Business activity involves risk, but it also offers potential rewards. These rewards motivate entrepreneurs to start and grow businesses, despite uncertainty.
What are business rewards?
Rewards in business refer to the positive outcomes entrepreneurs gain from starting and running their own ventures. These outcomes act as incentives for taking on the financial, personal, and professional risks involved in launching a business. Entrepreneurs are often driven by the desire to achieve these rewards, which make the challenges of running a business worthwhile.
The main types of rewards associated with business activity are:
Business success: Reaching personal and professional milestones
Profit: Earning more money than is spent
Independence: Having control over business decisions and personal time
Each of these rewards plays a vital role in entrepreneurial decision-making and can significantly influence the way a business is operated and developed.
Business success
Definition of business success
Business success refers to the achievement of specific objectives set by the business owner. These objectives can vary greatly depending on the individual and the business, but typically include:
Reaching or exceeding sales targets
Gaining a loyal and growing customer base
Building a strong and recognizable brand
Maintaining long-term profitability
Achieving growth in size, revenue, or market share
Delivering excellent customer satisfaction
Surviving in a competitive environment for several years
Success can be both financial and non-financial, and it is often measured in terms of how well a business meets its short-term and long-term goals. Success might mean expanding into new markets for one entrepreneur, while for another it could mean having a stable, well-functioning local business.
Why business success is a reward
For entrepreneurs, business success is a powerful and satisfying reward because it demonstrates that their ideas, efforts, and strategies have worked. This brings:
Validation of their original business concept and planning
Personal satisfaction and pride in their achievements
Professional recognition within their community or industry
Opportunities for growth and diversification
The potential to create further wealth or social impact
For example, a small bakery that begins with local customers but later expands to open multiple branches may be considered highly successful, especially if it has earned a loyal following and increased its profitability.
Factors influencing business success
A variety of factors can influence the likelihood of achieving business success, including:
Effective market research: Understanding what customers want and need
Product quality: Offering goods or services that meet high standards
Marketing strategy: Reaching the right audience in a compelling way
Customer service: Building long-term relationships with clients
Leadership and management: Making informed decisions and guiding the team effectively
Adaptability: Responding well to changes in market conditions or customer preferences
Success is rarely the result of a single action—it is usually the outcome of many well-coordinated business efforts.
Profit
What is profit?
Profit is the financial gain a business achieves when its revenues exceed its costs. It is one of the most important rewards of business activity because it allows the entrepreneur to benefit financially from their investment of time, money, and energy.
The basic formula for profit is:
Profit = Total Revenue – Total Costs
There are different types of profit, each reflecting different stages of business performance:
Gross profit: Revenue minus the cost of goods sold (COGS). This shows how efficiently the business produces or buys its products.
Operating profit: Gross profit minus operating expenses. It reveals how well the business manages its day-to-day activities.
Net profit: The final profit after all expenses, including taxes and interest, are subtracted. This is the true measure of profitability.
Why profit is a reward
Profit serves multiple purposes and is a key reason why many individuals start businesses. The benefits of earning a profit include:
Financial security for the entrepreneur and their family
Reinvestment potential to grow the business further
Savings for future opportunities or emergencies
Personal income to fund a desired lifestyle
Business sustainability and long-term survival
Without profit, a business cannot continue to operate, hire staff, pay suppliers, or invest in innovation. Profit also boosts morale and encourages future investment.
How profit motivates entrepreneurial behavior
The potential to earn profit influences how entrepreneurs make decisions, such as:
Choosing what to sell based on market demand and profitability
Setting prices that balance affordability with revenue generation
Controlling costs to improve profit margins
Targeting high-growth markets or customer segments
Using promotional strategies to boost sales volume
For example, a fashion retailer might stock popular items with high margins to maximize profit, while also seeking to reduce manufacturing costs.
Factors affecting profitability
Profitability is influenced by both internal and external factors, including:
Level of market competition: More competitors can drive prices down
Cost control: Efficient operations can reduce expenses
Pricing strategy: Higher prices can lead to more profit but may reduce demand
Sales volume: Higher sales can spread fixed costs more effectively
Customer loyalty: Returning customers increase stable revenue
Economic environment: Inflation, interest rates, and consumer spending all play a role
Entrepreneurs must regularly analyze their financial performance to make informed changes and protect their profit margins.
Independence
What does independence mean in business?
Independence in business refers to having the freedom to make decisions without needing approval from others, such as bosses, shareholders, or investors. Entrepreneurs value this because it allows them to run their business in a way that reflects their own values, goals, and lifestyle preferences.
