Functions of an entrepreneur begin with the creation of an idea and continue until it becomes a successful venture.
As an entrepreneur, you have redacted various functions for the accomplishment of your organizational objective.
Interestingly, the functions of an entrepreneur may change with the time, circumstances, place, and level of your organization or even with the economic condition.
Here are the top 6 defining functions of an entrepreneur are as follows.
Entrepreneurial functions of an entrepreneur are the essential functions performed to initiate a venture and growing it smoothly.
It involves, taking initiative of starting up, bearing all the risks involved, bringing innovation, making decisions and organization building.
Here are the entrepreneurial functions are as follows:
This is the first and foremost function of an entrepreneur. It’s the ability to switch ideas into reality.
Taking Initiative is all about taking charge and responsibility. It involves innovation, risk-taking, planning and manage resources to achieve the desired objective.
Though, taking initiative is not only a function they need to perform but an important quality they should have.
They do things without being asked and solve problems that others may not have noticed or thought those need solving.
The early initiative helps them to stay ahead of the competition and to learn the required skills for performing better to grow with their organization.
Most importantly, Initiative entrepreneur encourages their staffs to do the same which standardize the working culture of the organization.
Therefore, taking the initiative is probably the most important function of being an entrepreneur.
If you do something on your initiative, then there’s nothing you can condemn if it went wrong.
So, taking initiative can be risky.
As an initiative entrepreneur, you have to be extremely courageous to bear the risks business involves rather than to avoid it.
A new business always involves risk because one invests money to get profits shortly. As a small business owner, you may have to compete with big companies, shortage of raw material, change in customer preferences, sudden unexpected drawbacks and so on.
But interestingly, successful entrepreneurs don’t believe in taking a risk, because for them it’s never been a risk. For them, this is just a calculated and well-planned challenge that they can achieve.
As Frank Knight says,
Consequently, we can say, taking the risk and overcoming it is a common function that every entrepreneur must carry out.
Innovation and entrepreneurship walk hand in hand in building a successful commercial venture.
Entrepreneurs are highly responsible for innovation in existing markets and the invention of entirely new products, services, and even new markets.
The purpose of innovation is to constantly grow an organization through new products, more productive techniques, efficient processes, and flexible business models.
Most importantly, innovation helps to create a monopoly in the market by providing a competitive advantage.
The decision-making function of an entrepreneur is the most sensible function among all managerial function.
Being able to make quick decisions is one of the most important traits of a successful entrepreneur.
As an entrepreneur, you must take different decisions on a daily basis.
The purpose of making a decision is to bring results to your business.
The decision making cycles of an entrepreneur begins with the decision to solve a specific problem and initiate a venture, then choosing the best possible product or service to address the problem, selecting the right market, picking the efficient staff and so on.
Hence, be very conscious about how you make decisions because it can cost you the fortune.
Entrepreneurs are the main role players in building a successful business.
But an organization is not built by a chance.
It’s not about having a breakthrough product or idea, high valuation or marketing brilliance.
Broad accomplishment in business is accomplished by actualizing a long haul and taught an approach that advances customer centricity, continuous development, and talent propensity.
Consequently, it’s an entrepreneur’s job to introduce innovative products or services in the market, gain traction and manage resources, consistently deliver great customer value, explore opportunities for business expansion and build a culture of continuous innovation.
Managerial functions of an entrepreneur represent the classification of a manager’s job.
The managerial work divided into 8 parts, as, planning, organizing, staffing, directing, controlling, leading, supervision, co-ordination. Here are those as follows:
Planning is the first step of the managerial function of an entrepreneur.
It is the predetermined strategic thinking process that involves selection of course of action to achieve desired objectives.
In other words, planning is the base of tomorrow’s activity.
Planning helps an entrepreneur ascertain what needed to be done for the accomplishment of the objective.
An entrepreneur has to decide, what could be done, by whom it is to be done, how it is to be done when it is to be done, where it is to be done, why it is so important to be done and so on.
Planning helps you in many ways including tracking and analyzing your business that it’s going in the right direction.
It prevents one from being lost in the competition of the market. Effective planning helps everyone to understand their role in the organization and abstain from confusion.
Organizing is the process of defining and classifying the activities of the enterprise and setting up the authority relationships among them to achieve objectives.
After having the plan ready, it’s time to organize or gather the things or resources mentioned in the planning to start production.
As an entrepreneur, your first job is to divide the big objective into smaller units. Then hiring the specialized person for the smaller unit will make it easy and smooth.
After putting the right individual at the right place, now departmentalization comes into play where related jobs are grouped and put under one department which is under the charge of the best suitable individual.
This is how the organizing function of an entrepreneur creates a strong foundation for the company.
Staffing is known as the propeller of any organization.
It is the most vital and complex activity among all managerial operations as the performance of other managerial functions (planning, organizing, directing, controlling) depends on the manpower which is available only through staffing function.
Thus, the staffing functions of an entrepreneur involves consolidating the organizations grounding through the proper and effective selection, placement and orientation, training and development, performance appraisal, promotion, compensation, etc. of the personnel recruited for a particular position in the enterprise.
