10 Important Roles of an Entrepreneur
Updated February 20, 2023
Increased access to resources and useful information about running a business has enabled entrepreneurs to develop a variety of roles. By learning about these roles and how they affect your career as an entrepreneur, you can more effectively prepare yourself for different types of situations in your business. In this article, we discuss 10 roles an entrepreneur can hold.
What is an entrepreneur?
An entrepreneur is an individual who creates and grows a business through their creative ideas. Entrepreneurs play key roles besides generating income as they grow their businesses.
An entrepreneur identifies a commercial need in their community, crafts a business idea and takes the lead role to start their business. If a business idea doesn't involve creating a product that was insufficient in the market, it typically involves using technological innovations to make a product or service more easily accessible.
10 roles of an entrepreneur
Here are 10 entrepreneurial roles to familiarize yourself with before you set up a business:
1. Initiating and leading business activities
Initiating and growing a business to its maturity is a traditional role for entrepreneurs. As societies progress, people regularly develop new needs that an entrepreneur can satisfy with their business ideas. This business idea can provide either services or products that would benefit the community.
Identifying a gap and planning how to address it helps entrepreneurs initiate new business ventures at any opportunity. They must understand every aspect of the business, including making critical decisions, setting a good example for employees and resolving conflicts.
2. Allocating employees' duties
From the onset of a business, an entrepreneur needs to allocate their employees' responsibilities effectively. Hiring qualified and competent staff requires a great deal of care, especially for small businesses. An entrepreneur is also responsible for organizing a business structure and environment that helps each employee maximize their potential. The success of a business venture often relies on its employees' contributions.
Therefore, defining your team's role and responsibilities is a vital entrepreneurial role to exercise for maximum business productivity. Allocation of duties also minimizes team conflicts, maximizes production and helps boost employee morale.
3. Forecasting business changes
Most businesses face some kind of uncertainty as they develop. An entrepreneur's role in this aspect is to anticipate any challenges and address them as quickly as possible. Forecasting is important because it helps the entrepreneur make decisions such as reducing or increasing stock for a product, procuring updated software or making credit acquisition decisions.
Read more: Guide To Business Forecasts
4. Creating jobs
When an entrepreneur sets up or expands a business, they decide which employees they need to hire. Entrepreneurs consider factors such as who oversees processes and who can fulfill administrative tasks. Even when an entrepreneur does not directly employ staff to work in a physical location, they may still need to consider people who can work as a service provider, a software salesperson or a programmer.
5. Identifying business opportunities
Entrepreneurs regularly seek out opportunities that can grow or boost sales for their business. They identify which product to add and which market to expand to. An entrepreneur should listen to their potential clients and find opportunities to develop tailored products that cater to their clients' needs.
By doing a little competitive analysis, an entrepreneur can find out what other businesses in the area are doing and how they are succeeding. This process might include a physical survey or reading publications about trends in a specific industry. Talking to customers also makes it easier to identify their frustrations and experiences, which an entrepreneur can use to improve their business.
Related: What Is a Competitive Analysis?
6. Creating and sharing wealth
Starting a business involves a network of activities. Whether an entrepreneur runs a small business operator or an established company, many spend money from savings and gain capital from family, friends or banks when they start out. Investors often look forward to investing in small but potentially viable businesses, while lenders grow their own businesses by earning interest from capital extended to entrepreneurs. The cycle of such fund mobilization can help the local economy build wealth.
7. Improving the standard of living
Economies are used to measure living standards. These living standards can improve through the developments or services that an entrepreneur brings through their business.
Innovations that can reduce the cost of creating a product also reduces the product's price while allowing the business to maintain the same profits, which allows customers' to spend less money. When people save money by acquiring a product at a cheaper price, they can use the savings for other purposes. This is an indication of an improved standard of living.
8. Taking up and reducing business risk
When entrepreneurs start a business, they spend time analyzing and researching to make sure their ideas succeed. An entrepreneur's role is to eliminate the risk of business failure by taking measures to reduce as much risk as possible.
Such measures include bringing competent and committed employees in the company, obtaining insurance coverage for the most risk-prone segments of the business and getting more investors motivated to grow the business.
Read more: Risk Management: A Definitive Guide
9. Building strategic partnerships
An entrepreneur must create a business environment where partnerships can thrive, which helps their business succeed. Generating and closing new business leads is an essential entrepreneurial skill. An entrepreneur should maximize their marketing capacity, spend time talking to qualified potential partners and regularly call every prospect. Creating strategic partnerships can help entrepreneurs make better decisions for their company and even obtain more capital.
10. Digitalizing business operations
Because technology evolves so quickly, a business product or service can be rendered obsolete due to new technology's entry. An entrepreneur is responsible for continuously updating the technology they use in their business processes or activities. Entrepreneur roles regarding technology include:
Researching the most recent methods of reducing production cost
Disposing of equipment that is not improving profitability
Organizing training for staff to help them familiarize themselves with the latest technological programs in the market to improve efficiency
Using the most popular and recent marketing medium to ensure you reach your target group
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