure, insecticides to the plant till it becomes a fully grown tree and bears fruits.
The function of the entrepreneur continues as he/she may again sow the seed of a new tree. The entrepreneur can take help of genetic engineering in enhancing the quality of the tree. The entrepreneur may also take the task of generating high yielding variety of the tree. Throughout the course of growing a tree the entrepreneur always faces the risk of environmental change, nature’s wrath and the risk of somebody felling the tree. This analogy of a tree gives us a clear picture of the different functions that an entrepreneur is entrusted with.
The various functions are:
1. Conceive and Generate the Idea:
The entrepreneur plays an important role in generating the idea of a commercial venture. The entrepreneur must be able to visualize the need and utility of a product or a new project. Entrepreneurs carry out environmental analysis and study the future business environment and thereby provide novel ideas.
2. Conduct Market Research:
The entrepreneur after concretizing the ideas of the product has to undertake a market research. The market research would enable the entrepreneur to know the prospect of the product that he/she intends to produce. The entrepreneur may deploy research teams to conduct the survey and prepare the report.
3. Setting the Vision, Objectives, Goals, and Modus Operandi of the Enterprise:
The entrepreneur has to develop and determine the vision and mission of the enterprise. The entrepreneur has to convert the conceived ideas into clear cut objectives and goals of the enterprise. Whether the enterprise would manufacture its own products or would confine to trading only. The entrepreneur has to ascertain the nature and type of the business and the scale of operation. He/she has to draw out an action plan to be implemented in a time bound manner.
4. Ascertaining the Form of Enterprise:
The entrepreneur has to ultimately decide the form of the enterprise whether it should be a sole proprietorship, partnership, Joint Stock Company or a cooperative society. The legal status of the enterprise has to be decided by the entrepreneur.
5. Arrangement of Capital:
The entrepreneur has to arrange the funds necessary for the business initiative. It is not necessary that the entrepreneur has ready access to funds. The entrepreneur has to raise funds from other sources. The entrepreneur can take aid from government schemes, loans from commercial banks and financial institutions raise private loans etc.
6. Arrangement of Raw Materials:
The entrepreneur has to ensure availability of quality raw materials at lowest cost. The supply of raw materials has to be steady.
7. Arrangement of Machinery:
Keeping in view the requirements of the enterprise, the entrepreneur must procure appropriate machineries and equipment. The entrepreneur has to keep a watch on the technological environment and has to procure and install machinery that would be useful for the company.
8. Hiring of Manpower:
The entrepreneur has to decide the recruitment process, the eligibility norms and salaries of the workers. The entrepreneur also has to determine the rules and regulations of service and ensure development of skills of the manpower.
9. Proper Implementation and Execution of the Project:
The entrepreneur must ensure that the project commences as per the schedule of the action plan. All possible efforts are to be made to prevent any delay.
10. Bringing about Innovation:
An entrepreneur can develop new technology in production; discover new products, source of raw materials, and new markets. The entrepreneur as an innovator comes up with new ideas, products, services, methods in order to meet the ever changing needs of consumers most successfully. As innovator he/she has a profound influence on the level of business activities. Innovations can affect the life of a common consumer. Innovations can also influence the competitiveness of an economy.
11. The Bearing of Risk and Uncertainty:
In the entire process of establishing an enterprise, the entrepreneur bears the uncertainty involved in the enterprise. The entrepreneur undertakes the responsibility of bearing the losses that may arise on account of new ideas and projects undertaken by him/her.
12. Providing Training and Developing Skills of the Workers:
The entrepreneur has to make proper arrangements of programmes to develop the skill of the employees.
13. Try to Remove the Inertia or the Resistance to Change:
Usually the society opposes new ideas, products and techniques. The entrepreneur has to skillfully win the confidence of the people around. He /she can pave the way for others to accept the change or new innovation. He/she has to strive to change their attitude.
14. Catalyst of Economic Development:
An entrepreneur makes a vital contribution towards accelerating the pace of economic development of a country. The different functions of the entrepreneurs assign different roles to the entrepreneurs.
Roles of an Entrepreneur:
Here we simply enlist the different roles of the entrepreneur:
(i) Entrepreneur is a risk-taker
(ii) Entrepreneur helps is business management as well.