The significance of staffing is very extensive as it helps in placing the right person in the right place.
FedEx Corporation holds a reputation of accomplishment, from delivery to customer service. In the mid-1970s, the organization built up a way of thinking that remains steadfast today – People-Service-Profit.
The foundational belief is that take care of your employees and they will take care of your customer service. To understand employee relations, FedEx offers an annual survey and feedback action program. It allows problem assessment and explores opportunities.
FedEx’s culture shows us the importance of people or the staffing process in making a successful enterprise.
Directing is the process where entrepreneurs guide, instruct and oversee the performance of the workers or employees to achieve organizational objectives.
It is the function that provides significance to the other managerial functions as without proper directing a well-organized plan and effective manpower will be lost its flash.
This is the initiating stage of the real work of the organization.
As an entrepreneur, your role is very vital as you can’t only order your employees to do a particular job.
You have to motivate and encourage them to bring the best out of them and work in a meaningful way for the accomplishment of the predetermined goal.
However, directing function of an entrepreneur is crucial for tracking that the organization is moving in the right direction.
Controlling said to be the process of identifying whether the organization is moving in the right direction and according to plan.
It assures that there is a successful and proficient use of organizational resources to accomplish the preset objectives.
Most importantly, controlling is the methodical activity that measures the deviation of actual performance from the planned performance and finds out the reasons to make it right.
Therefore, it is the function that brings back entrepreneurs and management on track to redefine the organizational plan for effective and efficient use of resources.
Leading is nothing but a choice to take responsibility.
The leading functions of an entrepreneur is all about forming a group of people to achieve a common goal through proactive entrepreneurial behavior by optimizing risk, taking responsibility and managing resources for the benefit of an organization.
An entrepreneurial leader always works for generating the best possible outcome for the enterprise in an innovative way with a group of people and resources to achieve organizational goals.
As Steve Jobs says,My job is not to be easy on people. My job is to take these great people we have and to push them and make them even better - Steve Jobs Click To Tweet
Thus, the leading function of an entrepreneur is very crucial for a healthy and successful life span of an enterprise.
Supervision is the function of overseeing something or somebody.
Sometimes entrepreneurs have to act as a supervisor to overlook and ensure that the deciding factors of production are working well.
Not only are the factors of production but overseeing the managers and employees performance an exigent job entrepreneur for betterment and growth of the organization.
Co-ordination is the function that assures that different departments, groups, and people work together for more fruitful outcomes.
In an enterprise, several departments are working on the very same objectives to achieve it.
As an entrepreneur, you have to coordinate different departments and factors of production to produce a maximum result with minimum effort and expenses.
The promotional functions of an entrepreneur involves, discovering an idea, making a business plan and assemble the requirement to achieve the objective.
Discover an IdeaIdeas are easy. It's the execution of ideas that separates the sheep from the goats. - Sue Grafton Click To Tweet
Ideas are everywhere; it’s the execution, what matters.
Your most innovative idea, as you think it is, can come from many places, like, an opportunity you got, discovering something breakthrough while facing a problem or by identifying a gap in the market.
As an initiative entrepreneur, you may have a lot of ideas that can destroy the market. But you can’t do all at once. Everyone is not Elon Musk.
You have to choose one of them; the most effective, convincing, demanding and profitable one.
After choosing the most convincing one it’s time to analyze it with any knowledgeable person of the field or with your partner.
It will help you to make the best possible business plan for your idea.
Making of Business Plan
Making business plan is essential for your business success.
A business plan is a written form of your business’s future activity. It will tell you what your plans to do and how you plan to do it.
For instance, If you are here, at point ‘A’ today with a minimum amount of resources and ability and you want to go there, to point ‘B’ within a few decided times, a business plan will show how exactly you can go from here to there.
But to make it happen you have to be very strategic in your plan. Make sure you have done enough research about your product, market, and competition to make a perfect business plan.
Kevin J. Donaldson indicates the importance of having a business plan in a great way.Going into business without a business plan is like going on a mountain trek without a map or GPS support – you will eventually get lost and starve! - Kevin J. Donaldson Click To Tweet
Before you getting started, there are a few things you need to know and should address in your plan.
- How long should your plan be?
- Write down your goals and objectives in detail.
- Figure out your financing needs.
- What are the required resources?
There are many things like this which is essential for writing an accurate business plan.
Assemble the requirements
Assemble required resources is necessary to start executing your plans to see any results.
After confirming the possibility of the idea and making the business plan ready, the next function of an entrepreneur is to assemble the required resources according to the business plan.
The requirement involves, finding the right business partner and make a team, manpower, needed raw materials, location for enterprise, land for organization building, plant and machinery, transport and communication, etc.
The Commercial functions of an entrepreneur include 4 segments, as, production, marketing, personnel, and accounting.
The production function is the primary function of an entrepreneur. It is the manufacturing of goods or services.
Regardless of the type or size of the organization, the operation performed in production involves the following:
- Accessory or support activity.
Manufacturing is related to the production of goods or the creation of services. It includes decisions such as the selection of factory site, location, design and layout of the product, type of products to be produced; research and development process, design of the product and so on.
