THE DISCLOSURE PRINCIPLE—RISK FACTORS

We try to be positive and optimistic in all we do, and focus on success and not failure. But before beginning any business venture, including going public, it’s important to understand the general risks of being public as well as the specific risks related to your own business.

Without knowing the risks, it will be impossible to prepare for them or plan around them. Your investors are also entitled to know what risks attached your business. They may not be as familiar with these business risks, as you are— that is why you are running the business and they are the investor. In addition, explaining the risks the people, in writing, and ahead of time is an insurance policy.

How can you expand  your ability to spot these risk factors?

First of all, if you have the opportunity to talk to an experienced business person, he or she probably will be quick to point out the potential pitfalls in your business. These may not be fatal to the success of your business, however, take this information very seriously in your business planning and your disclosure.

If you’re able to find the a business plan of a competitor or someone in a similar business, or track the history of a competitor, you can also understand these risk factors better.

One of the things to keep in mind our macro trends. These are trends that go beyond what your business or any other business may have internally, and go to factors that are beyond your control. Some examples of these are general economic conditions, changing demographics, changing technology in your industry, and political factors.

Above all, be optimistic but at the same time realistic.