1.1.2 Risk and Reward

It is important for an entrepreneur to understand the things that can go wrong when setting up a new business these are risks

If an entrepreneur can address risk during the development stage of a new business idea, these risks can be reduced

Risks can include: Business failure, Financial Loss, Lack of Security

Business failure can be because of:

• entrepreneurs not knowing their market well
• not having enough money to start a business
• poor decision making
• competition or goods/services not meeting the needs of customers

Business owners can loose personal possesions if the business runs in to debt

Small businesses operate as sole traders and partenershiops and these have unlimmited liability: these are the riskest business start up options.

The reward for starting up a new business can include: Business Success, Profit and personel independence.

Success can mean different things to different entrepreneurs for example an online fashion blogger may consider subscribers or followers as a way of determining of success, where as a personal trainer will consider getting his/her clients to their desired weight/level of fitness as success.

Some rewards are connected to money and are referred to as financial rewards, other rewards are non-financial, e.g independence.

Measuring business scales, the amount of market share it holds or profit made over time, are ways that can determine business success.

An entrepreneur will make all decisions for the business and can set what days they want to work. This inderpendants is rewarding and encourages people to start their own businesses.