Potential equity investors and lenders expect their business plans to provide assurance that management recognizes these challenges and is prepared to deal with them.
A professional business plan should include a discussion of business risks and challenges.
Although every possible risk will not be identified and addressed, the business plan should discuss the most important ones and indicate how management will mitigate their potential impact on business operations.
In the marketing plan, the company’s action plans for overcoming the competition are outlined.
Some types of businesses are more subject to litigation risks than others.
General enterprise business risks are shared by most businesses but their significance varies by company.
Cover Page For College Essay - Risk Assessment Business Plan
In the case of start-ups or early stage companies, management must gain experience in managing operational, marketing and other problems that will arise.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 uncertainties, and the business plan sections relating to each risk category should have strategies to deal with them.Identification and discussion of business risks and challenges, and having strategies in place to deal with them strengthens the plan, enhances management’s credibility and increases the confidence potential investors will have in the business plan and its financial projections.Being upfront and discussing potential business risks, rather than glossing over them, builds confidence in the company’s management.Even professionals who have no on-site business can be sued for alleged “errors and omissions” in their advice.The litigation risk is discussed and measures to reduce it, including safety precautions and insurance coverage, can be described to indicate that the risk is known and has been addressed.Banks are exposed to interest rate risks but many have in place strategies to mitigate those uncertainties.Some businesses are exposed to challenges posed by higher gasoline prices, while realtors are exposed to risks relating to lower home sales.The business faces dangers associated with natural disasters.These relate to changes of the weather and their consequences, such as time lost in production and distribution and resultant economic downturns that depress sales.