Also, explain what management can do to make up for any schedule slippage that occurs. Every venture capitalist knows that new businesses are risky. They may not, however, understand which risks are most dangerous to the company or how management intends to neutralize them. This section enables management to discuss those risks and how it plans to overcome them. By doing this thoroughly, management increases its credibility with investors and demonstrates its foresight.
Nothing is gained by omitting important items from the list of risk factors.
Many managers find it useful when preparing to write this section to first put down in a separate writing the five risks most likely hurt the company is a material way and then to write out the practical steps the company is taking to minimize those risks. Financial statements and projections. This section should contain historical financial statements of the company's operations and projections of future operations. The projections should be for a period of three to five years. Narrative explanations should accompany the financial projections, highlighting important facts and assumptions contained in the projections as well as conclusions management wants the investor to draw.