(iii) Entrepreneur plays the role of a business leader.
(iv) Entrepreneur plays the role of an innovator.
(v) Entrepreneur promotes capital formation.
(vi) Entrepreneur creates large-scale employment opportunities.
(vii) Entrepreneur promotes balanced regional development.
(viii) Entrepreneur reduces concentration of economic power.
(ix) Entrepreneur helps in wealth creation and distribution.
(x) Entrepreneur contributes to the increase of gross national product and per capita income.
(xi) Entrepreneurial initiatives and actions help in improving the general standard of living.
(xii) Entrepreneurial activities promote country’s export trade and helps in import substitution.
Functions of an Entrepreneur – Innovation, Risk-Taking, Organisation, Management and Business Decisions
An entrepreneur is expected to perform the following broad functions:
1. Innovation:
Innovation means doing the new things or the doing of things that are already being done in a new way. This innovation is the process of doing new things. However, there is distinction between creativity and innovation. Creativity is the ability to bring something new into existence. Practically it is the ability not the activity of bringing something new into existence.
It is possible for a person to conceive of something new and envision how it will be useful but not necessarily like the necessary action to make it a reality. It is also possible that ideas generated in the mind of a man have little value until they are converted into new products, services or processes. But “innovation is the transformation of creative ideas into useful applications but creativity is a prerequisite to innovation.”
Schumpeter described entrepreneurs as innovations who use the process of shatter the status quo through new combinations of resources and new method of commerce. It includes new processes of production, introduction of new products, and creation of new markets, discovery of a new and better form of industrial organisation.
Peter Drucker also elaborates that “innovation is the specific tool of entrepreneurs the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced. Entrepreneurs need search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. Thus, innovation is the development process. It translates an idea into an application. It requires entrepreneur to work out the details of product design or service analytically, to develop marketing, obtain finance and plan operations.
2. Risk-Taking:
The risk is the condition of not knowing the outcome of an activity or decision. Nevertheless, risk is capable of being evaluated for relative probabilities. Risk bearing means provision for capital in order to enable the entrepreneur to establish and operate the business. Economics like Cantillon. J. B. Say and others stressed risk taking as the specific function of an entrepreneur.
Entrepreneur is required to reduce uncertainty in his investment strategies by initiating expansion and diversification programmes in the enterprise. In this connection Drucker observed that entrepreneurial behaviour is risky because so few of the so-called entrepreneurs know what they are doing. They lack the methodology. They violate elementary and well-known rules. So entrepreneur should try to reduce the level of uncertainty by analyzing the problem in proper perspective.
Actually “business game consists of great risks and rewards are also great when risks are successfully covered. The ability to perform services and the risks involved are inseparable. Therefore for successfully covering the risks, highest order of ability is required. A successful entrepreneur would be one who has trait, patience, and sagacity, power of observation and wisdom and ability of discrimination. He should be mentally alert, gifted- with discernment, practically acute-minded, shrewd and an exceptionally intelligent person.” Thus, entrepreneurs are required to perform this function-risk taking as well as risk bearing at the same time. They are the owner as well as executor of the business enterprise.
3. Organization and Management:
The process of organization and management includes planning of an enterprise coordination, control and supervision. Prof. Alfred Marshal recognised this function as an important function of an entrepreneur. Entrepreneurs often fall into the trap of thinking that just because their business is small. They do not really need a comprehensive system of organization and management.
They may rationalize that by designing an effective organizational and management control system. They cannot improve their capabilities because of their limited knowledge about possible methods of effective control. But entrepreneur are expected to develop an effective organization and management system in the organization.
They have to interact directly with employees and exchange information about what is going on in the firm. They tend to be directly involved in their organization’s operational activities to ensure effective control. They are expected to formulate plans, production strategies, and financial management and develop marketing channels and management of personnel.
4. Business Decisions:
Arther H. Cole described an entrepreneur as a decision maker. The decisions with regard to what to produce, how to produce and for whom to produce are to be taken by the entrepreneur himself. In this connection he has to implement his innovative process.
