Chapter 8 3.

Planning helps to keep track of the business

Planning and Failures for Entrepreneurs progress - A good plan can easily identify how many
activities have been completed and how many are
"Failure is simply the opportunity to begin again, this time still undone. It provides a way to determine the
more intelligently... A business absolutely devoted to priority activities that must be given attention closely.
service will have only one worry about profits. They will be Hence it offers a good portrait of what is current and
embarrassingly large." what the business planned to be.
Henry Ford, founder Ford Motor Company 4. Planning conveys the risks of what to expect in
advance - In the early stage of any venture,
Planning from the point of view of government clearances are necessary. If planning is
entrepreneurship is a way to explain one's entrepreneurial done, there would be enough time to get these
vision. It provides a big help for any entrepreneur to government clearances beforehand. Yet, if this
express where his business is heading and the way he information is not given attention, then come up later
wants to become successful. There are a lot of ways for unexpectedly the entrepreneur would be caught in
entrepreneurs to create their plans from very simple to the middle of the situation.
planning with preparation to planning with lots of 5. Planning helps to understand deviations and
imagination. Although, it must be accepted that not all failure - Often times plans do not work as expected
plans really succeed especially in putting up a business. or worst they fail. Having a well-designed plan makes
Accepting fear of failure is not quite easy. Most often, it an entrepreneur realize alter why a certain portion of
can be an important hindrance for entrepreneurs in their his plan fails. Hence, he can immediately correct
pursuit of new yet unfamiliar opportunities. However, with those parts that went wrong to bring back the plan in
the right expectations and understanding about failing in a good direction. Most entrepreneurs make plans in
entrepreneurship, this fear of failure can be overcome and mind but do not put them into writing. Certainly,
turn into a powerful and effective asset of an entrepreneur. trusting ones' memories is not a good practice
because people cannot trust them hundred percent.
Importance of Planning Plans could be simple or complex so it is vital that
In any business venture, planning serves a great entrepreneurs plan their ventures with plenty of
purpose. A plan offers success in cases if uncertainties hardwork and attentiveness.
and provides less room to make mistakes and fail. The
focus of the entrepreneur here is on the implementation of The TRIM Framework
the plan, meaning on how to get the product and/or The TRIM framework is basically an acronym for
service to the marketplace in the shortest time possible in team, resources, idea and market. It is a planning tool that
order to begin earning profits. pinpoints the kinds of people essential to form the
founding team, the resources at hand and required, the
Often a plan that is created and implemented in fine points of the idea, and the possible market for the
haste takes a backseat. Some entrepreneurs dismiss the product or service. There are several types of plans
concept of planning for the reason that planning eats included in the TRIM framework which consist of the back
much of their time. Another intention why entrepreneurs of a napkin, sketches on a page, the business model
shrugs off planning is that sometimes the original plan canvas, the business brief, the feasibility study, the pitch
turns differently in terms of the execution of the venture. deck, and the business plan.
Hence, planning is frequently set aside with the
assumption that it only works for big businesses which is Back of the Envelope/Napkin
an absolute mistake. The back of the envelope/napkin plan is a quick
and rough estimation of a business or product idea that is
written on any accessible scrap of paper such as an
Obviously, a small venture may not be interested to write envelope or napkin. Basically it is better than a guess but
a long plan. Certainly entrepreneurs even how small their not a precise calculation. The important distinction of the
businesses are must need to create a plan. Here are back-of-the-envelope/napkin estimations is the use of very
some advantages of creating a plan for a business simple assumptions.
venture whether big or small ones.
