1.1.2 Risk and reward

Which of the following are risks when starting a new business?

• Business failure

• Business success

• Lack of security

• Independence

Which of the following are rewards from business activity?

• Profit

• Increased overheads

• Lack of security

• Independence

Which two of the following increases the risk of business failure?

• Offering exceptional customer service

• Failing to carry out comprehensive market research

• Making a product that stands out from its competitors

• Producing goods that do not meet customer needs

Lack of overall planning and poor decision-making can lead to business failure. This is known as:

• Poor management

• Poor sales levels

• Poor understanding of the economy

• Poor quality

A budding entrepreneur who is looking to set up a new enterprise is concerned that the business might not provide enough of a stable income to maintain his current standard of living. Which of the following best describes this risk?

• Business failure

• Lack of independence

• Inability to break even

• Lack of security

Sara decided to start-up a business as a personal trainer, due to her passion for fitness.

Which of the following is the main reason behind Sara’s business idea?

• Pursue an interest

• Be her own boss

• Work more flexible hours

• Earn more money

Define what is meant by an 'entrepreneur'

• A person who starts or runs a business. They are prepared to take risks to be successful.

• A wealthy individual who invests in a business