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He mea tuku nā:
Business
KŌNAE AKO 1
Magazine 1 Te Pōkaitahi i
te Pakihi Iti me
te Whakahaere
Paemahi
Certificate in Small Business
and Project Management
He Mahere Whakahaere i te Pakihi Level
– Business and Project Planning 4

Te Wānanga o Aotearoa © 2017 Version 3
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Acknowledgments:
Content by Aotahi Limited, Te Kuiti.
Design by Design on Q Limited, Te Awamutu.
Certificate in Small Business & Project Management – Te Pōkaitahi i te Pakihi Iti me te Whakahaere Paemahi
Contents
Kōnae Ako 1 Outline 1
Special Boxes and Icons 2
1.0 Introduction to Planning for Small Business 5
1.1 Introduction to Small Business and Entrepreneurship 6

1.1.1 What is an SME? 6
1.1.2 Small Businesses in New Zealand 8
1.1.3 Entrepreneurship 10
1.2 Sustainability and the Multiple Bottom Line 17
1.2.1 Sustainability 18
1.2.2 The Multiple Bottom Line 18
1.2.3 Rethinking ‘Success’ 22
1.3 Business Planning 23
1.3.1 The Business Planning Process 25
1.3.2 Personal Planning 26
1.3.3 Plan for an Exit 31
1.3.4 The Business Plan Outline 32
2.0 Introduction to Project Management and the Lean Canvas 35
2.1 Projects and Project Managers 37

2.1.1 What is a Project? 37
2.1.2 Why Use Project Management? 39
2.1.3 The Project Manager 42
2.1.4 Project Roles 43
2.2 The Stages of a Project 45
2.2.1 The Initiation Stage 47
2.2.2 The Planning Stage 51
2.2.3 The Execution Stage 55
2.2.4 The Monitoring and Controlling Stage 56
2.2.5 The Closing Stage 59
2.3 The Lean Canvas 61
2.3.1 Filling Out the Lean Canvas 64
2.3.2 Using the Lean Canvas to Help Write a Full
Business Plan 72
2.4 Creating and Monitoring Projects with the Lean Canvas 73
2.4.1 Initiation Stage 73
2.4.2 Using the Lean Canvas to Monitor and Revise
a Business Project 75
2.5 Using the Lean Canvas to Monitor a Business Plan Project 77
References 80
KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning 3

Kōnae Ako 1 Outline

Introduction
This Kōnae Ako sets out the first steps for writing your business plan. The focus is on identifying the need for,
and benefits of, a business plan, and developing the first part of that plan. Writing your full business plan will be a
long and involved project. For that reason, this Kōnae Ako also offers an introduction to Project Management. The
project management knowledge you will learn in the CSBM programme can be used for any business project, large
or small. Throughout the programme, you will be using project management skills to carry out your business plan
project as well as several smaller projects.
When developing the first part of your business plan, you will need to think about your overall vision and goals for
your business. Although you may automatically think about financial goals and targets, there are other important
considerations. These days more than ever, it is important for a business to be run sustainably. This means that
the business does not use natural resources in a way that prevents future generations from using and enjoying
those resources. As the 21st century proceeds and challenges such as climate change grow, it will become even
more important to consider your business’s effect on the environment. To that end, we use the Multiple Bottom
Line to judge business success. This adds social, environmental, and cultural ‘bottom lines’ to the familiar
financial bottom line. These concepts are introduced in Section 1 of this Kōnae Ako, along with an introduction to
entrepreneurship and the role of Small to Medium Enterprises (SMEs) in the New Zealand economy.
In Section 2 we introduce project management. This is a system for planning, organising, and executing projects of
any size. The project management process has five distinct stages. In this magazine, we provide a basic overview
of all stages to prepare you for more detailed explanations later in this Kōnae Ako and later in the programme. We
also introduce the Lean Canvas: you can use this to quickly plan a business, but you can also use it to monitor your
progress on a business planning project.
In Magazine 2 you will learn more about the first two stages of the project management process: initiation and
planning. By the time you reach the end of this Kōnae Ako you will understand how to properly develop a project
plan according to ‘best practice’ and will then be prepared to start work on a project. The first project you will set
to work on is your business plan. Therefore, also covered in Magazine 2, is the first major part of your business
plan: the Strategic Profile. This is a document that sets out the goals, vision, purpose, and mission of your business
along with the values that you want to promote within it.
Learning Outcomes Covered
1. Develop a project plan

2. Develop a framework to guide and review business plan development
3. Develop a strategic profile for a business plan
Assessments
There are two assessments for this Kōnae Ako:
• K1A1: He Mahere Pakihi – The Business Plan Project

• K1A2: He Tirohanga Rautaki – The Strategic Profile

Special Boxes and Icons

As you read through the Kōnae Ako magazines you will often come across special text
boxes and icons. These boxes and icons are used to structure the content, and to point
out things that will help you get the most from the programme.
Explanations of each of these features are as follows.
DEFINITION:
A definition box is used to explain an unfamiliar term or piece of language.

