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Why should an entrepreneur diversify sources of income?

Answer and explanation

Correct answer: To reduce the risk of depending on one source

Income diversification means earning from more than one product, customer group, or business activity. If one source becomes weak or stops, other sources may continue supporting the enterprise. Diversification therefore spreads risk and can improve stability, although it does not remove every risk. It does not mean removing customers, reducing usefulness, or abandoning accounting records.

Related tags

Income-DiversificationRisk-ManagementBusiness RiskBusinessTrade And CommerceBusiness Trade And CommerceBusiness StudiesClass 11 Mcq

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