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Market Interest and Growth Potential
The biggest risk any new venture faces is that once the product is developed, no one will buy it.
Although there are a number of things that can be done to minimize this risk, such as market research,
focus groups, and beta sites, it is difficult to gauge overall demand and growth of that demand until
your product hits the market. This risk must be stated, but countered with the tactics and contingencies
the company will undertake. For example, sales risk can be reduced by an effective advertising and
marketing plan or identifying not only a primary target customer but also secondary and tertiary target
customers that the company will seek if the primary customer proves less interested.
Exhibit 14.12 Sample critical risk.
Competitor Actions and Retaliation
Having the opportunity to work with entrepreneurs and student entrepreneurs over the years, I have
always been struck by the firmly held belief that direct competition either didn‟t exist or that it was
sleepy and slow to react. I caution against using it as a key assumption of your venture‟s success. Most
entrepreneurs passionately believe that they are offering something new and wonderful that is clearly
different from what is currently being offered. They go on to state that existing competition won‟t
attack their niche in the near future. The risk that this assessment is wrong should be acknowledged.
One counter to this threat is for the venture to have room in its gross margins and cash available to
withstand and fight back against such attacks. You should also identify some strategies to protect and
reposition yourself should an attack occur.
Time and Cost to Development