These are especially common near the beginning of each section, as we
introduce new ideas.
HEI TAUIRA:
Example:
These are fictional (made up) stories used to illustrate a concept or a particular
point. Although the people in an example may not be real, the situation and
concepts they deal with can happen to many business people. It is a good idea to
think about how they might apply to you or your business.
Case Study:
While an example is a fictional story, case studies are from real life. They are
real people and business owners who have a story that is useful or important
for you to be aware of. The case studies will often show how the ideas in the
programme can be applied to a real-life situation. Sometimes they are about
people who used to be tauira (students) of the programme, like you!
Occasionally you will see dark boxes with quotations in them. These might be from
famous people, or sometimes characters from movies or books.
“Life itself is a quotation.”
- Jorge Luis Borges
Although these quotes might be amusing, their real

purpose is to show different ways of thinking about
the situations you encounter. Perhaps they will help
to inspire you, or make you think differently about the
opportunities you have!
2 KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning

Discussion Questions: USEFUL WEBSITES:
These are questions for you to think about The internet is a very important resource for
and discuss with your kaiako and other business owners, and many useful resources
tauira (or even friends or whānau outside the are available online. We use Useful Website
classroom, if you want to). Your kaiako is likely to boxes to show where resources relevant to
ask many of these questions during contact hours. the programme can be found.
People will often have different opinions about • Is the Internet Down? - https://
these questions, and that is a good thing: it istheinternetdown.com/.
means that they are thinking about what they
are learning! When you are taking part in a
discussion, remember to also say why you think
something. Hearing the reasons behind what Factors to Consider:
you say may help other students see things in
a way they had not thought of, and this can be The content of the Kōnae Ako magazines
very valuable. has been carefully chosen, so that it will be
useful to you in your role as a business owner.
However, sometimes there are additional factors
Pātai: which you will need to be aware of. These may
be related material which will be of interest, or it
may be to provide background or context for the
Although discussion is a valuable tool for
main content. Sometimes it may even suggest
helping us to develop our thoughts, sometimes it is
alternative approaches for you to consider.
more important to consider or reflect on something
by ourselves. Pātai are questions intended for
that purpose – they are things you may wish to
Occasionally, you will find boxes of emphasised text.
consider for yourself. You should not feel that you
This is for points which are critically important – make
have to share your thoughts about these pātai with
sure you pay attention to what is in them!
others, but may do so if you wish.
Emphasised text
NGOHE:
Activities in this workbook should be used to Business often involves making use of calculations
reinforce your learning. or formulae. These are provided in the same style as
emphasised text, and will usually be accompanied by
an example to show how it works.
TĪWHIRI:
Equations
The content in the Kōnae Ako magazines is
quite detailed, and it explains what you need
to do to make use of the information in the
programme. However, sometimes there is a Key Points
shortcut or an easier way to do something,
or some other tip that is useful for business Key Points appear at the end of each major subsection of
owners. In those cases we use a Tīwhiri box. the Kōnae Ako magazine.
These will usually be suggestions about They are used to summarise the most important
how to do something, or make your life as a points, and add interesting information to the end of a
business owner easier or more effective. subsection.


1.0
Introduction
to Planning
for Small
Business
As an entrepreneur, effective business planning is
critical to your business’s success. This includes long-
term strategic plans, operational business plans, and
even ‘project plans’ to implement specific projects in
your business. This section provides an introduction to
the planning process as well as an introduction to the
small business environment in New Zealand.
DEFINITION:
Business Plan (mahere pakihi): A document

that sets out the purpose and goals of a
business and a strategy for achieving those
goals. A document that is updated regularly
to guide the development of a business.
Business Terms in Aotearoa. (2012).
In the first part of the section, we outline what

entrepreneurship is, look at the role of Small to
Medium-sized Enterprises (SMEs) in New Zealand,
and explore the business qualities you need to be
a successful entrepreneur. You will learn that an
important part of planning is setting goals for yourself
as well as for your business. You will also learn about
the benefits of having non-financial goals, particularly
in regards to creating sustainable business models.
One tool for helping a business set such goals is the
‘multiple bottom line’. This is covered in the second
part of this section.
Lastly, in the third part of this section we will look at

