AN
ENTREPRENEUR
An entrepreneur is one in whose mind the idea of doing
business of a particular type first takes shape. He is on the look-out for
business opportunities and is a good judge of which products will sell. He is
imaginative and is guided by a strong sense of achievement. He is not afraid of
future uncertainties. He is prepared to take risk and face challenges. Above
all. an entrepreneur is one who creates something new, something different. He
innovates and combines resources in the form of men, materials and money and
brings them together to make the business venture profitable.
Entrepreneurship
What the entrepreneurs do may be regarded as
'Entrepreneurship'. In other words, entrepreneurship.is the act of being an
entrepreneur. The word entrepreneurship is actually derived from the French
term 'entrepreneur' which means to undertake, to pursue opportunities, to
fulfil needs and wants of people through innovation and starting business. The
entrepreneur is the person who does all this. He undertakes a venture,
organises it, raises capital to finance it and assumes the whole or major part
of risk of business. Thus, 'entrepreneurship is the process of giving birth
to a new business'.
Innovation and risk bearing are the two basic elements of
entrepreneurship. Hence you must know the exact connotation of these terms.
Innovation:
If a business activity does not require anything special to
be done. it is not entrepreneurship. In fact a person cannot be called an
entrepreneur unless he introduces something new, something different, in his
venture. This is known as innovation, that is, doing something different from
others. The entrepreneurs are constantly on the look out for something unique
to fulfil the need or want of people. They may or may not be inventors of new
products or new methods of production, but they are able to foresee the possibility
of making use of the invention for business. Others who come to know about the
same invention are not capable of thinking about its practical usefulness in
business. Or, they may not have the ambition or self-confidence to take
advantage of it.
In a competitive market, an entrepreneur can succeed in his
business only through innovation. Art innovation need not necessarily he
something big or dramatic. A simple adjustment to something old, or giving a
service without extra charge while selling a product. or a colourful packaging,
or selling a product in packets of different weights, and such types of steps
may be profitable innovations. Of course, if similar things are done by a number
of producers and sellers, an entrepreneur has to think of other types of
innovations Thus some innovations may lead to other innovations. No wonder that
imagination is sometimes more important than knowledge for innovative thinking.
An entrepreneur must have imagination and also the ability to think creatively.
Take the case of fruit juice. Now a days, fruit juice is
sold in small cartons instead of bottles. so that you can carry it and throw
away the container after drinking the juice. This is innovation. Let us take
another example. You may have heard of Henry Ford who established the Ford
Motor Company in the United States. He did not invent the automobile, but
he applied new methods of mass production and turned out passenger cars at low
cost so that many people could afford it.
Risk Bearing:
Risk bearing is another
aspect of entrepreneurship that every entrepreneur has to cope with. One who is
an entrepreneur must be a risk taker, not a risk-avoider. In fact, starting a
new business always involves risk because money is invested for profits-in
future. To try anything new is also risky. A new venture may not bring the
expected profits or ma, fail and run into losses. It may happen because of
increasing competition, a change in customer preferences, shortage of rave
material supply, or sudden unexpected calamities. But an entrepreneur is bold
enough to assume the risks. He is prepared to take risks for the reward. Even
if he fails in one venture, he persists, and this helps him to succeed.
Characteristics of an Entrepreneur
If you read business history, you will come across the names
of many persons who in:, he called entrepreneurs. Rockfeller and henry Ford of
the United States, Karl Benz and Gottfried Daimler of Germany, Soichiro Honda
of Japan, are well-known names of entrepreneurs, who started industrial
organisations and made fortunes. in our country, J.N.Tata, G.D.Birla,
Kirloskar and others have set up successful manufacturing industries. Small
business firms have often succeeded because of the part played by
entrepreneurs. It may be useful to know whether they had anything common as
regards their personal characteristics. It has been found that there are
certain elements in the character of entrepreneurs which are usually prominent
in them.
1
Independence: Many entrepreneurs who started their businesses
resisted being pigeonholed or following routine habits. In fact, entrepreneurs
become frustrated when they have to follow someone else's direction. They have
to be the boss. They like to be in control. They find it difficult to work
under the direction of others.
2 Hard
Work: Willingness to work—and work hard—is an outstanding trait of
entrepreneurs. You can bet that the successful business owner has paid with
tedious, sweat-filled hours, emotional stress, and perseverance. Most likely
the business verged on failure many times in the beginning, but the owner
simply would not let it die. A successful entrepreneur described his early
experiences that they worked endless, twelve hour days and sometimes seven days
a week. You might say it was his whole life.
3 Desire
to Achieve Goals: They have a strong desire to overcome problems and
setting up successful business ventures which eventually give adequate profits.
They considered profit as a measure of their achievement and performance rather
than making money alone.
4
Foresight and Dynamic Outlook: Basically, these people have wide
knowledge about business environment i.e., market, consumer attitude,
technological development, etc. Further, they are dynamic in forecasting
business uncertainties and risks, accordingly, they take quick and sound
decisions.
5 Open-mindedness:
They are intelligent in predicting changes in business environment. However,
they never resist changes because they know that they cannot stop it.
