UNIT - I
ENTREPRENEUR
A person who sets up a business or businesses, taking on financial risks in the hope of profit.
An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the
rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and
business/or procedures.
CHARACTERISTICS OF ENTREPRENEURS
People may lack the personality and skills necessary for successful entrepreneurship. There are some general
characteristics and skills that many successful entrepreneurs have:
Problem-solving: Entrepreneurs often start their businesses after identifying a problem and then coming up
with a way to address it. Entrepreneurs are also able to figure out how to solve problems that will occur
during the development of the business.
Innovation: Entrepreneurs are innovators, and are often engaged continuously in the process of conceiving
new products and services, renewing and improving current offerings, and developing new business
processes.
Risk-taking: Entrepreneurs are not risk-averse. They are willing to risk their time, money and even their
reputation to get the business started and take their products or services to market. Entrepreneurs are also
willing to take risks even after they establish a business, developing new products and approaches that can
grow their businesses.
Contrariness: Entrepreneurs are often people who are eager to question why and how things are being done
– even if these processes are clearly "industry-standard." This doesn't mean an entrepreneur should ignore
industry best practices, but the entrepreneur is also willing to challenge these practices if she believes that
there is a better way to do them.
Persistence: Entrepreneurs are persistent. They aren't easily discouraged and are willing to work through
discouragement and challenges. Entrepreneurs are willing to attend trade shows, meet with bankers, call on
clients and do what it takes to get the business started, and then to make it successful.
Leadership: Successful entrepreneurs are strong leaders. Leadership is an essential entrepreneurial skill, as
the entrepreneur will need to be able to cultivate trust and support from the people who join his business as
managers and workers. Many new businesses are cash-poor and experience significant challenges – but a
,good leader can inspire loyalty in workers who may not yet be receiving high wages, as well as in employees
who are facing roadblocks in their efforts to build the company.
FUNCTIONS OF ENTREPRENEUR
The following points highlight the top five functions of an entrepreneur. The functions are:
Decision Making
Management Control
Division of Income
Risk-Taking and Uncertainty-Bearing
Innovation.
1. Decision Making:
The primary task of an entrepreneur is to decide the policy of production. An entrepreneur is to determine
what to produce, how much to produce, how to produce, where to produce, how to sell and so forth. Moreover,
he is to decide the scale of production and the proportion in which he combines the different factors he
employs. In brief, he is to make vital business decisions relating to the purchase of productive factors and to
the sale of the finished goods or services.
2. Management Control:
Earlier writers used to consider the manage-ment control one of the chief functions of the entrepreneur.
Management and control of the business are conducted by the entrepreneur himself. So, the latter must possess
a high degree of management ability to select the right type of persons to work with him. But, the importance
of this function has declined, as business nowadays is managed more and more by paid man-agers.
3. Division of Income:
The next major function of the entrepreneur is to make necessary arrangement for the division of total income
among the different factors of production employed by him. Even if there is a loss in the business, he is to pay
rent, interest, wages and other contractual incomes out of the realised sale proceeds.
4. Risk-Taking and Uncertainty-Bearing:
Risk-taking is perhaps the most important function of an entrepreneur. Modern production is very risky as an
entrepreneur is required to produce goods or services in antici-pation of their future demand.
Broadly, there are two kinds of risk which he has to face. Firstly, there are some risks, such as risks of fire,
loss of goods in transit, theft, etc., which can be insured against. These are known as measurable and insurable
, risks. Secondly, some risks, however, cannot be insured against because their probability cannot be calculated
accurately. These constitute what is called uncertainty (e.g., competitive risk, technical risk, etc.). The
entrepreneur undertakes both these risks in production.
5. Innovation:
Another distinguishing function of the entrepreneur, as emphasised by Schumpeter, is to make frequent
inventions — invention of new products, new techniques and discovering new markets — to improve his
competitive position, and to increase earnings.
Types of Entrepreneurship
Classic entrepreneurs: The so-called "classic" entrepreneur is someone who observes a gap in the market or
takes note of a business or consumer need, and develops a company that addresses the deficit or the need. In
some cases, the entrepreneur may also be an inventor, although some classic entrepreneurs will team up with
someone who has invented a product. In many cases, the classic entrepreneur starts the business and
continues to own and manage it for many years.
Serial entrepreneurs: A serial entrepreneur enjoys getting businesses started, and then sells the business to
another person or company. This type of entrepreneur is typically somebody who is excited about starting
something new and taking risks. Once the business is doing well, however, this entrepreneur wants to move
on to another new and different challenge.
Social entrepreneurs: Social entrepreneurs incorporate social conscience with business. While their
businesses may still be for-profit, there is typically a strong mission statement connecting the business with a
social cause. For example, a social entrepreneur may import fair trade goods for resale while also educating
the public about the importance of activism in the area of sustainably and responsibly sourcing products.
Entrepreneurship
Definition: Entrepreneurship refers to the process of creating a new enterprise and bearing any of its risks, with
the view of making the profit.
