Entrepreneurship, risk, and types of bussiness ownership

Entrepreneurs

Individuals who start and manage their own businesses, risking time and capital.

Risk Reward Ratio

The expectation of additional reward for taking on more risk than traditional investments like stocks or bonds.

Prospect Theory

A behavioral economic theory stating that people fear losses more than they value gains.

Fear of Missing Out (FOMO)

An anxiety that an exciting or interesting opportunity may be missed, which can exceed fears of loss or failure for entrepreneurs.

Ambiguity Comfort

The willingness of entrepreneurs to engage in business opportunities without a clear goal or business model, allowing innovation to evolve through discovery.

Forms of Business Ownership

Different legal structures for businesses, including sole proprietorships, partnerships, and corporations, impacting liability and taxes.

Sole Proprietorship

A business owned and run by one individual, where there is no legal distinction between the owner and the business.

Partnership

A business structure where two or more individuals manage and operate a business together, sharing profits and liabilities.

Corporation

A legal entity that is separate from its owners, can be taxed, and offers limited liability to its shareholders.

Small Businesses

Firms that are independent and not dominant in their field, crucial for innovation and job creation in the economy.

Business Success Attributes

Key traits that contribute to entrepreneurial success, including resilience, adaptability, and risk tolerance.

Capital Gains Tax

Tax on the profit from the sale of property or an investment.

Profit vs. Gain

Profit is the financial benefit after expenses, while gain refers to the increase in value of an investment.

Innovation

The process of translating an idea or invention into a good or service that creates value.