Therefore, they are habituated to open-mindedness even though sometimes they
lose cruces of rupees due to changes in consumer tastes which ultimately forced
them to change their technology, etc.
6
Optimistic Outlook: They are generally inclined to believe that
present problems are of a temporary nature and conditions will be more
favourable in due course. Entrepreneurs are always eager to achieve their goals
in the best possible manner, to get outstanding results which they can be proud
of.
7 Working
Relationship : The success of a business mostly depends upon its
workers first and then their links with other business undertakings. Most of
the successful business entrepreneurs have had harmonious relationships with
others. This builds up their reputation in the market.
8 Good
Organisers : They are good at bringing together different types of
resources needed for starting a business and making it operationally efficient.
They can convince people about the prospects of business. get their
cooperation, raise funds, procure machinery, arrange supply of materials,
select right type of employees and coordinate various activities relating to
the business.
9 innovative Aptitude:
Most of the successful entrepreneurs have innovative aptitude. They spend part
of their income on research and innovative activities so that they offer
suitable products to meet the demands of consumers. Some of our industrialists
like Tata, Birla, Kirloskar, etc. have established their own research centres.
Functions of an Entrepreneur
Having read the
preceding pages of this unit, you must have started thinking about the
functions of an entrepreneur. Essentially, what the entrepreneur does is to
recognise the possibility of starting a business which may be profitable. Then,
he prepares a plan of action, and steps to be taken to set up the business, and
eventually undertakes the operation of the business. Of course, depending upon
the nature of business that is in view, the functions will differ. Let us see
functions of an entrepreneur who is looking for opportunities to engage in
production activity.
1
Develops an idea and explores opportunities: The idea of forming a
business unit is first formed in the creative mind of the entrepreneur. On the
basis of the idea he perceives opportunities for profitable investments and
explores the prospects of starting a manufacturing enterprise.
2 Product
analysis and market survey: He collects data on consumer preferences
and needs through market research techniques and to find out the saleability of
the proposed product. Further, he collects consumer preferences in respect of
design, colour, size, and shape. In addition, the entrepreneur gathers the
total demand and the degree of competition for the proposed product.
3 Decides
form of organisation: He decides the form of business ownership,
i.e. whether it should be a sole proprietorship, a partnership firm, a company
or a cooperative society.
4 Decides location: He decides
location of the factory at a suitable place taking into account the available
facilities of transport, power-supply, fuel, water, labour, supply or
raw-materials, nearness of market, etc.
5
Collects necessary capital: He makes available sufficient amount of
capital for the initiation and continuation of the business. He gives personal
guarantees to the financiers who contribute capital. Otherwise, he promises to
invest capital himself or arrange the necessary amounts from friends and
relatives. In case of small.enterprises, the promoters can provide funds from
their own savings. But in case of large enterprises, funds have to be raised
from various sources like general public, commercial banks, financial
institutions, etc.
6 Places
orders for machinery: He places orders for machinery, equipments and
other requirements. He takes decision about the installation of equipment and
machinery in the process of production.
7
Recruitment of labour: As an entrepreneur he makes an estimate of
skilled and unskilled workers of different categories required for various
departments. Accordingly, the entrepreneur arranges their recruitment.
8 Designs
internal organisation structure: He designs internal organisation
structure for his proposed concern. This involves breaking up of the total work
of the enterprise into major functions like production, marketing, finance,
personnel, purchase, engineering, etc. and the dividing of each of them into
sections. He stipulates the functions of different departments and their
inter-relationships.
9 Fulfils
formalities and launches enterprise: Every type of business has some
procedural formalities while starting a new enterprise. The formalities are
different for different types of business organisations. Unless you fulfil them
you cannot simply launch an enterprise.
Thus, the rote of an entrepreneur is that of an initiator
and promoter. In a sense, the role of an entrepreneur is also that of an expert
having knowledge of product, market conditions and of the practical aspects of
running a business. He should not be simply an imaginative thinker but also have
the ability to judge what kind of business will click. His role is indeed
crucial for the eventual success of a business. When an enterprise has been
launched and it turns out to be profitable, the entrepreneur may decide to
leave it, give up his ownership rights, and hand it over to others to run it.
Many entrepreneurs in the past have done so. They have been attracted by new
opportunity and more profitable lines of business. But many entrepreneurs have
continued to run the business they started taking every opportune of expanding
the original venture, adding new activities, making current operations more
efficient, and deriving satisfaction from their achievements.
But you will agree that it is the initial phase which is
most important for the success of a venture. It is at this stage that the
future of a business is decided. The basic responsibilities, of an entrepreneur
include the ability to seize an opportunity, to innovate, explore the prospects
of profitable business, and then to complete legal formalities, raise, funds
and finally manage the business are the basic responsibilities of the
entrepreneur. He has to face many obstacles, many problems and difficulties in
the course of promoting business. He h3' to take decisions which may have
long-run implications. An entrepreneur has thus to undertake many things. But
the most important of these are: (i) innovation, and (ii) risk bearing.
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