Risk and Reward

Why take the leap? ⚖️

Starting a business is a gamble: you give up a steady wage and put money on the line. So why do it? Because with the **risk** comes the chance of **reward**. Understanding both sides, and weighing them up, is the heart of enterprise.

The risks ⚠️

Running your own business carries real risks: - **Business failure**: the idea may not work and the business could close. - **Financial loss**: you can lose the money you invested. - **Lack of security**: you give up the safety of a regular employed wage.

The rewards 🏆

If it works, the rewards can be worth it: - **Profit**: money to keep or reinvest once costs are covered. - **Independence**: being your own boss and making your own decisions. - **Self-satisfaction**: the pride of building something that succeeds.

Match each term to its meaning

Which are risks?

Select ALL THREE that are risks of starting a business.

• Business failure
• Financial loss
• Lack of security
• Profit
• Independence
• Self-satisfaction

Risk or reward?

Giving up a steady, secure wage to run your own business is an example of a...

• Risk (lack of security)
• Reward
• Method of adding value
• Type of profit

Profit 💷

The headline reward is **profit**. It is simply what is left when you take your **costs** away from your **revenue** (the money coming in): **Profit = revenue - costs.** If costs are bigger than revenue, the business makes a **loss**.

Work out the profit

An interactive activity.

The entrepreneur 👔

The person who takes on all this is the **entrepreneur**. They are the driving force who is willing to take the risk in the hope of the reward. Their job is to spot an opportunity, bring together what is needed, and decide how the business runs.

The entrepreneur's role

Select ALL THREE things an entrepreneur actually does.

• Organises resources (money, people, materials)
• Makes the key decisions
• Takes the risks
• Guarantees a profit every year
• Removes all risk from the business
• Sets the country's tax rates

Adding value ✨

To tip the odds toward reward, a business tries to **add value**: making customers willing to pay more than the basic cost. Common methods are: - **Convenience**, **branding**, **quality**, **design**, and a **USP** (unique selling point). For top marks, name the **specific method**, not just the phrase "adding value".

Match each way of adding value to an example

Weigh it up

An interactive activity.

Enterprise summary

Starting a business carries _____, such as financial loss, balanced against _____, such as profit. Profit = revenue _____ costs. Making a product more attractive, for example through branding, is called adding _____.