This approach makes handy analysis of some
1. A plan is necessary to concentrate on goals - costs to arrive at the net profit. The inputs to this plan
Specific goals measure the progress with what has includes those variable and fixed costs such as materials,
been planned. Often the outcome of goals change as labor, rent, utilities, taxes, salaries and start-up costs.
time passes that leads to mix-up. A good plan Since the amounts are all estimations, the exact peso
discusses on strategies and definite steps that are amount need not be considered. Sometimes an
vital in the achievement of the identified goals. entrepreneur may just make a simple Google search or
2. Planning helps keep track of finances - A good merely make an intelligent guess about the numbers.
plan gives a detailed picture of the budget that is Entrepreneurs may have the leeway to overestimate but
required for every activity in the business operation. not to underestimate inputs listed on the back-of-the-
Having no plan, the budget may go out of order and envelope/napkin. With these inputs, the entrepreneur may
the entrepreneur may overspend his finances.
find out which items he can cut costs to increase his profit audience, there is a need to create a believable
margins. history. The background should reflect that the
company and the product or service being
Business Model Canvas represented has a positive record. In writing the
Business model canvas is a visual chart with elements business brief, the concern is give enough
describing a business' or product's value proposition, information, certainly without making the brief dull
infrastructure, customers, and finances. Basically, it is a and pointless. Consider too the selling points of the
strategic management and lean startup outline for argument from an analytical and an emotional
developing new or writing down existing business model viewpoint.
of a venture. It is used to align the business' activities by 3. Explain fully what the target is - Provide a clear
detailing possible trade-offs. There are nine building picture of who the target audience are. The business
blocks in this canvas as proposed by Alexander brief should describe the potential audience and the
Osterwalder in 2005. Using his business model design manner of gaining their interest. The group being
template, a business can easily define its business model. addressed to in the brief must visualize as if they are
This model has been discussed fully in Chapter 4. using regularly the product enough for them to make
action in involving themselves to the purpose. In the
The Business Brief business brief, there must be an explanation on how
A business brief is a document that offers the the business will gain profits or how the intention shall
explanation on the reason why a particular model leads to be beneficial which will most likely be very interesting
success in a given scenario. It is used to endorse goods to everyone.
and services to customers, increase profits, offer solutions
to industry problems or intensify consumer awareness of 4. Time- Anyone who would be writing a business brief
business activities. Besides promoting to make a ought to give time to himself in preparing it. Likewise,
purchase, it can also be written to sign up to attend a the targeted audience must also be provided with a
seminar, answer a survey or respond to any other call to clear timeline of when and where events contained in
action incorporated at the end of the brief. the brief will be put into action. There must be time to
make research to write a very realistic brief.
This is written in a persuasive active voice to
encourage customers and other companies to make Feasibility Study
investment in the business idea of an entrepreneur. A feasibility study is an assessment the viability of
Basically, this can be compared to a legal brief that a proposed project or system. It that takes into account all
discusses arguments in line with the customer's interests of a project's significant factors such as economic,
for granting his wish. A business brief is short, usually no technical, legal, and scheduling concerns. The objective
more than one or two pages in length, but should cover and rational of a feasibility study is to find out the
sufficient information on whatever purpose it intends to strengths and weaknesses of an existing business or
serve. In order to write a business brief extensive research proposed venture. At the same time, it tries to discover the
is required. A business brief as a strategic mode must be opportunities and threats existing in the natural
creative to win customers and increase revenue. environment, the resources essential to carry through, and
finally the forecasts for success. Hence, the two ways to
Most companies have shifted to writing business assess a feasibility study are the costs needed and the
briefs in order to be competitive in the faster paced value to be attained.
business world. It takes time and practice to write a good
business brief. A well-written business brief is becoming The contents of a well-written feasibility study
fewer in number these days. With the proper guidance include the history of the business, a detailed description
and patience an entrepreneur can surely compose a well- of the product and/or service, accounting statements,
written business brief. Here are suggestions for areas that details of the functional areas, marketing research and
should be emphasized in a good quality business brief. policies, financial data, legal requirements and tax
obligations. It must be done with an objective, impartial
1. Describe completely the task/purpose - In the style to provide information upon which decisions can be
business brief, the writer needs to describe fully the based. Project managers usually make use of feasibility
intention of the business brief. Purposes may include studies to recognize the aces and scams of undertaking a
trying to gain partnerships in the industry, looking for project before they spend a lot of time and money into it.
sponsors, attract new partners or raise funds for a
new venture or selling something to a particular group Having a feasibility study before business
he is representing. The targeted audience must planning can offer important information that shall caution
clearly identify the purpose of the brief so that they an entrepreneur in entering blindly into a risky business.
