Risks Specific to Ridgemont Outfitters
1. Ridgemont already has revenue but not enough to cover existing expenses. There are two revenue streams, 1. wholesale sales to national & international retailers and distributors and 2. direct retail sales to e-commerce consumers through our website. The gross margin on combined sales is close to covering expenses and an increase in revenue will make that possible. There is a risk that sales will not grow enough to cover overheads.
2. Whilst wholesale sales are growing and Ridgemont has attracted some good retailers to partner with from Summer 2017, there is a risk that product may not sell through in-store as quickly as anticipated and retailers may choose other brands and/or discount product to de-value the brands. In addition there is also a risk that the retailers may fail without paying for supplied product. Ridgemont has an agreement in place with a New York based factoring company and intends to only supply retailers that it can credit insure to alleviate the risk of non-payment.
3. There are production risks that we will not be able to supply product to meet demand due to factory issues in Southern China including poor quality and factories going out of business. However the senior management have extensive experience of producing footwear & apparel in the area and in addition Ridgemont employs a locally based agent who has 30 years experience in Southern China footwear production.
4. Competition in the outdoor footwear market is strong and there are many well know established brands. Whilst Ridgemont represents a different approach to technical outdoor footwear there is a risk that the established brands will copy its approach and use their larger distribution network and marketing power to force Ridgemont out of the wholesale market. However with the introduction of direct to consumer sales and marketing as well as the appetite to champion smaller brands among the public, Ridgemont should still be successful.