| Starting or operating a business requires owners to | | | | Assessing risk investments involves complex and |
| take certain risks, especially if the initial investment is | | | | detailed qualitative and quantitative calculations of |
| high. There is no guarantee that an investment will | | | | whether or not the potential gains of a decision or |
| pay off; however, there are ways to assess the | | | | action justify the risks that accompany it. |
| level of risk involved. With the help of an experienced | | | | For example, an already established business may |
| business attorney, you can calculate the level of risk | | | | wish to maximize profits by switching product |
| your business investment entails. This can help you | | | | providers. If the business is selling solar panels, the |
| make alterations to your business plan before making | | | | company should consider the quality of the solar |
| a mistake and having your business suffer for it. | | | | panels and weigh that against the cost. Although |
| Five factors of Risk Assessment | | | | selling the most cheaply made panel might |
| Assessing investment risks is a complex process; | | | | theoretically be the best way to increase revenue; |
| however, there are five factors which should be | | | | there can be repercussion for selling an inferior |
| considered: | | | | product. Customers may be unsatisfied with your |
| 1. Product- What is the product that you are selling? | | | | business because of cheaply made panels. |
| Is it unique? What makes it desirable? | | | | If a customer is unsatisfied, they can damage your |
| 2. Market-Consider the market your product will be | | | | business in many ways. In addition to not returning to |
| catering to. How will you reach them? What will make | | | | your business, they may rate your poorly on the |
| them want to purchase your product? | | | | internet, or spread their poor reviews to their friends. |
| 3. Business-How will you balance production with | | | | In the long run, going the cheapest route may be the |
| demand? | | | | riskier option. |
| 4. Finance-How will you fund the overhead production | | | | Who Can Help? |
| costs? | | | | If you are considering starting entrepreneurship, you |
| 5. Execution- How will you execute your business | | | | should consult an experienced business attorney |
| plan? How many hours are you willing to invest in the | | | | about your plan and investment risk. With the help of |
| success of your business? Additionally, do you have a | | | | an attorney, you may be able to identify and resolve |
| business partner? | | | | future problems that could compromise your business. |
| How to Calculate Business Risks | | | | |