risks in business Flashcards
1
Q
reasons why people start businesses
A
- financial objective of getting rich
- non financial: being own boss , persuading interest
- enjoyable challenge
- benefit others- non profit/ charity
2
Q
list 4 risks of running a business
A
- starting a business
- the health of the economy
- actions of competitors
- disruptive events- eg covid
3
Q
how can starting a business be a risk
A
- need money to buy equipment and invest
- leading to raise capital from their own money or bank loans
- therefore if not enough profit is made to pay back it will fail all investment will be lost
- especially sole traders with unlimited liability
4
Q
how can the health of economy be risky
A
unemployment
intrest rates
exchange rates
5
Q
how can making a business plan reduce risks
A
- for new businesses makes it less likely for failure as business plan covers cashflow, profit and loss and objectives
- meaning businesses can prepare
6
Q
how can market research reduce risks
A
- market research ensures firms sell the rights product for their desired target market at the right place
- to ensure sales and revenue is being generated
7
Q
how can keeping up with competitors reduce risks
A
- by keeping up with competitors strategies like marketing, prices or new products
- businesses can stay competitive by altering their actions so they don’t loose market share, sales an revenue
8
Q
how can researching law / economy reduce risk
A
- prepare for changes before they happen and make sure they have the best plans possible
- eg sugar tax- reduce sugar in sugary drinks
- increased interest- repay loans before they occur
9
Q
risks of releasing a new product
A
- cots of development- opportunity cost, research
- resources wasted product fails
- not getting product to market fast enough competitors do
- no economy of scale for small business expensive to produce on large scales increased costs
- bad product may damage reputations of business