Why independence is a reward
Being your own boss comes with several appealing advantages, including:
Control over work schedule and the ability to choose working hours
Decision-making authority regarding business direction, products, pricing, and operations
Personal satisfaction from building something independently
Ability to align business activities with personal interests or social goals
Freedom to innovate and try new ideas without needing approval
Independence can also lead to better work-life balance, especially for entrepreneurs who want flexibility due to family or personal commitments.
How independence shapes business decisions
Entrepreneurs who prioritize independence may make choices that reflect their desire for autonomy:
Forming sole proprietorships or partnerships instead of corporations with shareholders
Avoiding external investors to retain full control
Keeping business operations small and manageable
Setting personal and financial goals instead of focusing only on profit
For instance, a freelance web designer might choose to work only with certain types of clients or on specific types of projects to maintain creative freedom and job satisfaction.
How potential rewards drive entrepreneurial activity
Motivation to start a business
The possibility of earning rewards is often what sparks the decision to become an entrepreneur. Many people are willing to leave stable employment and take financial risks if the potential rewards are attractive enough. This includes:
Making more money than in a traditional job
Achieving personal goals
Creating a better future for themselves or their families
In some cases, dissatisfaction with employment (low pay, lack of recognition, poor working conditions) pushes individuals to seek the benefits of entrepreneurship.
Influence on goal setting
Entrepreneurs often design their business strategies around the rewards they are seeking:
If the goal is profit, they may focus on products with high margins and cost control
If the goal is success, they may prioritize customer satisfaction and innovation
If the goal is independence, they may avoid scaling too quickly to stay in control
Setting clear goals helps the entrepreneur stay focused, make better decisions, and measure their progress over time.
Decision-making based on potential rewards
The rewards entrepreneurs want will influence several aspects of business planning, such as:
Industry selection: High-tech or financial services may offer more profit, while creative industries may offer more personal satisfaction
Business model: An online store might offer more independence than a physical shop
Marketing choices: Aiming for brand success may lead to heavy investment in promotion
Hiring decisions: Some entrepreneurs may limit staff to maintain independence, while others may expand quickly to maximize success and profit
These decisions help the entrepreneur align their daily efforts with their long-term reward goals.
Factors that influence the likelihood of achieving rewards
Industry type
The nature of the industry plays a huge role in determining what kinds of rewards are available:
Technology and software: High scalability, high profits, but also high competition
Retail: Lower profit margins, but potential for strong customer relationships and business recognition
Creative services: More freedom and personal satisfaction, but potentially less financial gain
Entrepreneurs need to match their goals to the right industry to increase their chances of success.
Market conditions
The external environment affects how easily rewards can be obtained:
Booming economy: More customer spending, easier sales, and higher profits
Recession: Tougher competition, lower demand, tighter budgets
Market saturation: Harder to stand out and earn high profits
Emerging trends: New opportunities for growth and innovation
Entrepreneurs must stay alert to these changes and adapt their strategies to remain competitive and achieve rewards.
Business strategy
Strategic planning plays a key role in how and when rewards are achieved. Common strategies include:
Differentiation: Offering something unique to avoid price competition
Cost leadership: Operating efficiently to offer low prices and attract budget-conscious customers
Niche focus: Serving a specific market segment better than competitors
These approaches must be chosen based on what reward the entrepreneur values most.
Entrepreneurial skills and qualities
The personal strengths and abilities of the entrepreneur often determine how well they can pursue and achieve rewards. Key skills include:
Problem-solving: Handling challenges and unexpected setbacks
Decision-making: Weighing risks and opportunities accurately
Communication: Building relationships with customers, employees, and partners
Time management: Balancing different business responsibilities
Creativity: Coming up with innovative products or services
Developing these skills increases the chances of turning hard work into tangible rewards.
Real-world example: Ben Francis and Gymshark
Ben Francis, the founder of Gymshark, illustrates how rewards drive business activity. He started Gymshark as a side hustle while attending university and working part-time. He was driven by:
The desire to build a successful brand
The potential for profit through online sales
A passion for fitness and independence
His strategy included influencer marketing, product quality, and a strong online presence. Today, Gymshark is a multimillion-pound business. Ben Francis achieved all three main business rewards: success, profit, and independence—showing how entrepreneurial decisions are guided by the rewards one hopes to achieve.
