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AQA AS Business
Unit 1-
Element 1- Starting a Business
1.1 part 2- Risk and Reward
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Do all entrepreneurs
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NO!
Why not?
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Possible Reasons
Lack commitment
No finance
Not realistic Unable to problem solve
So how many new businesses fail in %terms?
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Risk and Reward
So this shows that there is a huge riskin setting up new
businesses, but ifyou get it right there can be huge
rewards
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Task
What might the potential risks be ofbecoming an
entrepreneur?
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Feedback
Left well paid job
Debts
Loss of personal assets How long can you keep going?
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Decision Making
Entrepreneurs have to take some risks,but these should be
calculated andfocussed on-
1. Is it worth it?
2. Do we have to take this risk?
3. Can we aford it?
4. Can we manage the fallout?
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Approaches to Risk
Risk avoidance
Risk reduction
Risk retention Risk transfer
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Task
What rewards might there be forentrepreneurs?
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Feedback
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Getting the right balance
We must think about the impact ofdecisions as these impact on
successor failure. Think about The
Apprentice- who has got it right andtherefore been rewarded and
who hasgot it wrong as their risk did not pay
of?
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Choices
The choices we make involveopportunity cost- what do you
thinkthis is?
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Opportunity Cost is
The cost of the next best alternative
Think of some examples where thisoccurs.
What are the impacts of these choices?
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Possible Implications
How best should we use scarceresources?
What will give the highest benefits?
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Reading
Business Review
Chasing Shadows- Opportunity Cost
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TaskEas et vs. BMI
What are the similarities anddiferences between the 2?
How do they both price their seats?
What is the opportunity cost of this?
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