Prof. Cole described the functions of an entrepreneur:
(i) The determination of those objectives of the enterprise and the change of those objectives as conditions required or made advantageous;
(ii) The development of an organization including efficient relations with subordinates and all employees;
(iii) The securing of adequate financial resource, the relations with existing and potential investors;
(iv) The requisition of efficient technological equipment and the revision of it as new machinery appeared;
(v) The development of a market for products and the devising of a new product to meet or anticipate consumers demand;
(vi) The maintenance of good relations with public authorities and with society at large.
Thus, the entrepreneur is an institution himself and he performs various functions related with organisation development and management control. He is supposed to bear the risk, manage, innovate, organize and take decisions with regard to his business empire.
Functions of an Entrepreneur – With Examples of Successful Entrepreneurs
Entrepreneurs perform the following functions:
1. Dynamic Function:
Entrepreneurs bring about a change in the environment through new ideas, new processes, and new products and services.
Example: Ingwar Kamprad’s company IKEA is known for selling great furniture designs at affordable prices. While others were busy making bulky furniture, Kamprad challenged the conventional wisdom by making furniture in modular form, which could be easily assembled at the customer’s premises and shipped to any part of the world at low cost.
2. Gap Filling Function:
Entrepreneurs identify market gaps and take appropriate steps to bridge those gaps. They seize opportunities, convert those opportunities into viable products and services, and offer value to customers. Organizing the vast amount of information in the world was seen not only as a great intellectual challenge but also an amazing opportunity by Larry Page and Sergey Brin though they had no idea how search could be monetized at the time. Once the gap was found, they took measures to fill the same quickly.
3. Organizing Function:
Entrepreneurs give shape to their ideas, create a business plan, pool resources, and organize things in the best possible manner. They assemble resources, put people on the job, supervise from close quarters while simultaneously coordinating and controlling the whole process. They also try to put their best foot forward in order to deliver results.
Example: Spain’s richest man, Amancio Ortega, started making gowns and lingerie in his living room way back in 1963. In 1975, he opened the first store that later on became the biggest fashion ware seller—Zara.
The entire idea of selling fashion is based on the concepts of creating trendy designs, staying ahead of competition, being very fast, and delivering the products to the customers at affordable prices. Zara needs just two weeks to develop a new product and get it to stores compared to the nine-month industry average. It is able to put everything in place at amazing speeds that sometimes defy logic and understanding.
4. Risk-Bearing Function:
Entrepreneurs live with risks and uncertainties of various kinds. They start production in anticipation of demand. There is no guarantee that customers would readily accept their products or services. Competitors may hit back, customers’ tastes and preferences might change, technological innovations may give birth to a superior product, government may change its policies, and many more changes could hit their plans abruptly and suddenly. Most of these risks may turn out to be non-insurable. The risk of failure is there in every venture and entrepreneurs may have to grapple with such risks almost on a daily basis.
5. Creative Function:
The entrepreneur is a dynamic agent of change—a catalyst who transforms resources into useful products and services. He chooses less-travelled paths, spots market gaps that are ignored by competition, and picks up unusual ways of doing things while using resources in the best way.
Example: Michael Dell has always had a genius for spotting holes in conventional wisdom. In the early 1980s, he realized that every personal computer (PC) was created with, more or Less, the same readily accessible components such as Microsoft’s software and Intel Corp’s chips. By assembling PCs and by selling them directly to customers, a fat margin of profit could be enjoyed. The then 18-year old Dell told his father that he wanted to compete with IBM. The unconventional strategy of selling direct—thereby inventing the most efficient way to get computer into the hands of customers—paid off handsomely and, more or less, changed the way PCs are bought and sold in the marketplace.
6. Economic Function:
Entrepreneurship is an economic venture covering production and distribution of goods and services with a view to making profit. Purposeful activity Entrepreneurs are driven by a set of goals such as creation of jobs, bringing about change in society, rendering service to humanity, improving the standards of living, etc. They are the people who challenge the unknown and continuously create the future. In short, they are the heroes of today’s market place.
Functions of an Entrepreneur – By Palmer and Schumpeter
There are various functions of an entrepreneur. We will discuss each of these one by one.
Function # 1. Risk Measurement and Risk-Taking:
Palmer (1971) suggested that the entrepreneurial function primarily involves risk measurement and risk-taking. The risks are not only in relation to the uncertainty to the success of the new business venture, but also on the personal and professional front like career opportunities foregone for the sake of starting the new venture, family relations, and psychic well-being.
