ChApter 8 | WRITE YOUR MARKETING AND PERSONNEL PLANS | 151Antoinette’s Dress Shop: Risk Analysis
Like every new business, Antoinette’s faces
several risks. I believe I can overcome each
risk with the actions discussed below.
Th e primary risk we face is that our
concept of an entire store selling business
clothing to working businesswomen is new to
this area. No one else in New City is presently
doing exactly what we propose. Although
we believe we have identifi ed a market niche
that the competition has failed to adequately
exploit, our assumption remains to be proven
here in New City. On the positive side, the
population base of our target customers is
more than adequate to support a store of
our size and we have based our volume and
profi t projections on average fi gures for the
industry. In addition, the type of store we
propose has been very successful elsewhere.
Nevertheless, we must demonstrate that
this type store will work here. It must take
suffi cient business away from stores with a
broader line of merchandise to make a profi t.
A secondary risk is that we are thinly
capitalized. If our sales volume fails to meet
projections in the fi rst year, our small working
capital reserve may be inadequate to meet
our cash-fl ow needs. On the positive side,
however, we believe our sales projections are
conservative and that we will have little
trouble meeting our sales revenue goals. In
addition, by starting with relatively modest
capital, we will have no large loan payments.
Also, we have had several potential investors
express an interest in the business. If our
working capital reserves are exhausted,
but the business demonstrates potential,
we should be able to attract investors. [But
remember we discovered that, on the basis of
the Cash Flow Forecast, Antoinette’s business
has a fatal fl aw (Chapter 7) and her entire
plan will need reworking from the beginning.]
Finally, there is a slight risk that the
population of younger working women in
New City will decline. However, we do not
expect this to happen. White collar jobs have
doubled here in the last decade and it seems
reasonable to expect that the population of
working women will continue to grow and
that we will profi t from that expansion. Th is
projection is based on the fact that many
well- established fi rms have located here and
more are expected to do so. Never theless, if
for any reason general industry declines, or a
signifi cant number of local companies fail or
move overseas, we could face some problems
and might have to change our marketing
strategy.