Risk & Reward
Business: Edexcel GCSE, topic 1.1.2
Risk and Reward
Entrepreneurs, and the businesses they start, face risk and reward.
Risk
- A business may not succeed for a number of reasons. Starting a business is risky.
Reward
- If a business succeeds, there may be a big financial or emotional reward.
Risks
The entrepreneurs that start businesses face a lot of risk. Some of the risks are:
Risk of failure
- Starting a new company is very risky as they are most likely to fail in their early days.
- They face the risk that consumers may not want to buy their product, especially if it is a brand new product.
Financial loss
- Starting a new business often requires a lot of investment. Failure can often mean a large financial loss for the entrepreneur.
Lack of security
- Entrepreneurs often lose the security that they had with their job in terms of a regular wage or salary.
- This means that if the business isn’t making any profit, the entrepreneur may have no money to live off.
Reward
Businesses and entrepreneurs can also benefit from great rewards.
Financial reward
- If a business is successful then an entrepreneur is able to make a profit.
- They also may be able to sell the business for a large sum in the future.
Be their own boss
- Setting up your own business means that you can work for yourself.
- This means that you are likely to have more flexible working hours and more choice over the type of work that you do.
Dissatisfaction with their current job
- Many entrepreneurs have had full time jobs in the past that they haven’t enjoyed which has led them to pursue their own idea.
Pursue an interest
- Some entrepreneurs simply want to set up a business doing something that they are passionate about.
Test yourself on Risk & Reward
What is the money earned if a business succeeds an example of?
If a business succeeds, the rewards may be...
If a business succeeds, the rewards may be...
What are the risks that entrepreneurs starting new businesses face?
Which of the following is NOT a possible reward from a successful business?