Risk-taking is not a desire to try one’s gambling skills in Las Vegas. Instead, entrepreneurs prefer to take moderate risks in situations where they have some degree of control or skill in realizing a profit. They do not prefer situations which involve either extremes of risk or certainty.
Function # 2. Innovate/Create/Discover:
Innovation, creativity, and discovery are at the heart of the functions of an entrepreneur. According to Schumpeter (1934), the key ingredient of entrepreneurship is innovativeness of the individual and may not involve ownership at all (i.e. the entrepreneur might not have invested his own money in the venture). If the principal function of the entrepreneur is to carry out new combinations of means of production, then these “combiners” need not necessarily be owners.
Function # 3. Analyse the Opportunities:
An entrepreneur has to have the opportunity-seeking style of management that sparks innovation. The environment may throw up various types of opportunities for an entrepreneur to take advantage of in creating a new venture. Thus, the entrepreneur needs to analyse such opportunities from time to time and choose the most appealing one at the right time.
Function # 4. Strategize for the Venture:
An entrepreneur needs to strategize, i.e. perform long-term planning for the venture to be started. (S)he has to analyse the markets to penetrate, challenge tough competition and devise ways to reach out to the potential customers etc. Thus, the entrepreneur should have the capability and skills to formulate strategies for the new business venture.
Function # 5. Develop a Business Plan:
A business plan is a written document containing the details about every aspect of the proposed business venture. It serves two purposes: to provide a road map for the people internal to the organization, i.e. the employees, stakeholders, etc.; and to convince the potential investors and financial institutions about the viability of the venture so that they may agree to invest in it. Thus, the entrepreneur has to be adept in performing this critical function of drafting a convincing and viable business plan.
Function # 6. Acquire the Resources:
The entrepreneur has to acquire various types of resources like capital, manpower, machinery/equipment, land, buildings, etc. to start a venture. Many of these resources may not be easily available for the proposed new venture. Thus, the entrepreneur needs to have suitable skills to line-up the resources as and when required.
Function # 7. Organize and Start the Venture:
An entrepreneur should be a good organizer, i.e. he should deploy suitable resources in the right activities at the right time in order to avoid wastages and to optimally utilize the resources in starting-up the new venture.
Function # 8. Develop and Grow the Venture:
Just starting the venture does not complete the role of the entrepreneur, as it is necessary to provide it with able support to develop and grow it in the times to come. Many of the start-up ventures are not able to survive for long. Therefore, active involvement of the entrepreneur during the development and growth stage is important.
Function # 9. Delegate, Direct and Lead the Firm:
During the growth stage of a new start-up firm, it starts growing in size and thus, requires that the entrepreneur delegates the routine matters to other colleagues in the organization, while providing strategic direction to the firm as a leader. This function demands leadership skills on part of the entrepreneur.
Function # 10. Supervise and Control:
Delegation of authority and responsibility of routine matters to the subordinates does not mean that the entrepreneur should not exercise any control. In fact, it becomes imperative to have suitable control mechanisms in place so that the entrepreneur may track the overall health of the enterprise. Occasional personal supervision is also required to be done by the entrepreneur to ensure that all is well with the firm and the standard procedures created are being followed religiously by one and all.
Functions of an Entrepreneur – According to Bill Bernbach
The four functions of an entrepreneur are – Innovation & creativity, Risk taking and achievement, organization & management and other functions.
According to Bill Bernbach, co-founder of Doyle Dane Bernbach “An idea can turn to dust or magic, depending on the talent that rubs against it”.
(I) Innovation and Creativity:
Innovation generally refers to changing processes or creating more effective processes, products and ideas. For businesses, this could mean implementing new ideas, creating dynamic products or improving your existing services. Creativity is defined as the tendency to generate or recognize ideas, alternatives, or possibilities that may be useful in solving problems, communicating with others, and entertaining ourselves and others.
Creativity and innovation have always been recognized as a sure path to success. Stimulating creativity and exploring completely new and unknown before territories lead as result to increasing the productivity of the organisation. Entrepreneurs think outside of the box and explore new areas for cost-effective business solutions. In fact, Creativity improves the process of solving problems. It does not matter whether it is about developing a new strategy or an innovative way to stay ahead of the competition. Creative problem solving gives that competitive edge that any entrepreneur is striving to achieve.
