Chapter – 3

FUNCTIONS OF ENTREPRENEURS
An entrepreneur is an opportunity seeker. He is also the organizer and coordinator of the agents
of production. He has to execute many a good function while establishing a small-scale
enterprise. He not only perceives the business opportunities but also mobilizes the other
resources like 5 Ms-man, money, machine, materials and methods. However, the main
functions of the entrepreneurs are discussed further.
1. Idea generation: This is the most important function of the entrepreneur. Idea generation
can be possible through the vision, insight, observation, experience, education, training and
exposure of the entrepreneur. Idea generation precisely implies product selection and project
identification. Ideas can be generated through environmental scanning and market survey. It is
the function of the entrepreneurs to generate as many ideas as he can for the purpose of
selecting the best business opportunities which can subsequently be taken up by him as a
commercially-viable business venture.
2. Determination of objectives: The next function of the entrepreneur is to determine and lay
down the objectives of the business, which should be spelt out on clear terms. In other words,
entrepreneur should be very much clear about the following things: (i) The nature of business
(ii) The type of business This implies whether the enterprise belongs to the category of a
manufacturing concern or a service -oriented unit or a trading business, so that the
entrepreneurs can very well carry on the venture in accordance with the objectives determined
by him.
3. Raising of funds: Fund raising is the most important function of an entrepreneur. All the
activities of a business depend upon the finance and its proper management. It is the
responsibility of the entrepreneur to raise funds internally as well as externally. In this matter,
he should be aware of the different sources of funds and the formalities to raise funds. He
should have the full knowledge of different government sponsored schemes such as PMRY,
SGSY, REGP, etc. by which he can get Government assistance in the form of seed capital, fixed
and working capital for his business.
4. Procurement of raw materials: Another important function of the entrepreneur is to
procure raw materials. Entrepreneur has to identify the cheap and regular sources of supply of
raw materials, which will help him to reduce the cost of production and face the competition
boldly.
5. Procurement of machinery: The next function of the entrepreneurs is to procure the
machineries and equipments for establishment of the venture. While procuring the machineries,
he should specify the following details: (a) The details of technology (b) Installed capacity of
the machines (c) Names of the manufacturers and suppliers (d) Whether the machines are
indigenously made or foreign made (e) After-sales service facilities (f) Warranty period of the
machineries All these details are to be minutely observed by the entrepreneurs.
6. Market research: The next important function of the entrepreneur is market research and
product analysis. Market research is the systematic collection of data regarding the product
which the entrepreneur wants to manufacture. Entrepreneur has to undertake market research
persistently in order to know the details of the intending product, i.e., the demand for the
product, the supply of the product, the price of the product, the size of the customers, etc. while
starting an enterprise.
7. Determination of form of enterprise: The function of an entrepreneur in determining the
form of enterprise is also important. Entrepreneur has to decide the form of enterprise based
upon the nature of the product, volume of investment, nature of activities, types of products,
quality of product, quality of human resources, etc. The chief forms of ownership organizations
are sole proprietorship, partnership, Joint Stock Company and cooperative society.
Determination of ownership right is essential on the part of the entrepreneur to acquire legal
title to assets.
8. Recruitment of manpower: Entrepreneur has to perform the following activities while
undertaking this function: (a) Estimating manpower need of the organization (b) Laying down
of selection procedure (c) Devising scheme of compensation (d) Laying down the rules of
training and development
9. Implementation of the project: Entrepreneur has to work on the implementation schedule
or the action plan of the project. The identified project is to be implemented in a time-bound
manner. All the activities from the conception stage to the commissioning stage are to be
accomplished by him in accordance with the implementation schedule to avoid cost and time
overrun, as well as competition. Thus, implementation of the project is an important function
of the entrepreneur. To conclude with, all these functions of the entrepreneur can precisely be
put into the following categories: (i) Innovation (ii) Risk bearing (iii) Organization and (iv)
Management

CHARACTERISTICS OF ENTREPRENEUR
Entrepreneur is a key figure in economic progress. He is the person who introduces new things
in the economy. He is considered as the business leader and not as simple owner of capital. He
is a person with telescopic faculty, drive and talent who perceives business opportunities and
promptly seizes them for exploitation. M.M.P. Akhouri, formerly Executive Director, National
Institute for Entrepreneurship and Small Business Development (NIESBUD), New Delhi,
describes entrepreneur “as a character who combines innovativeness, readiness to take risk,
sensing opportunities, identifying and mobilizing potential resources, concerns for excellence
and who is persistent in achieving the goal.” To be successful, an entrepreneur should have the
following characteristic features.