can respond to appropriately. The people listening to Likewise, a feasibility study is vital to business
or reading the brief should have a clear purpose of development. It permits a business to address where and
their role in the business. how it will operate. It identifies possible hindrances hat
may hamper its operations as well as identify the amount
2. Provide some background - In order to gain the of finances it will require to get the business smoothly
trust, confidence and respect of the targeted running. In addition, a feasibility study includes marketing
strategies that can convince investors to placed their d. Marketing Requirements - Describe it in detail
money in a worthwhile business. Here are the common how to reach the customers and let them know the
elements in a feasibility study: business offerings. The entrepreneur should know
exactly what type of promotional campaign he
1. Executive Summary - The most important page/s of plans to launch. Here he should the consumers he
the study is a brief narrative describing details of the will target and explain the reason/s why these
project, product, service, plan, or business which people would want to buy from the business
stakeholders read with interest. It is always presented instead from the competitors.
on the first two to three pages of a report that e. Physical Location - The location of the business
contained the summary of what has been found with is strategic in nature and beneficial to the its
the rest of the items in the study. It is often easier and success. An entrepreneur may opt to have an
more concise to write it after the study has been office space inside his home, rent or buy a place
completed, so that the information to be included is for business purpose. Here, it must also be
already available. indicated whether there will be a need for
2. Clear Project Description - A outline of the project warehouse facilities, factory, or trucking facility.
as it is defined for the study can provide stakeholders Where these facilities will be located must be in
the answer to their questions and help them know the the physical location component of the feasibility
results. The project description allows these study.
stakeholders to be accustomed with the idea/s f. Technology Requirements - Every business
presented in the study. needs at least some kind of technology to run
3. Competitive Landscape - Basically, this is a review smoothly. The technology component of a
of the strengths, weaknesses, opportunities, and feasibility study should include details about
threats encountered by the venture under study. The telephone answering systems, computer hardware
review will give important details necessary for and software, and inventory management.
decision making. Most entrepreneurs usually do not g. Target Dates- Certainly investors would want to
want to enter into a new market without knowing know the important dates in the study. Every
surely they can dominate the market. Others choose single activity must be covered. Here a GANTT
to concentrate on gaining profits rather than the chart would be a useful tool to create. The dates
market. Whatever they select, the challenges and the must be practical and reasonable. There is no
consequences of failure must be clearly identified. such thing as a miraculous deadline.
4. Operating Requirements - Here the entrepreneurs 5. Financial Projections - Most investors are interested
can use this point in the report to remain distinct, over the financials in a feasibility study to make
concentrated, and balanced about a venture's real certain that a venture can generate the kind of
needs. An underestimation of the physical and fiscal ascendable profits that merit their approval. Here the
resources essential for a new product or service operating requirements and financial data should
frequently turn out with unsuccessful projects or reconcile. Experts often recommend using the break-
unfulfilled promises. even analysis which is a timeline view of the moment
a. Material Requirements - This section includes a venture can pay for itself.
parts and supplies needed to produce a product 6. Recommendations and Findings - This is the
and the suppliers. Here, the entrepreneur should summary of all of the previous feasibility study
indicate whether volume discounts will be elements. The recommendations and findings can
available as the business grows or if he plans to outline the result of a business proposal. This section
manufacture those parts needed at some point in provides an opportunity to enhance a venture by
time. pointing out areas of a business prospect. Certainly,
b. Labor Requirements - A business cannot operate having a great idea for a product or business is not
without manpower. Usually labor will be one of the enough, how an entrepreneur can make money from
business biggest small business expenses, if not it is the best consideration.
the biggest. The number and types of employees
needed to run the business now and in the future The Pitch Deck
are included here. A pitch deck, known also as an investor pitch deck
c. Transportation and Shipping Requirements - or a startup pitch deck is the first communication
Smaller items can be shipped via local carriers instrument that provides an overview of the business in
such as LBC, Lalamove, JT &T, Speedy and the order to raise funds. It is usually created using
rest. However, heavy or bulk items must be PowerPoint, Keynote or Prezi to give audience a brief idea
transported via a freight or trucking company. about the business venture. This is usually presented to
There required transportation and shipping either on face-to- face or online meetings to possible
requirements depends on the type of products. For investors, customers, partners, and co-founders.
shipping perishable items, a proper container must
be used to protect and secure the items in terms Unlike the business model canvas, a pitch deck is
of bruising, breakage, or emission of foul odors. a representative tool for the external audience which is
The container keeps the item at proper used to represent the business model and structure for
temperature and in air tight. better understanding. Preparing a pitch deck is essential.
