The entrepreneur and entrepreneurship
Yvonne Harvey, Contributor

It is so good to be with you all again. This week, we will begin a new section of the syllabus: Section 3 - Establishing a business. This involves the concepts of entrepreneur and entrepreneurship. Also, we will consider the role of the entrepreneur and the characteristics of the typical entrepreneur.

The entrepreneur is a human factor of production whose main functions are to organise the other factors of production and bear risks.

The entrepreneur consciously moves resources from an area of lower productivity and lower yield to an area of higher productivity and higher yields.

The entrepreneur may also be seen as one who creates a new business in the face of risk and uncertainty, for the purpose of achieving profits, by identifying opportunities and assembling the necessary resources to capitalise on them.

Entrepreneurship is the process or the act of organising resources and acceptance of risk and uncertainty for the purpose of capitalising on opportunities with the aim of achieving profit.

Role of the entrepreneur

1. Conceptualising: The entrepreneur must formulate ideas regarding the type of business and the type of product that can be put on the market. He must also think of the size of the production in order to make a profit.

2. Planning: This means that the entrepreneur will consider the future and what is to be done in the future with regard to what has been conceptualised. The entrepreneur will make short-term as well as long-term plans. Overall, policies and organisational structure will have to be worked out. Planning also includes outlining the duties of managers and setting targets to be met, for example, production and sales targets.3. Accessing funds: The entrepreneur is responsible for raising funds or finances before production begins and whenever the business needs additional capital for expansion. This does not mean that the funds must come from the entrepreneur's own pocket. Apart from savings, the entrepreneur can use other sources of finance, including:

• Borrowing from friends and relatives
• Attracting foreign investors
• Acquiring partners
• Financial institutions.

4. Organising: This involves bringing together the other factors of production in order to ensure efficiency, maximum output and maximum profits.

5. Operating: Once the entrepreneur has chosen the right form of ownership, made short-term and long-term plans and organised resources, including time and money, he may begin to operate or run the business. Operating the business will involve the functional areas of production, marketing, finance and personnel. Operation of the business results in the production and sale of a good or service with the view to making a profit.

6. Evaluating the performance of a business: One of the functions of managers is evaluating. This is done at the end of the production process to see if the entire process has been successful and to see if the goals of the organisation have been met. Problems and failures are reviewed and suggestions are made and put in place to avoid these in the future.

7. Bearing risks: A risk is a chance. There are two types of risks: a) insurable and b) non-insurable risks. It is the responsibility of the entrepreneur to take out policies against those risks which can be insured, for example, the threat of theft, fire, flooding, etc. Those risks which cannot be insured against must be borne on the shoulders of the entrepreneur. Such risks are referred to as uncertainties, for example, a sudden change in the demand for the product. Entrepreneurs must be willing to take risks or chances in order to make profits.

8. Reaping profits or the bearing of losses: The entrepreneur's reward for organising the factors of production and bearing risks is profit. To gain profit, the entrepreneur must sell the good or service for more than it costs him to produce. That is, average revenue must be greater than average cost. If he sells for less than it costs him to produce, he will make losses. In the long run, he will leave the industry and go into one where he can, at least, make normal profit.

In some forms of operations by entrepreneurs, profits and losses are shared, for example, partnerships. In other forms, for example, the sole trader, profits and losses belong to the owner of the business.

Your task for this week is to do some research on what should be the characteristics of the typical entrepreneur. Write a few sentences on each characteristic.

Take care until next week.

Students get busy during an electrical class at Bridgeport High School, recently. - Anthony Minott/Freelance Photographer

Yvonne Harvey teaches at Glenmuir High School.