Part of any good business plan includes a section on likely risks to the business. Since every business has these risks, recognizing and planning for them must be done. Here are three steps to take, so that your business plan can outlay potential risks, and reduce them:
- Discuss the most likely risks to your business
- Develop a response plan for each risk
- Recognize that not all risks will be uncovered
These can include not achieving your desired sales results, adverse responses from competitors, or other problems which are specific to your industry. You might also include the estimated probability that each risk will occur, so you can spend more time preparing for those events which are more likely to occur. You should also detail how bad the effects will be, should each risk come to pass.
A good response plan will not only allow you to recognize that a risk is imminent, but also gives you some options for handling it as it unfolds. Clearly, the more likely and more severe the potential consequences, the more time should be spent creating options to deal with each potential problem. Your plan should also take into account when fundamental business assumptions are not coming true, so “Go/No-Go” points in the progression of the business can be identified, and the business effort can be abandoned, or drastically revised should it need to be. These can save you from wasting time, money, and effort on a business opportunity which can never succeed.
A great plan is a living document. As you get further along in your business efforts, you will learn more, gain a better understanding of the opportunities and risks, and make other changes. The business plan should be updated as new risks are discovered, and the potential for old risks disappears. Even so, some unanticipated risks will be encountered. In these cases, it will come down to how well you can overcome the unidentified problems (as well as the correctly identified ones).
Thus, when you recognize the most likely problems your business will face, develop a good plan for responding to each, and also understand that not all problems will be discovered, you will be better prepared by having a great plan. So, while the plan does not guarantee success by any means, it does make it more likely by forcing you to think realistically about possible risks, and solutions to these.
Copyright 2010, by Marc Mays