1. Need to achieve: Entrepreneurs have got strong desire to achieve higher goals. Their inner
self motivates their behaviour towards high achievement: most of the people dream of success
but do not take any action towards achieving these dreams. Entrepreneurs with high n-Ach
factor act continuously to achieve the goal and make their dreams come true. For them, winning
is achievement.
2. Independence: Most of the entrepreneurs start on their own because they dislike to work
for others. They prefer to be their own boss and want to be responsible for their own decisions.
3. Risk-bearing: Entrepreneurs are the persons who take decisions under uncertainty and thus
they are willing to take risk, but they never gamble with the results. They choose moderate risk
rather than play wild gamble. They, therefore, undertake calculated risk which is high enough
to be exciting, but with a fairly reasonable chance to win.
4. Locus of control: According to Rotter’s locus of control theory, an individual perceives the
outcome of an event as being either within or beyond his personal control. Entrepreneurs
believe in their own ability to control the consequences of their endeavour by influencing their
socio-economic environment rather than leave everything to luck.
5. Perseverance: Entrepreneur has got the quality of sticking to job he decides to undertake.
Once committed to a specific goal and course of action, entrepreneurs become absorbed to it.
They personally solve the problems that come across their way while setting up the project.
They also work sincerely until the whole project is successfully implemented.
6. Positive self-concept: Entrepreneurs are always positive in their action. Being an achiever,
he directs his fantasies and dreams towards achievement of worthwhile goals and sets
extraordinary standard of excellence in what he is doing. This is based upon his awareness of
SWOT analysis, i.e. his strengths, weaknesses, opportunities and threats. He utilizes his
positive knowledge to support his thinking. He never exhibits any negative attitude.
7. Ability to find and explore opportunities: Entrepreneurs are always alert to opportunities.
They are very much quick to see and grab opportunities. They exhibit an innovative turn of
mind and convert the problems into viable opportunities. They plan intellectually and anticipate
carefully how to achieve their goals in realizing an opportunity.
8. Hope of success: Hope of success is a significant quality of entrepreneurial personality.
Entrepreneurs set their goals with a hope of success rather than fear of failure. This is because
they set their goals on the basis of facts and their ability to manoeuvre them to their advantage.
9. Flexibility: Most of the successful entrepreneurs measure the pros and cons of a decision
and tend to change if the situation demands. They never feel reluctant to revise their decisions.
They are the persons with open mind without rigidity.
10. Analytical ability of mind: Entrepreneurs are unaffected by personal likes and dislikes.
They stand beyond these types of prejudices as they are realistic in their approach. At the time
of their need they select experts rather than friends and relatives to assist them. They usually
avoid emotional and sensitive attitude towards their business or problem.
11. Sense of efficacy: Entrepreneurs are always oriented towards action for accomplishment
of their goals. Being confident of their abilities, they find themselves as problem solvers rather
than problem avoiders. They chalk out their goals for future and make planning to achieve
them.
12. Openness to feedback and learning from experience: Successful entrepreneurs like to
have immediate feedback of their performance. They modify their plans on the basis of the
feedback they receive from the environment around them. They learn from their experience
and never get discouraged having received unfavourable information. On the contrary, they are
stimulated by unfavourable information to involve themselves sincerely in their own tasks to
reach their desired goals.
13. Confronting uncertainty: Successful entrepreneurs are always optimistic and take every
odd as the opportunity. They manoeuvre their environment in such a way that the works get
accomplished rationally. Thus, they win by the application of their extraordinary insight and
skill.