(II) Risk Taking and Achievement:
According to Britain encyclopedia entrepreneur means “a person who organizes and manages a job or economic association and receives its risks.
Entrepreneurship is a process in which the entrepreneur establishes new jobs and firms, new Creative and growing organization which is associated with risk, new opportunities and achievement. It results in introducing a new product or service to society.
In general, entrepreneurs accept four types of risks which are as follows:
(a) Financial Risk:
Most of entrepreneurs begin by using their own savings and personal effects and if they fail, they have the fear of losing it. They take risks of failure.
(b) Job Risk:
Entrepreneurs, not only follow the ideas as working situations, but also consider the current risks of giving up the job & starting a venture. Several entrepreneurs have the history of being in a good job, but giving it up as they thought that they were not cut out for a job.
(c) Social and Family Risk:
The beginning of entrepreneurial job needs a high energy which is time consuming. Because of these undertakings, he/she may confront some social and family damages like deficiencies and the problems resulted of her or his absence in the home and its effects on his/her family.
(d) Mental Health Risk:
Perhaps the biggest risk that an entrepreneur takes it is the risk of mental health. The risk of money, home, spouse, child, and friends could be adjusted but mental tensions, stress, anxiety and the other mental factors have many destructive influences because of the beginning and continuing of entrepreneurial activity.
Therefore entrepreneurship requires risk and achievement is a by-product of the hard work put in by the entrepreneur. Therefore, he/she is continually confronted with the failure risk. As a result, it should be said that when an entrepreneur consider the risks of a work, he/she considerers the chance of success or failure in order to continue it or not.
(III) Organization and Management:
The entrepreneurial organization is a simple organizational form that typically includes one large operational unit, with one or a few individuals in top management. Entrepreneurial management means the skills necessary to successfully develop and manage a business enterprise.
A small business start-up under an owner-manager is an example of an entrepreneurial organization. Here, the owner-manager generally maintains strict control over business operations. This includes directing the enterprise’s core management functions; according to Mintzberg, these include the interpersonal roles, informational roles and decision-making roles.
The smaller the organization, the more concentrated these roles are in the hands of the owner-manager. The entrepreneurial organization is generally unstructured. The entrepreneurial organization is a simple organizational form that typically includes one large operational unit, with one or a few individuals in top management. This has made it a more flexible organization.
In the interpersonal role, the owner-manager, provides leadership and represents the company to outsiders. In his informational role, the owner- operator in an entrepreneurial organization also monitors and disseminates the flow of information, as well as serves as the company’s spokesperson.
The decision-making role is, perhaps, the heart of the entrepreneurial function because it involves planning and developing business strategies, initiating internal change, allocating the organization’s resources and negotiating and handling non-routine events.
As the lean entrepreneurial organization grows in size, it might change into one of the other types of organizations as it responds to an increased need to efficiently manage complexity and segmentation of operations. As an entrepreneurial organization grows, swift decision-making might become a challenge for the owner-manager or small management team.
(IV) Other Functions of Entrepreneurship:
Apart from the functions discussed above, there are some other functions of entrepreneurship, which are being briefly explained below:
(i) Research:
An entrepreneur is a practical dreamer and does a lot of ground-work before taking a leap in his ventures. In other words, an entrepreneur finalizes an idea only after considering a variety of options, analyzing their strengths and weaknesses by applying analytical techniques, testing their applicability, supplementing them with empirical findings, and then choosing the best alternative. It is then that he applies his ideas in practice. The selection of an idea, thus, involves the application of research methodology by an entrepreneur.
(ii) Overcoming Resistance to Change:
New innovations are generally opposed by people because it makes them change their existing behaviour patterns. An entrepreneur always first tries new ideas at his level. It is only after the successful implementation of these ideas that an entrepreneur makes these ideas available to others for their benefit. In this manner, an entrepreneur paves the way for the acceptance of his ideas by others. This is a reflection of his/her will power, enthusiasm and energy which helps him in overcoming the society’s resistance to change.
(iii) Catalyst of Economic Development:
An entrepreneur plays an important role in accelerating the pace of economic development of a country by discovering new uses of available resources and maximizing their utilization.