Risk Analysis in Biz Plan #3
from iPlanner.net 6/13 enhanced by Peter/CXO Wiz4biz 9/13
Industry-Specific Risks
The risks & challenges section of the Business or Project plan should discuss industry-specific risks. One of those challenges is industry competition. Although it is expected that competition will be mentioned as one of the risks, enterprise strategies for competing effectively should be outlined in the Competition & Marketing sections of the business plan. In the competition section, major competitors and their strengths & weaknesses are discussed, as well as the company’s strategic positioning. In the Marketing Plan, the company’s action plans for overcoming the competition are outlined. [How we use our advantages to our advantage.] Some types of businesses are more subject to litigation risks than others. Uncertainties are especially high for companies selling internally-consumed products such as food, beverages & pharmaceuticals. Any business that involves customers physically visiting its place of business is vulnerable to “slip & fall” or other types of litigation. Even professionals who have no on-site business can be sued for alleged “errors & omissions” in their advice. The litigation risk is discussed and measures to reduce it, including safety precautions & insurance coverage, can be described to indicate that the risk is known & has been addressed. The company should include the cost of Liability Insurance in the financial forecasts.
Company-Specific Risks
In the case of start-ups, there are un-certainties associated with raising start-up capital & maintaining sufficient funding. In many cases, operations cannot commence until sufficient funds are raised to fund the acquisition of property, plant & equipment + initial working capital requirements. The risks associated with fixed-cost structure of the business are company-specific, because they vary from high to low, depending on the nature of the business.
[ Company-Specific Risks continued & Conclusion in next Premium Content ]