business planning itself. A business plan is a living,
dynamic document, and definitely not something
that is stored away on a shelf once you have written
it. We cover the two general types of planning which
5
entrepreneurs use and consider how assessing your 1.1 Introduction to Small
current position can help you develop a thorough and
Business and Entrepreneurship
practical business plan that outlines your strategy for
start-up and growth goals.
“The critical ingredient is getting off your
Sometimes in business you will have a specific project
butt and doing something. It’s as simple
that needs to be implemented. This is something as that. A lot of people have ideas, but
which is not part of your usual day-to-day business there are few who decide to do something
operations and may include, for example, moving about them now. Not tomorrow. Not next
premises, changing your production processes, or week. But today. The true entrepreneur
developing a customer relationship management is a doer, not a dreamer.”
system. Business projects that are carefully planned
– Nolan Bushnell
are more likely to succeed than those based on
guesses or left to chance.
Small to Medium-sized Enterprises (SMEs) are
The planning process helps you to work out exactly
an important source of innovation and economic
what needs to be done to build a business project
growth in New Zealand. SMEs help our economy
and what resources you need to effectively execute
by employing thousands of New Zealanders. They
a business plan. Always remember, failing to plan is
also contribute to the growth of the New Zealand
planning to fail.
economy. Statistics show that approximately 98.9% of
businesses in New Zealand are SMEs.1
Learning Outcome Covered Starting your career as an entrepreneur can be an

exciting and rewarding experience. It offers many
` Develop a framework to guide and review
advantages such as being your own boss, setting
business plan development
your own work hours, and making a living doing
something you enjoy. Even so, becoming a successful
entrepreneur requires careful planning, creativity, and
a lot of hard work.
1.1.1 What is an SME?

People often talk about ‘small business’ or ‘small
business owners’, but it is not clear how small a
business must be to count as a small business.
Governments and other organisations generally use
the term ‘SME’ instead. The definition of what counts
as an SME depends, to some extent, on the size of the
country we are talking about. For example, what is
considered an SME in many large countries such as
the United States (USA) might be the same size as a
large business here in New Zealand.
The most commonly used definition of an SME is the

one used by the European Union (EU). The EU defines
an SME as an independently owned and managed
business with fewer than 250 employees. However,
some countries set the limit at 200 employees,
while the United States considers SMEs to include
businesses with fewer than 500 employees.2
1 Statistics New Zealand. (2016).

2 OECD. (2005). p. 17.

The International Finance Corporation (IFC), which is closely associated with the World Bank, uses three
indicators to define SMEs. Micro-enterprises, small enterprises, and medium enterprises are those that meet at
least two of the three indicators shown in Figure 1.
Figure 1: Indicators for SME Definitions 3
Indicator Micro-Enterprises Small Enterprises Medium Enterprises

Number of Employees < 10 10 < 50 50 < 500
Total Assets < $100,000 $100,000 < $3 million $3 million < $15 million
Total Annual Sales < $100,000 $100,000 < $3 million $3 million < $15 million
For example, a business that employs six people, has total assets of $85,000, and has an income of $420,000,
would be classified as a ‘micro-enterprise’ as it meets the requirements of at least two of the indicators of a micro-
enterprise (Indicators 1 and 2). However, if that same business increased its asset base to $120,000 the following
year, it would then be classified as a ‘small enterprise’.
There is no official definition of an SME in New Zealand, but there is a ‘traditional’ definition that is referred to in
some legislation. The Ministry of Business, Innovation and Employment (MBIE) considers an SME to be significantly
smaller than a business with 200 employees. MBIE often defines SMEs as businesses with fewer than 50 employees.4
DEFINITIONS:
Small to Medium-Sized Enterprise (SME) (umanga āhua paku): A business with fewer than 50 employees.
Small Business (pakihi pakupaku): A business with fewer than 20 employees.
The Ministry of Business, Innovation and Employment (MBIE). (2014).
SMEs by the Numbers

USEFUL WEBSITE:
SMEs are grouped into different kinds depending on
the number of employees they have. MBIE lists the The Ministry of Business, Innovation
types of SMEs (and their definitions) as follows: and Employment (MBIE) supports the
` Zero employee enterprise: A business with no development of business in New Zealand
employees. by giving advice, making policy and dealing
with business rules and regulations.
` Micro-enterprise: A business with one to five
employees. • Ministry of Business, Innovation and
` Small business: A business with fewer than 20 Employment – http://www.mbie.govt.nz.
employees.
` Small to medium business: A business with 20 to
Discussion Questions:
49 employees.
` Medium business: A business with 50 to 99 • What was your understanding of an
employees. SME before starting this programme?
` Large business: A business with 100+ employees. • Why do you think there is no official definition
As you can see, the IFC and MBIE differ quite of an SME in New Zealand?
significantly when it comes to defining SMEs.
3 IFC. (2012).
4 MBIE. (2014).

