Risk and reward (Edexcel GCSE Business): Flashcards
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Practise the cards
14 cards from this deck
Risk-reward relationship in business
Risk-reward relationship in business
Higher potential rewards come with greater risks
Two factors that calculate business risk
Two factors that calculate business risk
Likelihood of negative event & severity of consequences
Personal satisfaction reward for entrepreneurs
Personal satisfaction reward for entrepreneurs
Seeing products grow, business expand, gaining recognition
Financial profit reward
Financial profit reward
Earning more than spending; more than fixed salary jobs
Independence reward in business
Independence reward in business
Making own decisions, working own schedule, no boss
What causes business failure?
What causes business failure?
Poor cash flow, declining sales, competition cause failure
Financial losses risk
Financial losses risk
Losing investment & personal belongings used as loan security
Unlimited liability meaning
Unlimited liability meaning
Owner personally responsible for all business debts
Lack of security risk
Lack of security risk
No guaranteed income, depends on business performance
How market research reduces risk
How market research reduces risk
Reveals problems early, identifies promising opportunities
How business plan reduces risk
How business plan reduces risk
Identifies potential challenges & solutions in advance
How does adequate start-up funding reduce risk?
How does adequate start-up funding reduce risk?
Prevents cash flow problems, covers initial & unexpected costs
Why seasonal demand increases risk
Why seasonal demand increases risk
Off-peak periods may not generate enough income for expenses
Why small target markets are riskier
Why small target markets are riskier
Vulnerable if customers change preferences or spending habits