Part 7/20 - Twenty Questions You Will Be Asked By Venture Capitalists (If You Get That Far)

By Laurence K. Hayward

This is part seven of a twenty part series on this topic.

7. What are the risks facing this opportunity?

Most people tend to think of "the competition" when people ask them about risks facing their business opportunity. However, competition is only one risk. Other risks include changes in technology, governmental and regulatory policies, labor market conditions (availability to find qualified labor at a reasonable cost), capital markets and the business climate. Then there are risks specifics to your business such as potential product liability and human resource issues (e.g. fraud, irreconcilable disagreements among management, etc.). Don't forget the financial risks. What happens if the capital you intend to raise doesn't allow you to reach breakeven or your next financing event? Especially during less favorable market conditions, investors take notice of management teams that have carefully thought through contingency plans.

A business risk assessment of potential threats to your business can help you prepare for the scrutiny of investors. Many business advisors and consultants provide such a service, just be careful to select one that has the requisite experience as per your industry and offering. If you cannot afford a business consultant’s fee, consider finding someone who can help facilitate a strategic brainstorming session with your management team and board of advisors that includes a risk assessment component.

Laurence K. Hayward is the Founder and CEO of TheVentureLab. To learn more about him follow the link here