ENTREPRENEUR
A person who sets up a business or businesses, taking on financial risks in the hope of profit.
An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the
rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and
business/or procedures.
CHARACTERISTICS OF ENTREPRENEURS
People may lack the personality and skills necessary for successful entrepreneurship. There are some general
characteristics and skills that many successful entrepreneurs have:
Problem-solving: Entrepreneurs often start their businesses after identifying a problem and then coming up
with a way to address it. Entrepreneurs are also able to figure out how to solve problems that will occur
during the development of the business.
Innovation: Entrepreneurs are innovators, and are often engaged continuously in the process of conceiving
new products and services, renewing and improving current offerings, and developing new business
processes.
Risk-taking: Entrepreneurs are not risk-averse. They are willing to risk their time, money and even their
reputation to get the business started and take their products or services to market. Entrepreneurs are also
willing to take risks even after they establish a business, developing new products and approaches that can
grow their businesses.
Contrariness: Entrepreneurs are often people who are eager to question why and how things are being done
– even if these processes are clearly "industry-standard." This doesn't mean an entrepreneur should ignore
industry best practices, but the entrepreneur is also willing to challenge these practices if she believes that
there is a better way to do them.
Persistence: Entrepreneurs are persistent. They aren't easily discouraged and are willing to work through
discouragement and challenges. Entrepreneurs are willing to attend trade shows, meet with bankers, call on
clients and do what it takes to get the business started, and then to make it successful.
Leadership: Successful entrepreneurs are strong leaders. Leadership is an essential entrepreneurial skill, as
the entrepreneur will need to be able to cultivate trust and support from the people who join his business as
managers and workers. Many new businesses are cash-poor and experience significant challenges – but a
,good leader can inspire loyalty in workers who may not yet be receiving high wages, as well as in employees
who are facing roadblocks in their efforts to build the company.
FUNCTIONS OF ENTREPRENEUR
The following points highlight the top five functions of an entrepreneur. The functions are:
Decision Making
Management Control
Division of Income
Risk-Taking and Uncertainty-Bearing
Innovation.
1. Decision Making:
The primary task of an entrepreneur is to decide the policy of production. An entrepreneur is to determine
what to produce, how much to produce, how to produce, where to produce, how to sell and so forth. Moreover,
he is to decide the scale of production and the proportion in which he combines the different factors he
employs. In brief, he is to make vital business decisions relating to the purchase of productive factors and to
the sale of the finished goods or services.
2. Management Control:
Earlier writers used to consider the manage-ment control one of the chief functions of the entrepreneur.
Management and control of the business are conducted by the entrepreneur himself. So, the latter must possess
a high degree of management ability to select the right type of persons to work with him. But, the importance
of this function has declined, as business nowadays is managed more and more by paid man-agers.
3. Division of Income:
The next major function of the entrepreneur is to make necessary arrangement for the division of total income
among the different factors of production employed by him. Even if there is a loss in the business, he is to pay
rent, interest, wages and other contractual incomes out of the realised sale proceeds.
4. Risk-Taking and Uncertainty-Bearing:
Risk-taking is perhaps the most important function of an entrepreneur. Modern production is very risky as an
entrepreneur is required to produce goods or services in antici-pation of their future demand.
Broadly, there are two kinds of risk which he has to face. Firstly, there are some risks, such as risks of fire,
loss of goods in transit, theft, etc., which can be insured against. These are known as measurable and insurable
, risks. Secondly, some risks, however, cannot be insured against because their probability cannot be calculated
accurately. These constitute what is called uncertainty (e.g., competitive risk, technical risk, etc.). The
entrepreneur undertakes both these risks in production.
5. Innovation:
Another distinguishing function of the entrepreneur, as emphasised by Schumpeter, is to make frequent
inventions — invention of new products, new techniques and discovering new markets — to improve his
competitive position, and to increase earnings.
Types of Entrepreneurship
Classic entrepreneurs: The so-called "classic" entrepreneur is someone who observes a gap in the market or
takes note of a business or consumer need, and develops a company that addresses the deficit or the need. In
some cases, the entrepreneur may also be an inventor, although some classic entrepreneurs will team up with
someone who has invented a product. In many cases, the classic entrepreneur starts the business and
continues to own and manage it for many years.
Serial entrepreneurs: A serial entrepreneur enjoys getting businesses started, and then sells the business to
another person or company. This type of entrepreneur is typically somebody who is excited about starting
something new and taking risks. Once the business is doing well, however, this entrepreneur wants to move
on to another new and different challenge.
Social entrepreneurs: Social entrepreneurs incorporate social conscience with business. While their
businesses may still be for-profit, there is typically a strong mission statement connecting the business with a
social cause. For example, a social entrepreneur may import fair trade goods for resale while also educating
the public about the importance of activism in the area of sustainably and responsibly sourcing products.
Entrepreneurship
Definition: Entrepreneurship refers to the process of creating a new enterprise and bearing any of its risks, with
the view of making the profit.
