Functions of an Entrepreneur | Unit 1 | Entrepreneurship: Concept and Functions | Class 11

Entrepreneurial functions

Innovation: The basic function of an entrepreneur is to be an innovator—someone who brings new ideas into business. Innovation does not only mean creating or inventing something new, but it may also mean doing the same things differently too. Entrepreneurs do things like create new products, find new ways to make things, discover new markets to sell their products, and use new raw materials or resources. An entrepreneur sees a chance to make a profit and tries to take advantage of it by doing something new or better. Example: IPod, smartphones, Induction cooktops etc.

Risk-taking: Risk-taking refers to taking responsibility for a loss that may occur due to unforeseen circumstances in the future. An entrepreneur not only takes the risk but also takes measures to reduce the risk of uncertainty. An entrepreneur is usually Confident, Positive and Willing to take risks to try new ideas or grow the business. E.g.. Dhirubhai Ambani took the risk of investing money on barren land and produced Alphonsos.

Organisation Building: Organisation and management are the main functions of an entrepreneur. An entrepreneur organises the resources like land, labour, capital, and also manages /allocates the resources in such a manner that there is minimum wastage and least cost. All decisions relating to an enterprise is taken by the entrepreneur. He/she alone determines the lines of business to expand and capital to employ. Thus, an entrepreneur is the final judge in the conduct of his/her business.

Promotional functions (Learn in the same sequence)

Discovery of an idea: An entrepreneur sees a business opportunity and believes it can make a profit. The idea might be to use natural resources in a new way, to start a more profitable business, or to improve an existing business. The entrepreneur then discusses the idea with experts, and after their guidance, the entrepreneur does detailed planning before starting. E.g., Inthe case study of Nirma, Karsan Bhai Patel identifies the need and the problem of the society that could not afford other brands of detergent powders because of their high cost, so he came up with the idea to manufacture low-cost but effective washing powder NIRMA.

Detailed Investigation: After discovering the idea, the entrepreneur first tries to estimate how many people will want to buy the product. This helps him understand the possible demand for his product. Based on this, he decides how much money he will need and how to arrange it. He also plans for other resources like power, workers, raw materials, etc. Eg, Karsanbhai Patel of Nirma didn’t just guess—he studied the market, tested his idea, and then expanded. That is how he did a detailed investigation before building Nirma into a big brand.

Assembling the Requirements: Once the entrepreneur is sure that the idea is practical and can make a profit, he starts gathering everything needed to start the business. He asks other people to join and help. If the idea is new or invented, he may need to get legal rights (patents). He chooses a place to set up the factory, decides on machines, and talks to suppliers for raw materials. Then, he signs some early agreements, and the project is ready to begin. Eg. Karsanbhai Patel arranged resources smartly and simply, like using his Kitchen as a Factory. He bought basic ingredients needed to make the detergent using his own income, in the beginning, he packed the detergent himself.

Financing the Proposition: The entrepreneur plans how much money the business will need. First, he estimates the total amount of money required. Then, he decides where the money will come from. He also plans for both long-term (for many years) and short-term (for a few months or a year) needs.He chooses the type of money source—like shares, loans, or debentures. Eg. Karsanbhai Patel raised finance through self-funding.
He started small, spent wisely, and reinvested profits to grow the business over time.    For example, when Narayana Murthy started Infosys in 1981, he had no capital, and his wife Sudha Murthy gave him Rs. 10,000/- which she had saved for a rainy day.

Managerial functions  (Learn in the same sequence)

Planning: It is the basic managerial function of an entrepreneur. It means thinking ahead and deciding in advance what to do , when to do it , How to do it, and who will do it. Planning helps the entrepreneur choose the right steps to reach business goals. It all starts in the mind of the entrepreneur as clear thinking and smart decisions.

Organising: Every business needs many people to handle different types of work. The entrepreneur sets the goals for these people to achieve. Under the organising function, an entrepreneur arranges the factors of production and creates jobs by clarifying who will work under whom.

Staffing:  After creating jobs in the organising function, these positions are filled through the staffing function by hiring the right people for the business. The staffing process includes planning how many people are needed, finding and selecting the right workers, training and developing employees, promoting or transferring them, checking their performance and deciding their salary or wages.

Directing: Directing means initiating action or putting plans into action. The entrepreneur guides and manages the team so that everyone works well together to achieve the goals. Under directing function, an entrepreneur performs these activities, mainly called as four elements of directing – Leadership, communication, Motivation, and supervision.

Leadership: Leadership is when the entrepreneur guides, supports, and motivates others to reach a goal. A good leader makes sure both the employees and the business are happy and successful.

Communication: Communication means sharing ideas, information, and feelings between people. It is very important in business. Entrepreneurs spend most of their time talking, listening, and explaining. Without good communication, nothing can be managed well.

Motivation: Motivation is about encouraging people to do their best. It helps workers stay interested and perform better. Good motivation should meet the worker’s needs like respect, safety, money, and job satisfaction.

Supervision: Super means over, and vision means see, so after giving instructions, the entrepreneur must watch and guide the workers. Supervision makes sure that the work is done correctly, resources are used properly, and mistakes are fixed quickly.

Controlling – Controlling means checking if the work is going as planned.
It includes setting performance goals, measuring actual work done, comparing results with the goal, finding mistakes and taking action to improve the identified mistakes or errors. This helps the entrepreneur make sure everything is on track and the business is working properly.

Coordination: Coordination is called the essence of management. As its needed while performing all the above functions of management. Coordination means making sure everyone in the business works together smoothly to reach the same goal. The entrepreneur checks that all departments are working as planned. If something goes wrong, they take steps to fix the problem.

Commercial Functions of an Entrepreneur

Production: Production is one of the main jobs of an entrepreneur. It means making goods or providing services. Whether the business is small or large, production is always important. In a small business, one person may handle it. In a big company, many people or teams may do it. It includes making products, supporting activities, and even giving advice related to production.

Finance: Money is very important for every business.
A business always needs money, starting from when it is set up and all through its growth. As the business grows, it needs even more money. It is the entrepreneur’s job to find different sources of money and arrange the funds whenever needed.

Marketing: Marketing is all about getting goods and services from the maker to the customer. Its main goal is to make customers happy by meeting their needs. Marketing helps the business grow and succeed. The entrepreneur’s job is to plan smartly so the business becomes the best in the market.

Personnel: This is about hiring people, helping them grow, paying them fairly, and making sure they have good working conditions and benefits. It helps keep workers happy and motivated.

Accounting: This means keeping track of all money matters in the business. The entrepreneur records all financial activities to know how much money the business has and how it is being spent.