Elsewhere, accessory or support activity includes all the activities which make the production activity smooth and easier.
It includes the proper planning and controlling of the production function, maintenance of machinery, purchasing of raw materials and quality of product or services.
Accessory activity helps in enhancing productivity and production which ends up favoring companies’ overall growth.
In simple words, marketing is the wheel of an enterprise.
Marketing is all about identifying and meeting human and social needs in a profit.
In other words, marketing is the activity of delivering the products or services to its real customer or consumer.
The main purpose of marketing is to provide value to the customer by identifying their demand. A company used marketing as an activity to promote the buying and selling of its products and services.
It includes advertising, selling and delivering products and services to its consumers to build a healthy relationship with them.
At times, we misunderstood marketing with selling. Marketing is a very broad activity, while sales are a part of it. Marketing is concerning about the customer and their needs, on the other hand, sales are all about the product or service.
The success of any product or service is decided by the proper ‘Marketing Mix’.
Marketing Mix is making up 4 Ps, as, product, price, place, and promotion.
No matter how good your product is, if a person doesn’t know about it, it is waste. That’s why the marketing function of an entrepreneur is such impactful, as it can meet your product to its potential customer.
The success of any enterprise fully depends on its manpower.
Personnel function is all about the people at work and their activity, relationship and commitment within the organization.
This commercial function involves the recruitment of employees, their training and development, working atmosphere, health, and safety and so on.
The function of an entrepreneur in managing personnel assets is essential for companies pleasing culture.
Every enterprise starts with the aim of making a profit by providing services. No matter your business becomes a success story or failure, the accounting will be a big part of it.
According to Business Dictionary, accounting is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information.
The accounting process includes a series of activities that start with the transaction and ends with the closing of the books. Here it is:
- Recording the Transaction.
- Classifying the Transaction.
- Summarizing the Transaction.
- Prepare Final Accounts.
- Analyzing and Interpreting the Results.
Financial functions of an entrepreneur concerned with the control and planning of financial resources. In involves, financial planning, raising funds and managing money, as follows.
The financial planning function of an entrepreneur is critical to the success of any company. It provides the Business Plan with firmness, by confirming that the goals set are attainable.
However, financial planning is the job of determining how a business will afford to accomplish its strategic goals and objectives.
A financial plan describes each of the activities, resources, equipment, and materials that are needed to achieve objectives.
Proper financial planning includes these following tasks:
- Evaluate the business environment.
- Ensure the business objective and vision.
- Identify the types of resources needed to accomplish the goal.
- Calculate the cost of resources etc.
Financial planning helps an entrepreneur to set financial goals for the organization.
Capital is known as the lifeblood of any business.
Thus, raising funds for the organization could be the most important function of an entrepreneur. It is a significant part of your business and the most challenging one.
Here are 5 major sources to raise capital from.
- Bootstrapping your Business.
- Crowd Funding.
- Get Angel Investor.
- Bring Venture Capitalist.
- Raise Money through Bank Loans.
If you bootstrap it will take a long time to get some real traction for your business and you may miss the opportunity. But if you want to move fast, get used to outside sources of capital.
Almost 94% of the business fails within the first few years of launching. Not having enough money becomes the most usual reason for it.
Money management is the process of managing your business’s capital through proper budgeting, tracking expenses and setting financial goals.
Failing to manage money can lead you to late payments and coming up short on cash.
To keep track of your expenses and stay top of your business, follow these 6 tips.
- Maintain Deadlines.
- Track Spending.
- Create a Budget.
- Make Inventory.
- Cut Cost and Increase Revenue.
- Have Reserve Cash.
If you want to keep track of your money, which is very important as an entrepreneur, Keep up-to-date with your accounting books.
The social functions of an entrepreneur may not have a direct connection with companies growth but it plays a very important role in building trust, reputation and a strong brand value.
Hence, the importance of social activities can’t be ignored at any aspect.
Social functions are all about solving potential community-based problems. It involves, fixing problems and create jobs and community development.
Fix problems and create jobs
Entrepreneurs, especially social entrepreneurs, eager to solve the problems in society.
They have a great urge within them which leads them to take positive steps towards the improvement of society and its culture.
In the process of addressing these problems, entrepreneurs build businesses to bring change and develop society.
As the business created, it provides people the opportunity of having jobs and improves their living standards. It allows them for better education, health, and living hood.
Whether you are a web-based company without local ties or a small business owner in one neighborhood, you can take the lead on contributing to the local communities in many ways.
Here are a few impactful ways to stay engage with your community and build a relationship.
- Promote Local Businesses.
- Contribute to the local community.
- Design a Business Model that Gives Back to the Charity.
- Collaborate with other Businesses.
There are several ways you can connect with the local community through your entrepreneurial venture. Displaying your support for non-profits and community organizations can help you build your value.
Hope this helps you understand what it takes to be an entrepreneur and create a successful enterprise.
This description of the functions of an entrepreneur is enough to prove the absolute role of an entrepreneur in the company’s prevalence.
What did you think of this? Do we miss something? Let us know if you want to add something to the list.