Functions and Types of Entrepreneurs

An entrepreneur performs several distinct functions while building and running a venture, and entrepreneurs themselves can be classified in a number of different ways depending on the basis used.

Functions of an entrepreneur

Idea generation and innovation. The starting point of any venture is an idea — a new product, an improved process, or a new way of serving an existing need. The entrepreneur is the one who generates or picks up this idea and judges whether it is worth pursuing.

Risk-bearing. Once the entrepreneur commits capital and effort to the idea, they bear the risk that the venture may not succeed. This risk-bearing function is what separates the entrepreneur from, say, a salaried manager who is paid regardless of whether the business as a whole makes a profit.

Organisation-building and resource mobilisation. The entrepreneur must bring together the various resources a business needs — finance, raw materials, machinery, premises and manpower — and organise them into a coordinated, functioning unit. This includes deciding the scale of operations, choosing suppliers, and setting up the basic organisational structure of the enterprise.

Decision-making. From choosing what to produce and at what price, to deciding whom to hire and how to raise finance, the entrepreneur is continuously required to take decisions that shape the direction of the enterprise.

Employment generation. As the enterprise is set up and grows, it creates jobs — directly within the enterprise itself, and indirectly among its suppliers, distributors and service providers. This employment-generation function is one of the entrepreneur's most important contributions to the wider economy, not just to the individual venture.

Classification / types of entrepreneurs

Entrepreneurs are commonly classified using the following bases:

By scale of business — small, medium, and large-scale entrepreneurs, depending on the size of investment, the scale of operations, and the number of people employed.

By area of operation — urban entrepreneurs, who set up enterprises in cities and towns where infrastructure, markets and finance are relatively easier to access; and rural entrepreneurs, who set up enterprises in villages and smaller towns, often using local resources and serving local needs, and who play a particularly important role in generating rural employment and reducing migration to cities.

By gender — men entrepreneurs and women entrepreneurs. Women entrepreneurship has been growing steadily in India, supported by education, self-help groups, and targeted government schemes, and is increasingly recognised as an important contributor to household income and to the wider economy.

By use of technology — technical entrepreneurs, who possess technical knowledge or an engineering/scientific background and build ventures around new technology, machinery or production processes; and non-technical entrepreneurs, who may not have a technical background themselves but focus instead on marketing, distribution, finance or other non-technical aspects of the business, often employing technical staff where needed. …