Your goal is to provide enough to help your investors feel secure that you have anticipated and dealt with major risks, and they can count on you to handle things that come up once the business is under way. Some potential threats include problems that can develop during marketing, quality control, promotion, distribution and other areas.
In some businesses such as manufacturing, there are high fixed costs because of the large investments in equipment and facilities. We need to establish a strong working relationship with the relevant authorities to ensure all procedures are followed correctly and ensure that we have a steady supply of product.
It is useful to apply some categorisation to them; for example: financial, people, reputation, operational, economic etc.
The business owner will make changes to her marketing strategies, operations and financial management in response to these risks becoming a reality.
There are many external factors when it comes to the business world. I was with a company that had hired one of the world experts in a certain type of 3-D modeling.
The risk factors alert the investor to the fact there is always a possibility of losing part or all of the money he puts into the company. Instead of that, it must be seen as an interactive process in which information will continuously be updated and analyzed.
One major challenge is the issue of industry competition. Within this framework, specific potential risks within each category can be identified and addressed.
Trying to gloss over the issues can lead to lack of confidence in the management. In the case of start-up companies, success of the enterprise will be dependent on the continuing services of only one or two key managers who provide executive leadership.