14. Interpersonal skills: Entrepreneurs are always comfortable while dealing with people at
all levels. They interact with raw material suppliers, customers, bankers, etc. for different
activities. As successful entrepreneurs, they should be persons who like working with others
possessing the much-needed quality of interpersonal skill to deal with people.
15. Need to influence others: Once the entrepreneurs set their goals, they have to play the
roles of manager too. For influencing others (n Power), a low need to establish emotional
relationship (low n Affiliation), and a high need to discipline one’s own self (to inhibit over
expression of their personality) are essential.
16. Stress takers: Entrepreneurs are capable of working for long hours and solving different
complexities at the same time. As the captain of an industry or an enterprise, an entrepreneur
faces a number of problems and in right moment he takes right decisions which may involve
physical as well as mental stress. He can face these challenges if he has the capability to work
for long hours and keep himself cool under monotony.
17. Time orientation: Entrepreneurs anticipate future trends basing upon their past experience
and exposure. They stick to the time pragmatically while doing their jobs.
18. Innovators: Successful entrepreneurs are innovators. They constantly put their efforts in
introducing new products, new method of production, opening new markets and recognizing
the enterprise.
19. Business communication skill: In order to motivate others in the business entrepreneurs
must possess good communication skill. Both written and oral communication skills are
necessary for the entrepreneurs for running enterprise efficiently.
20. Telescopic faculty: Successful entrepreneurs always tend to think ahead. They have got
telescopic faculties which make them think for the future. Future orientation makes them quite
alert to the changing conditions of the time and they tend to produce goods and commodities
as per the changing demands.
21. Leadership: Entrepreneurs should possess the quality of leadership. Leadership is the
ability to exert interpersonal influence by means of communication towards the achievement
of goals. Entrepreneurs as the leaders should provide the necessary spark to motivation by
guiding, inspiring, assisting and directing the members of the group for achievement of unity
of action, efforts and purpose. Hence, entrepreneurs by their own leadership styles and
behaviour reduce the problems by proper handling of situations. Good administrative work
depends upon effective leadership of the entrepreneur.
22. Business planning: Planning implies deciding in advance what, when and how to do a
thing. Entrepreneurs should be equipped with skill and knowledge to prepare their business
plan. A successful entrepreneur always follows the principles of management while planning
for his business. The planning can act as a bridge between the present position and expected
future shape of the enterprise. It provides a sense of vision to the entrepreneurs to cope with
risky and uncertain situation.
23. Decision making: Decision-making skill is a fundamental characteristic of an entrepreneur.
This implies the function of choosing a particular course of action at every stage of creation of
an enterprise out of several alternative courses for the purpose of achieving specified goals.
Hence, decision making is necessary at all times and mostly at conditions of uncertainty and
risk.
24. Ability to mobilize resources: Entrepreneurs must have the ability to marshal all the inputs
to obtain the end product. They have to mobilize 6Ms, i.e., Man, Money, Material, Machinery,
Market and Method effectively to realize the final product as entrepreneurship is a function of
gap filling and input completing.
25. Self-confidence: Entrepreneurs must have self-confidence to accomplish the task
effectively and efficiently. They must take decisions on their own in uncertain and risky
situation and should stick to it confidently even if there occur initial setbacks.

DISTINCTION BETWEEN AN ENTREPRENEUR AND A MANAGER

Point for Entrepreneur Manager
Distinction
1. Goal An entrepreneur starts a venture by But the main aim of a
management setting up a new enterprise for his manager is to render his
personal gratification service in an enterprise
already set up by someone.
2. status Entrepreneur is the owner of A manager is the servant in
enterprise the enterprise.
3. Risk An entrepreneur bears all risks and A manager being a servant
uncertainty involved in the does not bear any risk
enterprise. involved in the enterprise.
4. Rewards Entrepreneur for his risk bearing A manager receives salary as
role he receives profits. It is not only rewards for service render
uncertain and irregular but can at which is fixed and regular can
times be negative. never be negative.
5. Innovation As an innovation he is called as A manger executes the plans
change agent who introduces goods of the entrepreneur. Thus a
and services to meet changing needs manager translates the ideas
of the customer into practice.