Entrepreneurship: Functions of an Entrepreneur and Distinction between Entrepreneur and Promoter

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Functions of an Entrepreneur

Functions of an Entrepreneur in image

Image Shows the Functions of an Entrepreneur

Conception of an idea

  • Entrepreneur is the person with a creative mind

  • Identify business opportunities

  • Take steps for the conversion of ideas into successful business ventures

  • Give them a concrete shape.


  • Entrepreneur undertakes the risk of setting up a small enterprise as a sole proprietor.

  • Now-a-days many entrepreneurs have assumed the role of promoters of large companies.

  • Promotion may be undertaken for setting up a new business, small or large expansion of an existing business or for combining two or more business firms.

  • Entrepreneur has to conduct feasibility studies, decide to the form of organisation, assemble the required funds and people, and give a concrete shape to the business proposition.


  • Entrepreneur is also seen as an innovator

  • Entrepreneur tries to develop new technology, products and markets.

  • The entrepreneur uses his creative abilities to do new things and exploit opportunities in the market.

Bearer of risks and uncertainty

  • Starting of a new business venture involves good amount of risk and uncertainty.

  • The entrepreneur who assumes risks and is prepared for the losses that may arise because of unforeseen situations in future.

  • Willingness to take risks that helps him to take initiatives in doing new things or trying new methods of production.

Arranging necessary capital

  • Arranging funds is one of the biggest hurdles in setting up a new entrepreneur.

  • To provide the initial capital

  • Raising additional funds required to carry on and expand the business


  • Entrepreneur has to design the organisational structure and recruit suitable persons for various positions.

  • He also makes an estimate for skilled and unskilled workers

  • Makes arrangements for their recruitment.

Distinction between Entrepreneur and Promoter

  • An entrepreneur is also known as the promoter

  • The requisite funds and people undertake the risk and give a shape to the business proposition.

  • Those who visualise a business opportunity and are ready to bear the risk are termed as ‘entrepreneurs’

  • Those who take steps to set up the business and make it operational are known as promoter.

  • But in actual practice, such distinction does not hold well because the role of entrepreneur, now-a-days, does not confine only to identifying a business opportunity and his readiness to bear the risk.

  • It also extends to taking necessary steps to set up the business and make it operational specially because facilities like venture capital and services of professional are readily available.

  • Some economists identify the basic entrepreneurial function as

    • Risk taking

    • Emphasised the coordination of production resources

    • Provision of capital

    • The introduction of innovations.

  • More practical approach would be to treat entrepreneurship as a wider term which includes promotion.

  • Most promoters of business unit in India happen to be the entrepreneurs themselves and in a family run business, the entrepreneur is owner as well as manager.

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