Stephanie A. Reed

Chapter One:
Taking Risks and Making Profits

I. Entrepreneurship and Wealth Building

a) Business is any activity that seeks to provide goods and services to others while operating at a profit. b) Goods are tangible products such as computers, food, clothing, cars, and appliances. c) Services are intangible products (i.e., products that can’t be held in your hand) such as education, healthcare, insurance, recreation, and travel and tourism. d) Entrepreneur is a person who risks time and money to start and manage a business.

A) Revenues, Profits, and Losses

1. Revenue is the total amount of money a business takes in during a given period by selling goods and services. 2. Profits is the amount of money a business earns above and beyond what it spends for salaries and other expenses needed to run the operation. 3. Loss occurs when a business’s expenses are more than its revenues.

B) Matching Risk with Profit

1. Risk is the chance an entrepreneur takes of losing time and money on a business that may not prove profitable.

C) Standard of Living and Quality of Life

1. Standard of living refers to the amount of goods and services people can buy with the money they have. 2. Quality of life refers to the general well-being of a society in terms of its political freedom, natural environment, education, health care, safety, amount of leisure, and rewards that add to the satisfaction and joy that other goods and services provide.

D) Responding to the Various Business Stakeholders

1. Stakeholders are all the people who stand to gain or lose by the policies and activities of a business and whose concerns the business and whose concerns the business needs to address. 2. Outsourcing means contracting with other companies with other companies (often in other countries) to do