Many good companies get rejected by the investors 10. Management team - This is one of the major section
because of not so good pitch deck. Here is all the in which the investors are truly interested in is the
inclusion in a pitch deck: management team section. Here the details of the
management team are presented in terms of
1. Elevator Pitch-An elevator pitch is a quick synopsis qualification, experiences, and dedication and how far
of the idea, background, and experience. It always are these individuals are planning to go with the
starts with an introductory text which provides an entrepreneur. The directors, key stakeholders, key
overview of the entire business strategy and the rest advisers, other investors (if any) are part of this
of the pitch deck. This slide should be able to express section.
"who you are, what you do, and what you want to do." 11. Key Metrics, Current Status and Future
2. Problem - The second slide states the problem the Projections- This is where the entrepreneur boast
target audience faces. This makes it clear to the his current standings and provide a three-to-five-year
investors that a clear opportunity has been found by forecast of his business. In this section he states his
the entrepreneur and he has ready to capitalize on it. plans for future expenses, investments, and routes.
3. Opportunity - A problem leads to an opportunity
which can be capitalized on. The entrepreneur may The Business Plan
use charts, graphs and numbers to validate his Most business experts value the time and effort
statement. being spent in writing a business plan. Although some
4. Solution - This slide should discuss the likely regard the plan as difficult, time-consuming, and based of
solutions to the identified problem and should move unproven assumptions. Others believe it is a beneficial
on to the specific solution and the main reason for way to develop and organize ideas. A business plan is
planning to choose it. This part is an assurance that necessary and relevant to the new entrepreneur. Here are
the audience will clearly understand and will accept some of the importance of a business plan when starting a
the solution. business.
1. Helps in getting finances - Money is important to
5. The Product- This slide showcases the product and start or operate a business. For a new business the
its numerous highlights. This highlights can be entrepreneur's savings and personal funds may not
presented into several slides. The entrepreneur be enough to start his business. Those who are in
should ensure that he explains comprehensively the business may wish to expand or try out new things or
key highlights of the product. innovations which shall also require money. In order
6. Business model - A business model is a theoretical for an entrepreneur to seek funds for his business by
structure that supports the feasibility of a product or approaching investors he needs a well-written
company. The model includes the purpose and goals business plan. Certainly, investors would like to see a
of the company and how it proposes to realize them. plan of action to ensure that their investment is in
This is a vital section of the pitch deck because here safe hands. A well-written business plan shows
the entrepreneur explains the economics of the potential investors the various aspects of the
business structure to the investors. It is composed of business and its potentials.
the operating structure, how to make money, the 2. Helps anticipate possible problems - A well-written
distribution channels, the gross margins, and other business plan helps in making forecasts through
important items. trends that may impact the business positively and
7. Competition - This is a section where the negatively. As mentioned earlier it is not easy to
entrepreneur convinces his investors that he has prepare a business plan, there would be mistakes
done his homework and knows about his competitors. along the way of its writing. Having identified all these
The slide should contain the list competitors and flaws shall help prevent costly mistakes, waste of
include their positioning, strengths, weaknesses and time, money and effort, violate laws and rules and
opportunities which are left unattended for the other such offenses since all aspects of the business
entrepreneur to tap into. Here a competitive are well defined.
landscape and position for the entrepreneur's 3. Helps remain on track - Writing a business plan
company must e created as his customers see it includes planning for the future also. Targets set by
among the competition. the entrepreneur must be monitored objectively.
