Risk and Reward Flashcards

1️⃣ Familiarise yourself with the flashcards:

  • Look through all the flashcards to see what's on both sides.
  • Make sure you understand the information on each card. If something's unclear, click the link to the revision notes at the bottom of the page for more details.

2️⃣ Test yourself:

  • Look at the question or prompt on each card and try to remember the answer before flipping it over.
  • Check the answer and make a note of any cards you find challenging and need to go over more.

3️⃣ Consistently Review and Practice:

  • Use spaced repetition: spend more time on the cards you struggle with and go over them more often.
  • Regularly review all the flashcards to help you better understand and retain the information over time.

Note: We may include questions that have multiple correct answers. It's useful to remember specific examples to understand these concepts better.

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What does risk mean in business?

The chance that decisions will lead to loss or failure.

What does reward mean in business?

The benefits an owner hopes to gain, such as profit, success, or independence.

What is financial loss for a start-up?

When the owner does not get their money back or costs are higher than revenue.

What is business failure?

When a business cannot survive, for example it cannot pay its bills and has to close.

What is meant by lack of security for an entrepreneur?

Not having a guaranteed income or sick pay; earnings depend on the business.

What is profit and how do you calculate it?

Profit is money left after costs. Profit = revenue – costs.

Give two non-financial rewards of starting a business.

Independence (being your own boss) and personal satisfaction.

What is a calculated risk?

A risk taken after weighing possible costs against likely rewards.

Why are new businesses often risky?

Demand is uncertain, rivals may react, and cash flow can be tight at the start.

How can market research help reduce risk?

It shows what customers want and how much they will pay, so choices are better.

How can a business plan help reduce risk?

It sets aims and forecasts sales, costs, and cash flow to prepare for problems.

What is the link between risk and reward?

Bigger possible rewards usually come with higher risk, so owners must balance both.