Which of the following is one way for an entrepreneur to decrease risk when starting a new business?

• A. Invest all capital in a single market
• B. Diversify their product offerings
• C. Ignore market research
• D. Set prices without considering costs

Answer: (B)

Verified step by step guidance

1. Understand the concept of risk in entrepreneurship, which refers to the uncertainty and potential financial loss when starting a new business.
2. Recognize that investing all capital in a single market concentrates risk, making the business vulnerable to market fluctuations in that one area.
3. Learn that diversifying product offerings spreads risk across different products or markets, reducing the impact if one product fails.
4. See why ignoring market research increases risk because it leads to uninformed decisions about customer needs and market conditions.
5. Understand that setting prices without considering costs can lead to losses, increasing financial risk rather than decreasing it.