Which risk can come along with profit in a new business?

Correct answer: Possibility of loss

Direct answer: Option B is correct. A new business involves uncertainty. An entrepreneur spends money, time and effort without having a guarantee that customers will buy the product or service. If income is greater than costs, there is profit; if income is lower than costs, there may be a loss. This possibility of an unfavourable result is business risk, even when the entrepreneur hopes to earn profit. Option A is wrong because a new business does not always succeed. Option B is correct because the possibility of loss is a normal risk accompanying the possibility of profit. Option C is wrong because an entrepreneur has responsibilities such as planning, finance, legal duties and customer service. Option D is wrong because decisions are necessary in starting and running a business; avoiding every decision prevents action. Risk does not mean careless gambling; it means accepting uncertainty after thinking about possible outcomes. Exam cue: profit opportunity and possibility of loss usually exist together.