1.1.2 risk and reward Flashcards
What is a risk?
financial loss, lack of security, business failure
how can a business fail?
lack of strategy for the future
how is starting a business a financial risk?
Entrepreneurs may use their personal assets/ cash to start a business
What is unlimited liability?
If the business is sole trader or
partnership then they have
“unlimited liability” which
means they could lose their
personal assets to pay the
business debts
what is lack of security?
if an entrepreneur leaves a regular paying job to start a business, this could cause insecurity to lack of sales with falling consumer incomes. They may have a mortgage and bills that they cant pay.
What is reward?
business success, profit,
independence
what counts as a business reward?
A business reward is a benefit that it brings to the owner
what is business success?
This may mean; awards,
fame, survival, growth or
making more money than
they would working for
someone else
How do you calculate profit?
Profit = Total revenue – Total costs
what is a financial reward of setting up a business?
A reward of setting up your own
business is you get to keep all
the profit that the business
makes
What is independence?
A reward of setting up your own business is that you could be your
own boss
Being your own boss means you get to make the major decisions in
the business
You can also change the business if you want to
What does it mean to be made redundant?
Redundancy is dismissal from your job, caused by your employer needing to reduce the workforce.
what are reasons for redundancy?
new technology or a new system has made your job unnecessary. the job you were hired for no longer exists. the need to cut costs means staff numbers must be reduced.
