Economists segregate the factors of production into four categories out of which entrepreneurship is the fourth production factor that combines the other 3 important factors of land, labour, and capital with innovative ideas to earn a profit. A good entrepreneur combines these factors in a balanced proportion and then mobilizes them.
A strong entrepreneur initiated the production process by intermingling other production factors such as organizing, management, and control of firm affairs. He also takes up challenges as per market policy and makes a profit. He owns a business as his property or asset. There is often a demarcation between management and its ownership. The risk-bearing and production initiation are two key factors of being a potent entrepreneur. Let us find out some functions of being an entrepreneur:
This includes – finding the meaning and functionality of production, finding the factors of production such labour, capital source, and land property, understand the law of diminishing returns, returns to scale and finally product optimization. The three key functions as a production factor include-
Initiation of business:
This the preliminary function of beginning a business. He first finds optimum opportunities to exploit the economy through better terms. Then the development of the project idea is another important task where decision making and scaling of ideas are done. Lastly, the key factors of productions must be obtained to get the success come soon. The business must be dynamic from all aspects and he must coordinate with factors of production to make their usage in the right direction. The main task is the generation of productivity and so an entrepreneur must always try to fetch the greatest yield from the lowest cost factors of production.
Bearing optimum risk:
It is a very crucial function of fetching productivity through entrepreneurship. There will be risks of failure and certain challenges in exchange for future benefits and profits for the company. In a random dynamic model, the outlook of a new business or startup changes rapidly, so an entrepreneur must be potent to accept those and move efficiently. As the taste of consumers keeps on varying, so adaptations to new challenges must be a motto for entrepreneurs. There can be new entrants in the market, taxes may increase and all these factors highly affect the demand and supply of the product. If there is any economic loss, then he has to face these financial challenges as well.
There also may be technological risks. When he makes an optimum profit, by bearing risks, there can be certain management functions that cannot be dealt with or handed over to the manager. So in those scenarios, he has to deal with it all.
Probably the most important factor to raise productivity is the innovation of the business as per market norms and modern technology. It can be in the field of new products, new technology, new business models, exciting and new promotion tactics, exploring new markets, so on. This helps entrepreneurs with better economic growth. However, any new technology has additional risks with it. The entrepreneur manages such risks in exchange for the scope for higher returns and rewards. The entrepreneur must have an innovative spirit to lead to the achievements and advancements in his firm and on the whole round of economy.
Although the managers take care of the routine day to day decisions, the entrepreneurs must maximize their focus on the possible risks and begin assessing them for better productivity in the future. Thinking of the entrepreneurship of Bill Gates or Henry Ford, we can easily understand how it plays a vital role in regulating the engine of the economy. The building of large firms as well as small models needs thriving of the economy and so the freedom to start a business and buy resources comes for a generated productive growth of a business.