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Entrepreneurs, risk and reward
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Entrepreneurs take risks in the hope of rewards. Understanding both sides explains why people start businesses.
What entrepreneurs do
An entrepreneur is someone who starts and runs a business.
They organise resources (money, people, equipment), make business decisions and take risks.
They organise resources (money, people, equipment), make business decisions and take risks.
Risks
Business failure: most new businesses face strong competition.
Financial loss: they may lose savings they invested.
Lack of security: no guaranteed income, unlike a salaried job.
Financial loss: they may lose savings they invested.
Lack of security: no guaranteed income, unlike a salaried job.
Rewards
Business success: seeing an idea work.
Profit: the financial reward for taking risks.
Independence: being your own boss and choosing how to work.
Profit: the financial reward for taking risks.
Independence: being your own boss and choosing how to work.
Explain one risk of leaving a job to start a business.
- A job gives a regular, guaranteed salary.
- A new business may not make a profit for a while.
- So the entrepreneur faces a lack of income security.
Answer: Lack of security: no guaranteed income.
Entrepreneurs organise resources, make decisions and take risks. Risks: failure, financial loss, lack of security. Rewards: success, profit, independence.
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