Planning and Entrepreneurship

Drucker's popular "If you fail to plan, you will plan to fail," is the theme of this article. Mr. Teodoro R. Estacio of the Manila Bulletin, Business Options,7/30/09, wrote an article "Why entrepreneurs should plan?" Joinme in learning from his ideas and my own learning experience

Entrepreneurs, as the experts would say, are "risk-takers." Others call them "opportunity seekers." They are niche-finders. Visionaries. They are naturally drawn to create, to innovate. Be that as it may, these entrepreneurs are not exempt from observing a basic principle of good management which is planning. As managers of their own enterprise, it is incumbent upon them to carefully plan their business. This involves defining the "what," the "who," the "how," the "when," and the "where" of their business operations. What are the products or services to be engaged in? Who are the people to be involved in the operation? How should the enterprise go - into manufacturing/production? merchandizing, or services? When should the products be sold or services be offered? Where should the market be located? These five W's can be expanded into a more detailed description of the management, marketing, operation, financial and legal aspects of the business necessary in facing its internal and external environments, especially the buying behavior of consumers.

What are the uses of a PLAN in business?

• It can be used as a guide or a tool of management for direction towards expansion or development.
• It may serve as a measuring stick for indexing success or failure of the business.
• It can be a document for sourcing additional funds from either private or government funding agencies.
• It may serve as a reference map towards more planning activities and thereby optimize its vantage point.

Why is there a need to PLAN?

With the list of its uses, a PLAN is obviously a must for entrepreneurs! However, there are still many entrepreneurs who fail to plan. A US survey, for instance, reported that more than 80% of small businesses have no formal plan to show. The expressed reasons for this are:

• they think that the business is too small, it can easily be managed even without the aid of a PLAN.
• they know the business inside out, hence, there is no need for any form of a guideline.
• they think that due to the ever-changing challenges in the economy, there is no need to write a PLAN.

What is the result of having no business PLAN?

• A big percentage of micro and small businesses do not survive within the first 5 days of their existence.
• Concomittantly, failures are also atttributed to other factors, such as: lack of financial know-how, people problems, and inadequate financing.

An important, but neglected element in planning is failing to diagnose correctly the pulse of the buying public. Since it is the buying public that will determine the success of the business, it is recommended that they be considered seriously in the first part of the planning stage. This is part of environmental scanning. It is studying the buying behaviour of the consumer, among others. Studying involves observation and gathering data through survey polls and other means practicable to feel said pulse.

Summarizing, entrepreneurs should PLAN to guide them in their day-to-day business transactions; to keep them abreast of business trends and consumer pulses; to present documentary materials to potential funding institutions for business financing; and to index potential threats to business operation as well as to gauge potential success factors.