8. The Key Highlight - This section is where the Once a target is not met within a specified period, it is
entrepreneur compares himself with the competition time to look into possible reasons for errors.
and prove how he is better than them. There must be 4. Helps in good management of the business - A
an explanation about the value proposition and the well-written business plan makes a business much
USP which will give a valid reason to the investors to easier and better to handle. It is manageable in
buy the proposal. knowing what goes where and who is responsible for
9. Marketing and Sales- This section includes the list different duties. Delegation can be done simpler
of all the marketing and sales strategies to obtain, having a well laid out plans.
overcome, and to serve the existing and prospective 5. Budgeting is easier - Finance is vital and necessary
customers of the product. The slide must describe the for any business' survival and growth. Hence, it is a
marketing mix, and the various sales channel the big mistake to get money wasted. A well-written
entrepreneur is using and is planning to use. business plan provides the best allocation for funds to
 various aspects of the business. The plan could offer their mistakes. The combination of failures and lessons
cheaper alternatives and makes the entrepreneur learned make most successful entrepreneurs become
stays on the budget to avoid needless expenses on smarter from these experiences.
the business which may save money that can be
placed into other business operations and/ or Truths about Failure in Entrepreneurship
investments. Failure is a frightening, that no would-be
6. Helps in the start or continue the business entrepreneurs would like to hear this word. The reality
decision - The decision to start a business at all or though is that no entrepreneurial journey can be complete
continue with a business or shut it down is very without it. At one point or another, most successful
important. A well- written business plan allows the entrepreneurs failed at some kind of business encounter.
entrepreneur to decide when a business is not doing Here are some truths about failure among entrepreneurs:
well. The business idea may not be bad at all, hence 1. No success without failure - The road to recovery is
a different approach for the business could be made. long and painful when someone failed. Although,
A good business plan always stands a taste of time. when heartbroken, entrepreneurs turn to understand
and appreciate more what happened.
Failure and Entrepreneurship 2. Failure and success are similar - Without failing
Entrepreneurs often succeed because of their occasionally, an Entrepreneur cannot completely
strong will. They continue to try repeatedly when others understand what success really looks like.
usually would give up. They are not easily depressed or 3. Failure arises from curiosity- Usually an limitless
frustrated when things do not go based on plans. When thirst for knowledge and longing to reach their full
things go well, it is easy for them to take personal credit. potential is the reason why numerous entrepreneurs
However, when poor business decisions result in failure, it venture out. This curiosity provides entrepreneurs
is really more difficult. Really successful entrepreneurs are answers to their questions in mind but needs to take
ready to take responsibility for their mistakes. a lot of risks. Even with countless warnings, curiosity
propels them to discover what they wanted to know.
4. Failure is an asset - Undeniably, failure is a
Most entrepreneurs always pray that they would not make recognition that something has been tried. The
any errors and miscalculations but certainly not possible. important thing are the learnings taken from the trials
Failures are unavoidable. The reality though is most and for entrepreneurs this is better than not having
successful entrepreneurs failed and benefit from their tried. Entrepreneurs become more respected and
failures. The ability to learn from mistakes and positively valuable with each and every failure.
move forward contributed greatly to their success 5. Nobody wants to fail - Besides one's own pride,
professionally and financially. Entrepreneurs who took the friends, family and relatives of an entrepreneur do not
optimistic lessons from their mistakes and move on are want him to fail in his every attempt. In business, all
those who are able to achieve great things. Since stakeholders have their respective interest in the
unescapable, many entrepreneurs turn weak and business and to its success. An entrepreneur needs
helpless, but this must not be the case. For instance: to develop strong relationship with his business
partners. With honesty and transparency his partners
1. Henry Ford became bankrupt five times and was will surely work with him even in difficult times. Then
even given the advice to move out of the automobile success will follow and everyone will benefit from this.
industry. 6. Failure does not mean quitting - Quitting is very
2. Walt Disney was turned down by investors about 300 different with failure. Failure is a barrier, quitting is
times when it was looking for finances. not. Quitting is when the entrepreneur stops trying.
3. The popular Beatles group was not accepted by five 7. Each failure gets easier - For an individual being
record companies before their success. heartbroken several times, makes acceptance easier
4. Steve Jobs was one of the leading example of and getting over is much simpler. Holistically the
coming back with a bang. Apple fired him from the more disappointment a person experienced makes
CEOs position because of terrible products. He him better and is able to manage smoothly the
afterwards started NeXT which turned out to be a process in general. The same is true with an
huge success. It was because of this only that Steve entrepreneur.
