Lecture: Characteristics and Functions of an Entrepreneur

Several factors go into the making of an entrepreneur. Individuals who initiate, establish,
maintain and expand new enterprises constitute the entrepreneurial class. The social-political and
economic conditions, the availability of industrial technology and know-how, state of art and culture
of business and trading, existence of markets for products and services and the incentives and
facilities available for starting an industry or business, all have a bearing on the growth of
entrepreneurship. A conducive environment is created through the policies and interest of the
government in economic and industrial development.

• Characteristics of an entrepreneur:

Entrepreneur is a key figure in economic progress. He is the person who introduces new
things in the economy. He is considered as the business leader and not as simple owner of capital.
He is a person with telescopic faculty, drive and talent who perceives business opportunities and
promptly seizes them for exploitation. To be successful, an entrepreneur should have the following
characteristic features.

1. Need for achievement: Entrepreneurs have got strong desire to achieve higher goals. Their inner
self motivates their behaviour towards high achievement: most of the people dream of success but
do not take any action towards achieving these dreams. Entrepreneurs with high n-Ach factor act
continuously to achieve the goal and make their dreams come true. For them, winning is
achievement.

2. Independence: Most of the entrepreneurs start on their own because they dislike to work for
others. They prefer to be their own boss and want to be responsible for their own decisions.

3. Risk-taker: Entrepreneurs are the persons who take decisions under uncertainty and thus they are
willing to take risk, but they never gamble with the results. They choose moderate risk rather than
play wild gamble. They, therefore, undertake calculated risk which is high enough to be exciting,
but with a fairly reasonable chance to win.

4. Locus of control: According to Rotter’s locus of control theory, an individual perceives the
outcome of an event as being either within or beyond his personal control. Entrepreneurs believe in
their own ability to control the consequences of their endeavour by influencing their socio- economic
environment rather than leave everything to luck.

5. Perseverance: Entrepreneur has got the quality of sticking to job he decides to undertake. Once
committed to a specific goal and course of action, entrepreneurs become absorbed to it. They
personally solve the problems that come across their way while setting up the project. They also
work sincerely until the whole project is successfully implemented.

Entrepreneurship Development & Business Communication (ENP2061) SoAS, GDGU

Dr. Anwesha Mandal, Asst. Professor
 Lecture: Characteristics and Functions of an Entrepreneur

6. Positive self-concept: Entrepreneurs are always positive in their action. Being an achiever, he
directs his fantasies and dreams towards achievement of worthwhile goals and sets extraordinary
standard of excellence in what he is doing. This is based upon his awareness of SWOT analysis, i.e.
his strengths, weaknesses, opportunities and threats. He utilizes his positive knowledge to support
his thinking. He never exhibits any negative attitude.

7. Ability to find and explore opportunities: Entrepreneurs are always alert to opportunities. They
are very much quick to see and grab opportunities. They exhibit an innovative turn of mind and
convert the problems into viable opportunities. They plan intellectually and anticipate carefully how
to achieve their goals in realizing an opportunity.

8. Hope of success: Hope of success is a significant quality of entrepreneurial personality.

Entrepreneurs set their goals with a hope of success rather than fear of failure. This is because they
set their goals on the basis of facts and their ability to maneuver them to their advantage.

9. Flexibility: Most of the successful entrepreneurs measure the pros and cons of a decision and
tend to change if the situation demands. They never feel reluctant to revise their decisions. They are
the persons with open mind without rigidity.

10. Analytical ability of mind: Entrepreneurs are unaffected by personal likes and dislikes. They
stand beyond these types of prejudices as they are realistic in their approach. At the time of their
need they select experts rather than friends and relatives to assist them. They usually avoid emotional
and sensitive attitude towards their business or problem.

11. Sense of efficacy: Entrepreneurs are always oriented towards action for accomplishment of their
goals. Being confident of their abilities, they find themselves as problem solvers rather than problem
avoiders. They chalk out their goals for future and make planning to achieve them.

12. Openness to feedback and learning from experience: Successful entrepreneurs like to have
immediate feedback of their performance. They modify their plans on the basis of the feedback they
receive from the environment around them. They learn from their experience and never get
discouraged having received unfavorable information. On the contrary, they are stimulated by
unfavorable information to involve themselves sincerely in their own tasks to reach their desired
goals.

