Risk Management PlanFor help in completing this section, che

Risk Management PlanFor help in completing this section, check SBM:EB pp. 338-343, 66-76; 473-476. pp 96How will you deal with unmet sales forecasts? What will you do if the market responds differently than planned? Underdemand? Overdemand?How will you respond if competitors: underprice you? overcome your competitive advantage? introduce newer/better technology?What will you do if the industry takes a downturn?How will you handle labor issues/problems?How will you handle labor issues/problems? Skilled labor is unavailable or insufficient to meet your needs. Government regulation raises benefit/compensation costs.What production/supply risks might you face? What are your contingency plans for those risks? How will you handle suppliers who: raise prices? become erratic in their deliveries or their quality?Any distributor risks? Contingency plans? Any regulatory risks? Contingency plans?Capital-related risks–potential cash flow problems, notes coming due, etc.? Contingency plans?What insurance coverage do you have? On key people? On physical plant, equipment, and inventory?What other potential risks are part of your specific business?Suggestions for writing this sectionAll business plans are built on assumptions regarding economic conditions, your future operations, etc. This is where you make those assumptions clear to investors.You need to strike a careful balance between showing your investors that you are aware of the risks and are competent to handle the risks so you don’t scare them.Remember, the higher the risks, the greater the return investors will look for.Investors will look for reality and completeness in your contingency plans. Can you do it, and have you considered all the important issues/problems?The worst thing that can happen to you is to have investors find and/or raise risks you haven’t considered.Resources needed to write this sectionEconomic forecasts for the previous 3-5 years and for the next 1-3 years.Industry studies from sources like Standard and Poor or Valueline, referencing their predictions and what risks they see for the economy or industry.Information on the experience of competitors.Labor forecasts for your area and region.A contingency plan for each key area of the business. Sales forecasts. Suppliers of your components or raw materials. Alternative hiring plans.Previous