Question

Explain the promotional functions of entrepreneurs.

Answer 1

(1) Discovery of Idea:

• The first and foremost function of an entrepreneur is idea generation. A person may conceive his own ideas or develop the ideas contributed by others. Ideas can be generated through several ways like own experience and exposure of entrepreneur, keen observation of the environment, education, training, market survey, environmental scanning, and so on.

(2) Determining the business objectives:

• The entrepreneur has to develop business objectives in the backdrop of nature of business and type of business activity i.e. nature of business, manufacturing or trading, type of business organization chosen so that he/she can organize the venture in accordance with the objectives determined by him/her.

(3) Detailed Investigation:

• Entrepreneurs should investigate the commercial feasibility of the product proposed to be produced and conduct market studies to ascertain the potential demand for the product.

(4) Choice of the form of enterprise:

• The entrepreneur has to choose the appropriate form of organization suited to implement the venture. There are various forms of organization namely sole proprietor, partnership, company, and co-operatives, etc. which are in existence.

(5) Fulfilment of the formalities:

• Having chosen the appropriate type of organisation, the entrepreneur has to take the necessary steps to establish the form of organisation chosen. As regards sole trader, the formalities are the barest minimum. In the case of a partnership firm, the entrepreneur has to arrange for a partnership deed and he has to get the deed registered.

(6) Preparation of Business Plan:

• The entrepreneur has to prepare a business plan or project report of the venture that he is proposing to take up.

(7) Mobilisation of funds:

• The entrepreneur has to take steps to mobilise the capital needed to implement the venture. An entrepreneur has to estimate the fixed capital and working capital required for running the project.

(8) Procurement of Machines and Materials:

• The entrepreneur has to locate the various sources of supply of machinery, equipment and materials.