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Brainy Fact


                        Ritesh Agarwal is one of the youngest entrepreneur in India. He is the founder of OYO rooms.




                         Some Important Terms in Entrepreneurship


                 Entrepreneurs take risks to make a profit. Let us now try to understand the meaning of the word profit and risk
                 used frequently in entrepreneurship:
                    • Profit: The term "profit" refers to the financial gain that an entrepreneur gets or a positive difference between total
                   income earned and total costs invested in running a business. Profit is the main indicator of a business's financial
                   success or failure. For example, Nisha has recently started running her own flower shop. She made her quarterly
                   report and found that her income is little more than her total expense. This brought confidence in her and she
                   planned to keep a close watch to bring up the profit margins for future growth of her business.

                    • Risk: The term "risk" refers to a situation where the result is not known and could lead to a loss. Entrepreneurs
                   often face a variety of risks as they initiate, develop, and operate their business. Understanding and managing
                   risks are essential components of successful entrepreneurship. These risks can sometimes bring failures also
                   in a business. For example, in the above situation where Nisha, a florist, has established her business well in a
                   span of one year. She now wants to expand her business by opening another branch in a nearby city where the
                   competition is very high and the cost of investment is also more but she is quiet confident and wants to take
                   the risk because she feels risk is an integral part of entrepreneurship, and successful entrepreneurs understand
                   the importance of identifying, assessing, and managing risks effectively.
                    • Wage Employment: It exists as a partnership between two entities : the employer and the employee. In this
                   type of employment, an employee receives compensation for their work in the form of wages or salary. It does
                   not involve risks and the amount paid is fixed with certain incentives irrespective whether an employer is having
                   loss or profit in his business. The continuity of the service in case of wage employment depends on the terms
                   and conditions laid down in the contract between the two parties, as well as the relationship between the
                   employer and the employee.

                   Let us understand the difference between Wage Employment and Entrepreneurship

                          Factors                  Wage employment                          Entrepreneurship
                                          Individuals work for an employer or a   Initiate and operate their own
                  Nature of Work          company and receive a fixed wage or    businesses. Responsible for their own
                                          salary in exchange for their labour.   profits and losses.
                                                                                 Entrepreneurship involves a higher
                                          The level of risk is comparatively lower
                  Risk and Responsibility                                        level of risk-taking. It has uncertainties,
                                          with stable income and job security.
                                                                                 financial risks, and market fluctuations.
                                          Employees receive a regular and        Entrepreneurs' income is often variable
                  Income Structure        predictable income in the form of      and depends on the success of their
                                          wages or salaries.                     business.

                                          Employees typically enjoy job security   Entrepreneurs face the risk of business
                  Job Security            as long as they adhere to the terms and   failure, which may result in financial losses
                                          conditions of their employment contracts.  and sometimes closing of the business.


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