FUNCTIONS OF AN ENTREPRENEUR

FUNCTIONS OF AN ENTREPRENEUR

An entrepreneur is an agent who buys various factors of production with a view to combining them into a finished product which can be sold in the market. While doing so, he has to perform the following basic functions: 1. Risk Assumption Function : An entrepreneur has to necessarily act as a ‘risk-bearing’ agent of production since he has to bear a greater amount of uncertainties in business. The term uncertainty refers to more than an ordinary risk. Ordinary risk can be measured and insured whereas risk due to uncertainty cannot be insured and it is incalculable also. For instance, risks due to the possibility of changes in the taste of customer, change in fashion and technique of production, new inventions etc. cannot be ensured. But, an entrepreneur has to undertake and face such uncertainties. The entrepreneur assumes this risk and tries to reduce these uncertainties by his initiative, skill and admirable ability.
2. Business Decision-making Function : From the very inception of the business till its development, an entrepreneur has to take decisions at various stages. He has to decide the nature and type of goods to be produced, the size of the business, its location, technique of production etc. A successful entrepreneur is one who takes sound decisions at the appropriate time so that his business may succeed.
3. Managerial Function : An entrepreneur has to perform the managerial functions also. Managerial functions are nothing but functions of coordination, organization and supervision. An entrepreneur is one who combines the land of one, the labour of another and the capital of yet another, and, thus, produces a product. While undertaking an entrepreneur, he has to perform all managerial functions starting with planning and ending with controlling.
4. Function of Innovation : Innovation is an important function of an entrepreneur. In this context, one should know the distinction between an investor and an innovator. The person who discovers new methods, new materials and machines is called an inventor. But, the person who utilises these inventions so as to make new combinations of products is called an innovator. Innovation is a never ending process and in fact it is an ongoing function. Thus, an entrepreneur has to be always on the lookout to introduce a new product or a new production technology or open a new market hitherto untapped or discover a new source of supply of new material. Innovators are always successful in their ventures. Source:Entrepreneurship Development by E.Gordon & K.Natarajan

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