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Excerpted from:
Business Plan Development: Critical Risks |
A good business plan lays out what you want to do
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A better plan details how you will do it
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A great plan explains why
There are many ways to assess your critical risks, but you may benefit from breaking them down
into people, technology, market, financial, and execution risks, as these are
categories that plan readers are used to seeing. Don’t underestimate the
importance of this section, however, or copy some fancy language from S-1 filings or similar. The critical risks section allows to you to demonstrate that
you in fact understand what the risks of your plan are, and it also allows you
to present your strategies for dealing with these risks.
People risks
- Are you able to ramp up quickly enough and attract the key personnel required to execute the planned marketing and sales programs?
- Will you be able to retain your technological experts?
- What happens if the key principals leave?
Technology risks
- What happens if your core technology does not remain unique in the marketplace?
- Has your core technology withstood the test of time?
- Are you aware of competitors working on technologies that would render your technology inferior?
- What would it take for your company to adapt to technological developments and trends in the marketplace?
- What will you do if your customers’ wants and needs exceed the capabilities of your technology?
- How much resources are you able to pour into R&D if the marketplace requires you to?
Market risks
- If the industry is new, what makes you believe that it will be around for a while?
- Can you demonstrate that customers like your industry’s products?
- If the market is growing now, what makes you think that it will continue to grow in the future?
Financial risks
- Will you be able to get the required financing?
- Will you meet your cash flow obligations?
- What will happen if interest rates increase?
Execution risks
- Why do you believe that your team will be able to execute the plan?
- If you are commercializing new technology, what are the chances of customers not being willing to pay for it?
- Can you demonstrate that your key principals have been successful at this sort of venture previously?
- Are you on track so far with your plans?
