from iPlanner.net 6/13 enhanced by Peter/CXO Wiz4biz
Business Plan – for your Startup or Small Business – should include a discussion of business risks & challenges. Although every possible risk will not be identified & addressed, the Biz Plan should discuss the most important ones and indicate how management will reduce their potential impact on business operations. Identification & discussion of business risks & challenges, + having strategies in place to deal with them, strengthens the Biz Plan, enhances management’s credibility and increases the confidence that potential investors will have in the Biz Plan and its financial projections. Being upfront and discussing potential business risks, rather than glossing over them, builds confidence in the company’s management. And that’s what you want to do to attract partners, talent & funding.
Risk Analysis is particularly important for Start-ups & Small Businesses – whose objective in writing a Biz Plan is often to secure capital to start the business, to secure additional working capital for operations or to raise money for expansion. Since your business often has a more limited operating histories, entrepreneurs & small business managers have not yet demonstrated their ability to cope with business risks. Potential Equity Investors & Lenders expect your Biz Plan to provide assurance that management recognizes these challenges and is prepared to resolve with them.
Identification of Risks. The first step in the enterprise Risk Analysis process is to identify the internal & external “threats” that may prevent achieving “planned results”. For convenience, these threats can be classified into three (3) broad categories. These are General Business risks” that are faced by all companies, Industry-Specific risks” that are faced by companies within the industry and Company-specific risks” faced by the company itself. Within this framework, specific potential risks within each category can be identified & addressed. The major challenges are those that may adversely affect the company’s financial condition, forecasted financial results & liquidity.
(General Enterprise Business Risks, Industry Specific Risks & Company-Specific Risks in Premium Content)