What are the Functions of an Entrepreneur?

According to the famous economist Joseph Schumpeter, 'Innovation' is the only true function of an entrepreneur.

• They do not follow old rules. They invent a completely new product, a new method of production, or find a brand-new market that no one has ever thought of before (e.g., creating the first iPhone when everyone was using keypad phones).

Starting a new business is incredibly dangerous. The entrepreneur puts their own money, career, and reputation on the line.

• They take massive financial and psychological risks knowing that the idea might completely fail and they could lose everything. A normal employee takes zero risk, but an entrepreneur absorbs all the risk.

An idea is useless without execution.

• The entrepreneur acts as the master coordinator. They bring together the 'Factors of Production'—they find the land, hire the best workers (Labor), arrange funding from banks (Capital), and organize them all to work together as a highly efficient team.

An entrepreneur is the ultimate decision-maker. They must decide the factory location, the exact price of the product, the marketing strategy, and whom to hire or fire. They have to make tough, split-second decisions every single day to keep the company alive.