The typical business man of two or three centuries ago was the master craftsman who owned the tools which he used with his own hands upon his own material and in his own house. He sold his wares directly to the consumer. Sometimes he employed additional labor and sometimes not. He was laborer, capitalist, landlord, and employer all in one. But under the stress of competition a specialization developed which made it no longer expedient for the business man to exercise all of these functions. The man who specialized in organizing and directing the business came, in time, to have an advantage over the non-specialist. And so a special class of persons developed whose business it was to organize and direct enterprise. Since these persons are said to undertake the business, it was formerly customary to call them "undertakers." In recent times, however, this term has been used to designate a particular class of business managers and it became necessary to find another term so as to avoid ambiguity. The term entrepreneur, which is the French equivalent of the English word undertaker, is frequently used for this purpose. Sometimes the word employer is used to designate this person. Recently the word enterpriser has been widely used.

80. Functions Of The Enterpriser

The business of the enterpriser is to organize and direct the enterprise. He decides whether or not the business is to be undertaken. He employs the labor and secures capital and land in suitable quantities and proportions. He undertakes to see that these factors produce efficiently. He finds a market for the product. Out of the money return which he receives for the product, he undertakes to pay the laborer and the landlord and the capitalist for their contributions to the production. If there is a balance left after paying all the claims against the business, it goes to the enterpriser as profit. If he is compelled to pay out more in the conduct of the business than he realizes from his sales, the business is conducted at a loss and he must bear the loss. Unless he can, on the whole, conduct the business at a profit he cannot continue indefinitely as enterpriser.

81. Forms Of Business Management

The responsibility for the successful organization and direction of a business enterprise may rest with one person or it may be divided among several. It will be convenient to classify business management according to forms as single enterpriser businesses, partnerships, corporations, cooperative businesses, and government industries.

82. The Single Enterpriser

As a good example of the single enterpriser may be cited the farmer. The typical farmer is more than enterpriser, for he furnishes to the enterprise his own labor and his capital and his land as well as his managing ability. But he is the enterpriser as well, for he decides how the land and labor and capital shall be united in the enterprise. He is responsible for their efficient cooperation and for the marketing of their products. He secures his profits when the factors in production are well organized and directed, and he suffers a loss when the business is poorly managed. Likewise, the lawyer or the shoemaker who works for himself is a single enterpriser, for he directs the business and takes the risks, making profits or suffering losses. As a general thing the single enterpriser system flourishes where small scale production prevails, as for example in retail trade, in agriculture, in the professions, and in such handicrafts as blacksmithing, tailoring, etc.

83. Advantages And Disadvantages

One of the important advantages of the single enterpriser system is the ease of starting the enterprise. There are no agreements to be made with partners, no stockholders to be secured, and no license fees to be paid for incorporation. The enterpriser decides upon the business and then proceeds to get the capital and labor and land together and to set the enterprise in motion. A second distinct advantage of the single enterprise is that the person who makes the decision secures directly for himself the profits or suffers the losses. Such closeness of relation between direction and responsibility is conducive to efficient management. As disadvantages of the single enterpriser system in comparison with the other forms of enterprise we may cite the fact that the single enterpriser seldom has the breadth of experience and the capacity for conducting the business that are likely to be found among his competitors where the competing businesses are directed by groups of persons. In the second place, it is difficult for the single enterpriser to secure capital as readily as the partnership or the corporation can secure it. And thirdly the single enterpriser is not likely to be so well able to bear the losses which may attend the business as are the other forms of enterprise, while in the corporation form the extent of loss suffered by the enterprisers may be limited.