13. Confronting uncertainty: Successful entrepreneurs are always optimistic and take every odd
as the opportunity. They maneuver their environment in such a way that the works get accomplished
rationally. Thus, they win by the application of their extraordinary insight and skill.

Entrepreneurship Development & Business Communication (ENP2061) SoAS, GDGU

Dr. Anwesha Mandal, Asst. Professor
 Lecture: Characteristics and Functions of an Entrepreneur

14. Interpersonal skills: Entrepreneurs are always comfortable while dealing with people at all
levels. They interact with raw material suppliers, customers, bankers, etc. for different activities. As
successful entrepreneurs, they should be persons who like working with others possessing the much
needed quality of interpersonal skill to deal with people.

15. Need to influence others: Once the entrepreneurs set their goals, they have to play the roles of
manager too. For influencing others (n Power), a low need to establish emotional relationship (low
n-Affiliation), and a high need to discipline one’s own self (to inhibit over expression of their
personality) are essential.

16. Stress takers: Entrepreneurs are capable of working for long hours and solving different
complexities at the same time. As the captain of an industry or an enterprise, an entrepreneur faces
a number of problems and in right moment he takes right decisions which may involve physical as
well as mental stress. He can face these challenges if he has the capability to work for long hours
and keep himself cool under monotony.

17. Time orientation: Entrepreneurs anticipate future trends basing upon their past experience and
exposure. They stick to the time pragmatically while doing their jobs.

18. Innovators: Successful entrepreneurs are innovators. They constantly put their efforts in
introducing new products, new method of production, opening new markets and recognizing the
enterprise.

19. Business communication skill: In order to motivate others in the business entrepreneurs must
possess good communication skill. Both written and oral communication skills are necessary for the
entrepreneurs for running enterprise efficiently.

20. Telescopic faculty: Successful entrepreneurs always tend to think ahead. They have got
telescopic faculties which make them think for the future. Future orientation makes them quite alert
to the changing conditions of the time and they tend to produce goods and commodities as per the
changing demands.

21. Leadership: Entrepreneurs should possess the quality of leadership. Leadership is the ability to
exert interpersonal influence by means of communication towards the achievement of goals.
Entrepreneurs as the leaders should provide the necessary spark to motivation by guiding, inspiring,
assisting and directing the members of the group for achievement of unity of action, efforts and
purpose. Hence, entrepreneurs by their own leadership styles and behaviour reduce the problems by
proper handling of situations. Good administrative work depends upon effective leadership of the
entrepreneur.

Entrepreneurship Development & Business Communication (ENP2061) SoAS, GDGU

Dr. Anwesha Mandal, Asst. Professor
 Lecture: Characteristics and Functions of an Entrepreneur

22. Business planning: Planning implies deciding in advance what, when and how to do a thing.
Entrepreneurs should be equipped with skill and knowledge to prepare their business plan. A
successful entrepreneur always follows the principles of management while planning for his
business. The planning can act as a bridge between the present positions and expected future shape
of the enterprise. It provides a sense of vision to the entrepreneurs to cope with risky and uncertain
situation.

23. Decision making: Decision-making skill is a fundamental characteristic of an entrepreneur.

This implies the function of choosing a particular course of action at every stage of creation of an
enterprise out of several alternative courses for the purpose of achieving specified goals. Hence,
decision making is necessary at all times and mostly at conditions of uncertainty and risk.

24. Ability to mobilize resources: Entrepreneurs must have the ability to marshal all the inputs to
obtain the end product. They have to mobilize 6Ms, i.e. Man, Money, Material, Machinery, Market
and Method effectively to realize the final product as entrepreneurship is a function of gap filling
and input completing.

25. Self-confidence: Entrepreneurs must have self-confidence to accomplish the task effectively
and efficiently. They must take decisions on their own in uncertain and risky situation and should
stick to it confidently even if there occur initial setbacks.

