Too often, entrepreneurs leave risk analysis out of their business plans. But a really strong plan takes the good with the bad, and recognizes that the projected business model will probably not play out as described. There are too many unknowns – too many external factors that could undermine your assumptions.
A thorough (and realistic) business plan identifies the specific risks of the business. It also explains what the business owner will do to mitigate those risks.
How do you identify the risks of a particular business? Once you’ve described what has to happen for you to reach your sales and profit goals, think about all the things that could cause the opposite to happen.
What might cause your marketing plan to fail?
What could make your sales lower than projected?
Could your suppliers disappear? Could your lease agreement be cancelled?
Then, describe what you would do in any of these situations to make sure your business could stay afloat.
What are the risks of your business?