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