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Explain one risk for an entrepreneur when starting a new business - Edexcel - GCSE Business - Question 3 - 2022 - Paper 1
Question 3
Explain one risk for an entrepreneur when starting a new business. Explain one way a small business could add value to a product.
Worked Solution & Example Answer:Explain one risk for an entrepreneur when starting a new business - Edexcel - GCSE Business - Question 3 - 2022 - Paper 1
Step 1
Explain one risk for an entrepreneur when starting a new business.
Answer
One significant risk for an entrepreneur starting a new business is the potential for business failure due to insufficient cash flow. Entrepreneurs often invest their savings, seek loans, or attract investors to fund their new ventures. However, if revenue generation does not meet expectations, this can lead to cash shortfalls. An inadequate cash flow may hinder the ability to pay for essential expenses like rent, salaries, and suppliers. This situation may ultimately result in the business closing down, leading to financial loss and personal stress for the entrepreneur.
Step 2
Explain one way a small business could add value to a product.
Answer
One way a small business could add value to a product is by offering personalized customer service. Smaller companies often have the advantage of building closer relationships with their customers compared to larger corporations. By actively engaging with customers, addressing their specific needs, and providing tailored recommendations, a small business can enhance the customer experience. This personal touch not only fosters customer loyalty but also distinguishes the business in a competitive market, effectively adding value to its products.