Jobs got back to Apple as a CEO. Failure is just one aspect of the entrepreneurial
5. Thomas Alva Edison is someone who bounced back journey that should prevent an entrepreneur to continue
after failing. He invented something which mankind his endeavor. When properly managed and understood,
cannot persist without. He took nearly 1000 attempts this failure can make an entrepreneur a better person and
to discover light. His words on failure are a great a better businessman.
source of inspiration for one and all.
Reasons for Failure
Entrepreneurs have an alternative word for failure Reading from the biography of any successful
and that is discover. From failing entrepreneurs are able to entrepreneur, anyone would be amazed on how they
discover better ways on moving into the next step of advantageously embraced failure. In the entrepreneurial
business building. The scars from the failures propel journey, acceptance of failure is the best option and the
entrepreneurs to achieve more using the lessons from best strategy to succeed. Everyone knows that failures are
the stepping stones to attainment of ones' goals. There soon or very early can lead to the business into
are however, some reasons for an entrepreneur's failure demise. An entrepreneur should extensively and
which could be because of: carefully review and analyze first all aspects of his
business before deciding on an expansion. There
1. Lack of right vision - Passion is the very most must be proper timing for expansion since it will be
reason of establishing a business. However, not all harder to manage the business after.
entrepreneurs understand that the most 9. Miscalculating competition - Underestimating
indispensable thing when opening a business is the competitors is risky to undertake by any
vision. Vision is how the entrepreneur sees himself entrepreneur. Competition must be identified before
and his business say after five to ten years since he taking a portion of the market. To stay safe in his
started. With a clear vision, an entrepreneur shall business position, an entrepreneur should keep a
have focus to keep him moving in the right direction. keen eye on his competitor's strengths and
2. Proper selection of a business - Proper selection of weaknesses.
business is vital to prevent entrepreneurs failing. It is 10. Giving up too soon - It is commonly a cause of
really very complicated for an entrepreneur to decide failure of every entrepreneur to quit and give up his
which business to build. Certainly, most businesses business. Although it is really very difficult to get up
have the potential to earn. However, an entrepreneur from considerable obstructions, but quitting is not a
must know and identify which one is really solution. The truth is there is no success without
appropriate for him. Research can help an failure. The route of becoming a successful
entrepreneur makes the proper selection of a entrepreneur is full of hurdles and obstructions.
business that he will adapt. Instead of quitting, an entrepreneur must learn from
3. Lack of appropriate planning - Incorrect planning is his mistakes and just try harder not to repeat them.
another common cause why entrepreneurs fail.
Having a well-written business plan especially for
first- timers is an essential component of starting a
new business which entrepreneurs disregard. A well-
written business plan usually includes both the long-
term and short-term strategies. While the business
vision shall set the direction for the business goal, the
business plan is the key towards attaining such goal.
4. Having inadequate capital - It is basically suicidal to
start a business with insufficient capital.
Entrepreneurs particularly new ones must know the
significance of cash flow. They must not miscalculate
the value of money it will require them to run their
startup venture efficiently.
5. Poor execution of the plan - A well-written business
plan is worthless without proper implementation. The
most critical reason behind the failure of
implementation is ineffective leadership. There are a
lot of big challenges in the implementation of new
strategies. It is only with leaders possessing courage,
determination and patience that can make the
execution of a well- written business plan effective
and successful.
6. The hiring of wrong people - Hiring the right
employee is essential to the success of any
entrepreneur and his business. Hiring a wrong
individual is a waste of resources, besides creating a
negative work environment. A negative work
environment is not good for any business. An
entrepreneur must always take the step to hire good
people.
7. Failure in marketing-The success of every business
also depends on its marketing. Marketing is
significant in attracting many potential buyers for the
services or products being offered by the business.
Promotion is a very reliable process that can
meaningfully and highly contribute to any business
success.
8. Expanding too soon - Certainly, every entrepreneur
wants to expand and grow. However, making it too