Risk Analysis in your Biz Plan #2
from iPlanner.net 6/13 enhanced by Peter/CXO Wiz4biz
General Enterprise Business Risks
– are shared by most businesses, but their significance varies by company. In the case of start-ups or early stage companies, management must gain experience in managing operational, marketing & other problems that will arise. Potential threats include unexpected problems that may develop in quality, distribution, marketing, promotion & other areas. Start-ups & early stage companies must also build relationships with customers and attract customers from competitors. Small – but established companies – have already gained experience dealing with these problems, reducing this business risk. The risk analysis section should mention these dangers and do a “Sensitivity & What-If Analysis”. Each risk category should have strategies to deal with them.
Although all companies face uncertainties associated with the general economic environment, some enterprises are less Business-Cycle Sensitive than others. The economic cycle risk of a food company, for example, may be less of a concern than is the case of a construction company. Banks are exposed to interest rate risks but many have in-place, strategies to reduce those uncertainties. Some businesses are exposed to challenges posed by higher gasoline prices, while realtors are exposed to risks relating to lower income of home during a recession. The important thing is to identify which of these general business challenges could impact your business and have strategies to deal with them. Companies should have strategies to stabilize their business and continue to succeed, despite unexpected changes in the economic environment.
The business faces dangers associated with Natural Disasters. These relate to changes of the weather and their consequences – such as time lost in production & distribution and the resultant economic downturns that depress sales.
In the case of companies that offer Proprietary Products, there are uncertainties associated with ownership of intellectual property. It is important to have Trade-marked brand name & Patent protection to prevent unauthorized duplication of company products or services – which could have an adverse effect on the company and affect the outcome of Intellectual Property rights disputes.
[ Industry-Specific Risks & Company-Specific Risks in next Premium Content ]