SECTION A

1(d) Explain one way an entrepreneur can reduce the risk of failure when starting a new business.

(3 marks available)

Some tips:

1. Identify the key risks: Before you can suggest a way to reduce the risk of failure, it’s important to first identify the key risks that entrepreneurs face when starting a new business. Some common risks include a lack of funding, poor market demand, competition, and inadequate planning.
2. Choose a strategy: Once you have identified the risks, choose one strategy that an entrepreneur can use to reduce the risk of failure. For example, an entrepreneur might focus on developing a unique product or service that is not currently available in the market, or they might conduct thorough market research to identify and meet the needs of a specific customer segment.
3. Explain the strategy: Finally, explain in detail how the strategy you have chosen can help reduce the risk of failure for an entrepreneur. Use examples or case studies to support your explanation and demonstrate your understanding of the concept.

Here’s an example answer to the question:

“One way an entrepreneur can reduce the risk of failure when starting a new business is by conducting thorough market research. By identifying gaps in the market and understanding the needs of potential customers, an entrepreneur can develop a product or service that meets those needs and has a higher chance of success. For example, when Apple introduced the iPod, they conducted extensive research into the music industry and identified a need for a portable music player that could store a large number of songs. This helped them create a product that was innovative and met the needs of their target market, ultimately leading to their success in the music industry.”