FAQ
The type of reward an entrepreneur seeks—such as profit, success, or independence—plays a major role in the kind of business they choose to establish. For example, someone motivated by the desire for high financial returns may look to start a business in a fast-growing or high-demand industry, like technology or financial services, where profit margins can be larger. In contrast, an entrepreneur who values independence might opt for a business that is easier to manage alone, like freelancing or a small e-commerce store. Additionally, those who are driven by personal fulfillment or creative success might start a business in areas such as arts, crafts, or consulting, where they can align their passion with their professional goals. The level of risk, required investment, and potential for scaling the business are all considered based on what reward is most important to the entrepreneur. Ultimately, the reward shapes both the industry and structure of the business.
Yes, the type and value of rewards can vary significantly depending on which stage of the business life cycle the company is in—startup, growth, maturity, or potential decline. In the startup phase, the main reward might simply be launching the business successfully and proving the concept works. Entrepreneurs may initially seek small profits, personal achievement, and independence. As the business grows, financial rewards may become more significant, and success might be measured in terms of revenue growth, customer acquisition, or expansion. During the maturity stage, maintaining profit levels and market share becomes crucial, and rewards may include long-term stability and industry recognition. In a declining stage, the focus may shift to minimizing losses or finding new ways to innovate, where survival itself becomes a form of success. The entrepreneur’s expectations and goals often evolve with the business, and so do the types of rewards they prioritize. Rewards are not static—they reflect business performance and personal growth.
Non-financial rewards can be harder to measure than profits, but entrepreneurs often assess them using a mix of personal feedback, business indicators, and reflective evaluation. For example, customer satisfaction is a common non-financial reward, and it can be measured through online reviews, testimonials, customer retention rates, and surveys. A sense of achievement or business success might be judged by whether the entrepreneur has met key performance goals such as launching a new product, expanding to a new location, or being featured in media. Independence is another key non-financial reward that is measured more subjectively—entrepreneurs may evaluate how much control they have over their work schedule, business decisions, and lifestyle. Some may also consider employee satisfaction, positive impact on the community, or brand reputation as important non-financial indicators of reward. While these are not shown on financial statements, they still strongly affect motivation and decision-making within the business.
Entrepreneurs must carefully manage the balance between pursuing immediate rewards and ensuring long-term business success. Short-term rewards like quick profits or rapid growth can be tempting but might not always align with sustainable business practices. To balance this, entrepreneurs often create detailed business plans with both short-term targets (such as hitting monthly sales goals or breaking even within the first year) and long-term goals (like entering international markets or developing a product line). They may reinvest early profits into research and development, marketing, or staff training rather than taking all profits as income. Time management is also critical—spending too much effort chasing quick wins can prevent progress on broader strategic initiatives. Entrepreneurs might also set up key performance indicators (KPIs) that track both short-term cash flow and long-term brand development or customer loyalty. By constantly reviewing progress and adjusting strategies, entrepreneurs ensure that today’s rewards don’t come at the cost of tomorrow’s success.
Risk tolerance greatly influences how far an entrepreneur is willing to go in pursuit of various business rewards. Those with a high tolerance for risk may be more aggressive in chasing high-reward opportunities, such as investing heavily in a new product launch or entering unfamiliar markets, because they are comfortable with the potential for loss or failure. On the other hand, risk-averse entrepreneurs may prioritize stability and choose safer business models, even if it means slower growth or smaller profits. This affects not only their business decisions but also the types of rewards they are likely to pursue. For example, a risk-tolerant entrepreneur may aim for rapid scaling and high profit margins, while a risk-averse one may focus on independence and steady income. Understanding their own comfort level with uncertainty helps entrepreneurs set realistic goals and choose strategies that suit their reward preferences, ensuring they remain motivated and in control of their business journey.
Practice Questions
Explain one reason why the potential for independence might encourage someone to start a business.
The potential for independence might encourage someone to start a business because it allows them to make their own decisions without needing permission from a manager or employer. This autonomy means they can choose their working hours, the type of work they do, and how they operate the business. For example, someone may start a photography business to have control over their creative direction and schedule. This level of freedom and personal control is a strong motivating factor for many entrepreneurs, especially those dissatisfied with traditional employment structures.
Discuss how the possibility of making a profit can influence an entrepreneur’s decision-making.
The possibility of making a profit strongly influences an entrepreneur’s decisions because it affects how they manage costs, set prices, and choose which products or services to offer. If an entrepreneur believes a certain product will generate high profits, they may invest more in marketing or quality to increase sales. For instance, a food truck owner might decide to introduce premium items with higher profit margins instead of selling low-priced goods. They might also seek cost-effective suppliers to increase the difference between revenue and costs. Overall, profit potential shapes most financial and operational decisions in a business.
