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I am starting an internet business I have enough traffic of my estimation and I am currently earning through to Google adsense program now I faced a question What are the major risks that can influence my business. This question was asked by an Angel investor in order to proceed further. As per my experience I found no risks up to now also I can't expect any risk(s) in future too. Can anybody please tell me what risks I may face in future?

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3 Answers

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Risks are specific to your company and the leadership team. Without additional information it is impossible to answer the questions.

Answering the risk question -- like that of "who is your competition" -- is a critical question as it demonstrates your maturity to the investor. The correct answer is never "there aren't any"

So what are the categories of risk you can use to start to assess your position:

  • Technology: What if your hosting provider goes out of business?
  • Economy: If the recession gets worse and unemployment goes up -- how does that impact your business? if we experience a recovery and more people have jobs -- how does that impact your business?
  • Market: What if a major player with significant brand awareness moves into your space?
  • Personnel: is there a member of your team that would be challenging to replace if they get hit by a bus.
  • Cash Flow: What if the costs of the items on your use of funds go up. What is the impact on the potential deliverable?
  • Timeline: if development projects are not completed on schedule -- what does that do to the revenue projections?
  • Legislation/Legal: Are their any pending legislative or legal actions which could impact your business? Margins?

I hope that gives you a good start on putting together your risk analysis for your prospective investor. Good luck!

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Perfect answer! thanks a lot... :-) – Gimp Sep 15 '11 at 23:18
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Adding to the lists provided by Joseph and xpda:

  • What if Google AdSense (your real customer - as that is where the money comes from) decides to drop you from the AdSense program?

This can happen due to suspected click fraud even if you didn't do anything. (e.g. a competitor / evil person / person trying to support your site) clicks on the ads more often than Google expect.

From Google's perspective, it's cheaper to simply drop you as a publisher than it is to investigate the matter. You may want to Google or Bing for the phrase "invalid clicks".

You need a backup revenue plan which doesn't involve Google AdSense.

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Thanks! good answer. – Gimp Sep 16 '11 at 7:56
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Joseph's risks are good, but there are a couple more that are often overlooked.

  • Technology: What if the technology changes and makes your business irrelevant? Take, for example, companies that made software CDs.

  • Competition: What if a larger company gets into your market with 10x the advertising and customer pricing lower than you can afford to match?

These are often unlikely scenarios, but they should be considered.

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