1.1.2 risk and reward Flashcards
What is risk?
business failure, financial loss, lack of security
What is reward?
business success, profit, independence
What is Financial Risk?
The owner may put their own cash and other assets (e.g. a van) into a business
What is Lack of Security?
If an entrepreneur has a regular job, and they decide to leave that job to open their own business this is a huge risk. They may have a mortgage, a car and other bills to pay. Also there may be insecurity of sales with falling consumer incomes
What’s Business Success?
The rewards of a good business is success
This may mean; awards, fame, survival, growth or making more money than they would working for someone else
What is profit?
Profit = Total revenue – Total costs
A reward of setting up your own business is you get to keep all the profit that the business makes
