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How Employees and Entrepreneurs Differ

               When an entrepreneur starts a new business, it involves risk. Risk is
               the chance of losing something. An entrepreneur makes an investment
               of money, time, and energy in the hope of getting greater rewards, or
               benefits. The saying, “No risk, no reward,” relates to this concept.
                   Because employees work for someone else, but entrepreneurs work
               for themselves, entrepreneurs risk more than employees. Employees may
               risk losing a job if they do not perform the job well, but they are paid
               for their work. Entrepreneurs risk not being able to pay themselves if
               business is “slow.” A failed business might also mean losing the money
               the entrepreneur invested into it.

                   The rewards that employees and entrepreneurs get from their work
               can also be different. A reward can involve money, but it can also be
               something such as personal satisfaction or independence. As a business
               owner, an entrepreneur is in control of the money made by his or her
               business. He or she also has the “final say” in all business decisions.
               As a result, entrepreneurs are ultimately responsible for the success or
               failure of their businesses.

                   Consider this example to understand the risks and rewards for an
               entrepreneur vs. her employee. Carla Hernandez decides to start a fruit
               “smoothie” drink shop in her neighborhood. Carla invests a lot of money,
               time, and effort to get the business started. Tony Bertelli, one of her
               employees, creates a new juice combination that Carla decides to put on
               the menu. By doing so, she risks the money spent on ingredients. She
               also risks a drop in sales if customers don’t like the drink. As it turns
               out, the new drink is a great hit with customers, and sales dramatically
               increase. Tony receives a small raise as a reward. Carla will benefit the
               most because she owns the business and took the bigger overall risk.
               Risks involve making choices, and entrepreneurs need to weigh their
               choices carefully to achieve their goals for their businesses.

                                                                                          Figure 1-1
                                                                                      Small Business Owners.
                                                                                      When you own a business, you
                                                                                      are your own boss.

                                                                                      Applying Concepts.
                                                                                      Do you know someone who
                                                                                      owns a “small business” in your
                                                                                      town? Is there a “big business”
                                                                                      that is in competition with

                                                                               Importance of Entrepreneurship   5
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