Business Risk Assessment

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Business Risk Assessment

from the Oklahoma Commercialization Model

How to Properly Identify Risk

©2007 i2E, Inc.

Table of Contents
©2007 i2E, Inc.
1)Overview2)Investigation Stage3)Feasibility Stage4)Development Stage5)Introduction Stage6)Growth Stage7)Maturity Stage8)Commercialization SpecialistsResources: •The Oklahoma Commercialization Model•Angel Capital Education Foundation•Tech Coast Angels•i2E Team

It’s important to analyze your business opportunity
with respect to five areas of risk: product, market,
business, finance andexecution risk.

This business risk assessment tool identifies the
general risk for each of the five areas with respect to
each stage of commercialization.

Ultimately this tool identifies the action items or
milestones that should be completed to mitigate
each level of risk.

Text Box: Overview©2007 i2E, Inc.

Risk Profile:

The innovator has a new product or
technology advancement with seemingly
positive market potential.

However, the innovator lacks the financial
resources and/or business expertise to
commercialize the product.

Text Box: Investigation Stage©2007 i2E, Inc.

RiskAction ItemsProduct Risk:
Product may not be feasible or lacks unique qualities
and cannot be protected.
•Define concept•Confirm critical assumptions•Survey state of the art•Identify critical barriers•Determine technologyMarket Risk: Limited understanding or knowledge of the market can
cause a misrepresentation of the growth and size of the
Conduct market overview & identify:
•Pricing structure•Market barriers•Risks•Distribution channels•Trends and competitorsBusiness Risk: Great product or technology, but a new product or
technology does not translate into a great business.
•Estimate profit potential•Conduct self-enterprise and commercialization assessments•Identify professional needs•Identify capital needsFinance Risk: Proof-of-concept funding for productprototype is difficult to identify. •Self fund•Study the capital cycle•Identify ten proof-of-concept sources•Identify ten seed sourcesExecution: Management at this stage is typically theinnovator. This lack of business skills can bedifficult to overcome. •Learn to manage people•Identify ten advisors•Study management practice•Study company formation types

Risk Profile:

At this stage the company’s management
team is incomplete with no product revenues.

The final design of the product is complete
and an initial business plan is developed.

Text Box: Feasibility Stage©2007 i2E, Inc.

RiskAction ItemsProduct Risk:
The company is focused on product innovation rather than
business development. Intellectual property rights remain a concern.
•Develop working model•Test technical features•Assess preliminary production feasibility•Conduct manufacturing assessment•Assess safety & environmental features•Finalize designsMarket Risk: Unrealistic market study results can cause misallocation of scarce recourses.

Final product design is dependent on successful outcome of
market study.
Identify and quantify:
•Market size•Customers•Volume•Prices•Distribution•CompetitorsBusiness Risk: Exploring business formation and the plan still lacks
expertise and business skills to commercialize.
•Formulate financial assumptions•Develop pro forma•Identify seed capital •Form advisory teamFinance Risk:
Cash flow is a problem due to lack of revenues andearly proof-of-concept funding is difficult to attract. •Bootstrap•Prepare investment strategy•Prepare investment presentationExecution: The management team is incomplete; therefore, multiple

responsibilities fall on a few individuals. Chicken and egg syndrome becomes evident as you need capital but capital
won’t follow poor management teams.
•Multi-task•Implement appropriate management structure•Pursue...
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