University of Kentucky College of Agriculture

Unit: PRIMER

Risk
The final R in PRIMER is for Risk. This may include production, financial, or marketing risk.

The kind of questions to ask:   (click here to view questions)
     
  • Is this enterprise adaptable to my area?Yes No Maybe
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  • Are there significant sources of production risk?Yes No Maybe
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  • Are there significant sources of financial risk?Yes No Maybe
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  • Are there significant sources of marketing risk?Yes No Maybe

 

New Enterprises are risky

Many new enterprises or modifications to conventional enterprises are often referred to as alternative enterprises. Alternative enterprises differ from traditional, or conventional, enterprises in that they are usually subject to more production and market risk. These risks also translate into financial risk as lenders view nontraditional enterprises as greater credit risks. In addition, few alternative enterprises have the risk dampening effects of government programs to offset wide swings in production and price. There may be legal risks associated with new enterprises in the form of licensing and taxing requirements along with local, state, or federal regulations. Human risks relating to liability issues, labor quality and quantity, and managerial ability should also be considered.