• Functions of entrepreneurs:

An entrepreneur is an opportunity seeker. He is also the organizer and coordinator of the agents
of production. He has to execute many a good functions while establishing a small scale enterprise.
He not only perceives the business opportunities but also mobilizes the other resources like 5Ms-
man, money, machine, materials and methods. However, the main functions of the entrepreneurs are
discussed further.

1. Idea generation: This is the most important function of the entrepreneur. Idea generation can be
possible through the vision, insight, observation, experience, education, training and exposure of the
entrepreneur. Idea generation precisely implies product selection and project identification. Ideas
can be generated through environmental scanning and market survey. It is the function of the
entrepreneurs to generate as many ideas as he can for the purpose of selecting the best business
opportunities which can subsequently be taken up by him as a commercially-viable business venture.

2. Determination of objectives: The next function of the entrepreneur is to determine and lay down
the objectives of the business, which should be spelt out on clear terms. In other words, entrepreneur
should be very much clear about the following things:

Entrepreneurship Development & Business Communication (ENP2061) SoAS, GDGU

Dr. Anwesha Mandal, Asst. Professor
 Lecture: Characteristics and Functions of an Entrepreneur

(i) The nature of business

(ii)The type of business

This implies whether the enterprise belongs to the category of a manufacturing concern or a
service-oriented unit or a trading business, so that the entrepreneurs can very well carry on the
venture in accordance with the objectives determined by him.

3. Raising of funds: Fund raising is the most important function of an entrepreneur. All the activities
of a business depend upon the finance and its proper management. It is the responsibility of the
entrepreneur to raise funds internally as well as externally. In this matter, he should be aware of the
different sources of funds and the formalities to raise funds. He should have the full knowledge of
different government sponsored schemes such as PMRY, SGSY, REGP, etc. by which he can get
Government assistance in the form of seed capital, fixed and working capital for his business.

4. Procurement of raw materials: Another important function of the entrepreneur is to procure

raw materials. Entrepreneur has to identify the cheap and regular sources of supply of raw materials,
which will help him to reduce the cost of production and face the competition boldly.

5. Procurement of machinery: The next function of the entrepreneurs is to procure the machineries
and equipments for establishment of the venture. While procuring the machineries, he should specify
the following details:

(a) The details of technology

(b) Installed capacity of the machines

(c) Names of the manufacturers and suppliers

(d) Whether the machines are indigenously made or foreign made

(e) After-sales service facilities

(f) Warranty period of the machineries

All these details are to be minutely observed by the entrepreneurs.

6. Market research: The next important function of the entrepreneur is market research and product
analysis. Market research is the systematic collection of data regarding the product which the
entrepreneur wants to manufacture. Entrepreneur has to undertake market research persistently in
order to know the details of the intending product, i.e. the demand for the product, the supply of the
product, the price of the product, the size of the customers, etc. while starting an enterprise.

Entrepreneurship Development & Business Communication (ENP2061) SoAS, GDGU

Dr. Anwesha Mandal, Asst. Professor
 Lecture: Characteristics and Functions of an Entrepreneur

7. Determination of form of enterprise: The function of an entrepreneur in determining the form

of enterprise is also important. Entrepreneur has to decide the form of enterprise based upon the
nature of the product, volume of investment, nature of activities, types of product, quality of product,
quality of human resources, etc. The chief forms of ownership organizations are sole proprietorship,
partnership, Joint Stock Company and cooperative society. Determination of ownership right is
essential on the part of the entrepreneur to acquire legal title to assets.

8. Recruitment of manpower: Entrepreneur has to perform the following activities while

undertaking this function:

(a) Estimating manpower need of the organization

(b) Laying down of selection procedure

(c) Devising scheme of compensation

(d) Laying down the rules of training and development

9. Implementation of the project: Entrepreneur has to work on the implementation schedule or the
action plan of the project. The identified project is to be implemented in a time-bound manner. All
the activities from the conception stage to the commissioning stage are to be accomplished by him
in accordance with the implementation schedule to avoid cost and time overrun, as well as
competition. Thus, implementation of the project is an important function of the entrepreneur.

Entrepreneurship Development & Business Communication (ENP2061) SoAS, GDGU

Dr. Anwesha Mandal, Asst. Professor