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The Entrepreneur

Who is an entrepreneur ?
An entrepreneur can be defined as a person who organises or starts
and manages a business with the hope of making a profit.

Functions of an Entrepreneur
 The entrepreneur also has the responsibility of managing the
business; (operating the business)

 The entrepreneur bears the risk of a loss since there is no

guarantee that the business will succeed. The risk that all his
time, efforts and financial investment may not yield profits.
(bearing risk)

 The entrepreneur comes up with the idea for the business to

sell a particular good or service to the public. ( conceptualising)

 The entrepreneur also plans the formation of the business such

as registering the business. (organising)
 The entrepreneur organises the resources for the business for
example, he must locate a place to conduct his business ( land),
hire employees ( labour) etc. ( organising)
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 The entrepreneur also invest capital into the business. This can
be his savings and /or a loan, a machine, land, a vehicle, a
computer etc. (accessing funds)
 The entrepreneur has the responsibility of monitoring the
performance of the business. This ensures that the business is
on the right track to achieve the goals and to improve areas
where the business may be falling short. (monitor
performance)
 The entrepreneur will enjoy the profits made but bear the
burden of losses incurred. Profits are made when revenue from
sales is greater than cost of production while the reverse is true
for losses made. (making a profit or loss)

Characteristics of an Entrepreneur

 Creative & innovative – entrepreneurs need to always

implement new ideas and ways of doing things in order to be
original and stay ahead of competition. For example, the owner
of a bakery will always have to create new recipes to attract
customers and keep them interested in their products.

 Flexible – an entrepreneur has to be able to do many different

task in order to successfully operate his business. He would
need to have an understanding of book keeping, ordering and
maintaining stocks, interacting with customers, technical skills,
and how to make the product.
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 Persistence and perseverance – ensuring that one’s own

business is a success requires one to stick to his goals even
when being faced with challenges. It requires a person to find
the positive in every situation. For example, a businessman
owning a clothing factory , facing a downturn in the economy,
can make cheaper clothing that people can afford.

 Goal oriented and committed – strongly focusing on achieving

one’s aims.

 propensity to take calculated risk – this is the risk involved in

investing capital into the business with no guarantee that
profits will be made.

Functions of the Entrepreneur

Invest implement manages organises plans bears

Capital idea business resources formation risk

Entrepreneurs and Decision Making.

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Decision making is at the heart of being an entrepreneur. Itt

encompasses all aspects of his daily routine as well as the future of
his business. The following are the functions of the entrepreneurship
WITH REGARDS TO DECISION MAKING in particular:

1. Conceptualising – ideas are conceptualised by the entrepreneur

both for the business and its product and services offered.
Based on the results of market research, the entrepreneur
must decide if he should undertake the idea or not. He should
bear in mind that it should be his first priority to satisfy the
customer both in terms of what the product offers and its price
in order to be competitive.

2. Planning – planning is necessary in order for a business to be

successful. A feasibility study is undertaken to gather facts to
prove if the business will be a success or not. Planning can be

 Short term plans – plans that take less than a year

 Long term plans – plans that take more more than five
years to realise.

Entrepreneurs must decide what action must be undertaken

when planning for the business.

3. Accessing Finance – The entrepreneur must decide how much

money is needed to start the business, what further capital will
be required in the future for planned projects, where will the
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funds be acquired, what are the advantages and disadvantages

of the various sources of capital e.g the pros and cons of
borrowing from the bank or an angel investor or savings or
selling shares etc.

4. Organising the factors of production – decisions based on the

factors of productions would include the raw materials used,
accessing the raw materials, locating the business, the various
types of labour that will be required to operate the business
and make the products and services such as managers, clerks,
factory workers, delivery men etc. financial capital such as
loans and savings as well as physical capital such as assets like
building, machinery etc.

5. Operating the business – operating the business will include an

accounting system, an information technology system if it is
affordable to the business, strategies used to increase sales
particularly marketing strategies (advertising), the reduction of
cost to make the price of the products / services more
competitive on the market (sourcing more affordable raw
materials from suppliers, collecting money from sales on time
to have a smooth flow of cash into the business, collecting
debts.

6. Evaluating – an evaluation of strategies implemented to

achieve goals must be done to determine if they can be used
again or if other options should be considered for the future.
The learning experience should be noted for future reference.
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7. Risk bearing – risk is unavoidable is present from the very start

of the business and continues with every decision made for the
business during its life. However, it is necessary for its success.
There is a degree of risk for all options available. The
entrepreneur has to decide which option is feasible to him and
the business. Which one can the business handle, what
challenges the business is more likely to overcome based on its
strengths and weaknesses. What one business can handle
another business may not. There are many factors to consider
when determining this.