Sample interview questions: How do you assess the potential risks and rewards of a new business venture?
Sample answer:
Assessing Potential Risks:
- Conduct thorough market research: Identify competitive threats, customer preferences, and industry trends to gauge potential risks in the market.
- Analyze financial statements: Examine historical data and financial projections to assess financial viability and identify potential cash flow issues or debt burdens.
- Evaluate regulatory environment: Determine if any laws, regulations, or licensing requirements may pose barriers to entry or operational challenges.
- Identify operational risks: Assess potential issues with production, supply chain, workforce management, or technical infrastructure that could impact business operations.
- Conduct a SWOT analysis: Conduct a comprehensive Strengths, Weaknesses, Opportunities, and Threats analysis to identify internal and external factors that may influence risk exposure.
Assessing Potential Rewards:
- Market size and growth potential: Evaluate the size and potential growth of the target market to determine the revenue-generating potential of the venture.
- Profitability margins: Analyze industry benchmarks and projected financial statements to estimate potential profit margins and return on investment.
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