Risk & Reward Flashcards
All 7 cards in this deck
Name the three risks of business activity.
Business failure, financial loss and lack of security.
Name the three rewards of business activity.
Business success, profit and independence.
Why is starting a business a financial risk for an entrepreneur?
A new business needs financial investment to start up, and if the business fails the entrepreneur could lose this money.
What is meant by 'lack of security' as a risk of starting a business?
The entrepreneur may give up their job, losing the regular income from wages or a salary.
What is meant by business failure?
The business cannot continue trading, e.g. because there is not enough demand for its product.
What is meant by 'independence' as a reward of business activity?
The entrepreneur is their own boss and makes their own business decisions.
True or false? Taking a risk when starting a business guarantees a reward.
False. The business may fail and the entrepreneur may make a financial loss instead.