An entrepreneur is a person who has possession of a new enterprise, venture or idea and is accountable for the inherent risks and the outcome. He performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. He is thus a nucleus of high growth of the enterprise.
An entrepreneur is said to perform the following functions
1. Assumption of risk
Risk bearing or uncertainty bearing is the most important function of an entrepreneur which he tries to reduce by his initiative, skill and good judgment.
The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modern techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
Risk bearing or uncertainty bearing still remains the most important function of an entrepreneur which he tries to minimize by his initiative, skill and good judgment.
2. Business decisions
The most vital function an entrepreneur discharges refers to decision making in various fields of the business enterprise. He is the decision maker of all activities of the enterprise.
- The entrepreneur has to decide
- To enter the industry this offers him the best prospects
- To produce goods that he thinks will pay him the most
- To employ those methods of production which seem to him the most profitable.
- To effect suitable changes in the size of the business, its location that are needed for the development of his business.
3. Managerial Functions
The entrepreneur performs the managerial functions such as
- Formulating production plans
- Overseeing finances
- Dealing with the purchases of raw materials
- Providing production facilities
- Organizing sales
In large establishments these management functions are delegated to professional managers an entrepreneur performs many useful functions such as
- Undertakes a venture
- Assumes risk and
- Earns profits
- Identifies opportunities to start business either as a manufacturer or a distributor
The entrepreneurship exists in every field of economic endeavor. Entrepreneurship has also been developed in the trading sector. A manufacturing entrepreneur demonstrates his entrepreneurial talents by bringing out new products while a trading entrepreneur performs his entrepreneurial functions in creating demand for the business he deals.
The success and the quality of the output of the performance of the entrepreneur depends on how well he performs these functions. Therefore these functions performed describe the intensity of the relationship of the entrepreneur with the enterprise. For this reason, we can say that the relationship between the entrepreneur and entrepreneurship can be described as that between the body and the soul.