1.1.2 Small Businesses in New Zealand

Small businesses play an important role in New Zealand’s economy. To many people, small business is at the heart
of our ‘Kiwi’ way of life.
Statistics New Zealand5 collects, records, and publishes statistics about businesses in New Zealand each year.
Figure 2 shows the number of ‘economically significant’ enterprises in New Zealand in each size category. The data
is found in the latest New Zealand Business Demography report (at the time of writing) made available by Statistics
New Zealand.
Figure 2: Number of Enterprises in New Zealand by Size 6
Percentage of all
Employee Size Group Number of Enterprises Cumulative Percentage
Enterprises
0 362,856 70.4% 70.4%
1–5 98,748 19.2% 89.6%
6–9 21,153 4.1% 93.7%
10 – 19 17,187 3.3% 97.0%
20 – 49 9,780 1.9% 98.9%
50 – 99 2,979 0.6% 99.5%
100+ 2,346 0.5% 100%
Total 515,046 100% -
This table shows that 98.9% of businesses in New

Zealand are SMEs (employ 50 or fewer employees). It
also shows that 70.4% of businesses in New Zealand
have no employees! In reality, there are many more
businesses that have no employees because Statistics
New Zealand only counts ‘economically significant’
businesses.
To be ‘economically significant’ a business must meet

at least one of the following criteria:
• has annual expenses or sales (on which GST is

charged) of more than $30,000.
• has, on average, more than three employees over
one year.
• is part of a group of businesses.
• is registered for GST and involved in agriculture or
forestry.
• has over $40,000 of income recorded in its annual
tax return.
5 Statistics New Zealand (Tatauranga Aotearoa) is the government agency that collects and publishes statistics.
6 Statistics New Zealand. (2016).

Figure 3: Small Businesses in New Zealand 7
The Ease of Doing Business in New Zealand

New Zealand has been identified as the world’s easiest place to start a business. The World Bank’s Doing
Business 2017 report ranked New Zealand as the easiest, out of 190 economies, in which to start a business (see
Figure 4). New Zealand has held the top spot since 2009. The ranking is based on the time, costs, and procedures
involved in starting a business, as well as the amount of money you need to have on hand to start a business.
In New Zealand, it takes half a day, one procedure, and no paid-in capital to start a business. In some countries it
can take over 200 days and up to 18 procedures. Business owners can also be required to have large amounts of
capital before they are allowed to start a business. The same report ranked New Zealand 1st for the ease of doing
business (New Zealand was ranked 2nd in the 2016 report).
Figure 4: The Easiest Economies to do Business 8
Economy Ranking Economy Ranking

New Zealand 1 st
Norway 6th
Singapore 2nd United Kingdom 7th
Denmark 3rd United States 8th
Hong Kong 4th Sweden 9th
Republic of Korea 5 th
Macedonia 10th
7 MBIE. (2016).
8 Source: World Bank. (2017).

This ranking considered the ease of starting up a

business as well as other factors such as getting DEFINITION:
construction permits, credit, and paying taxes.
Entrepreneur (rakahinonga): Anyone who
has started a new business. Someone who
acts as an initiator, designer, and encourager
of change and innovation.
• Why do SMEs make up such a large
proportion of New Zealand businesses? Business Terms in Aotearoa. (2012).
• Why is it so easy to do business in New Zealand?
• How do SMEs contribute to the New Zealand
However, in general, when you hear the word
economy?
‘entrepreneur’ it means one or more of the following:
• Are you surprised that New Zealand ranked
• Anyone who starts his or her own business.
first in these studies? Why? / Why not?
• Someone who creates a new enterprise, regardless
of whether they own it.
1.1.3 Entrepreneurship • Someone who creates new products or services.
We often hear stories about successful Kiwi entrepreneurs • Someone who has a new, innovative way of doing
like Stephen Tindall, founder of The Warehouse. What business.
we do not hear is what it actually takes to turn a bright • Someone who takes a large amount of risk to fulfil
idea into a successful business venture. their business vision.
What is an Entrepreneur?
‘Entrepreneurship’ means different things to different • What do you think ‘entrepreneur’ means?
people. To some, an entrepreneur is a person who has • Do you find it easier to give examples of
started a business or is in the process of starting one. entrepreneurs than to come up with a definition?
These are people who have taken the risk to create
• Do you think using examples of entrepreneurs
a new venture, with the intention of being able to
might help you to come up with a good definition?
financially support themselves.
To others, however, an entrepreneur is a clever and

highly talented person who brings about change
through the introduction of new processes, services, or
products. To these people, there needs to be a degree
of innovation involved in entrepreneurship. That is: it is
not enough just to start a new business; the business
itself must provide something new to the economy.
That is why when many people think of entrepreneurs
they think of people like Bill Gates (co-founder of
Microsoft) or Mark Zuckerberg (founder of Facebook).
Someone may consider that anyone who runs

their own business is an entrepreneur, regardless
of whether they started it themselves, inherited, or
bought it from someone else, or whether there is any
innovation at all in the venture. They may argue that,
to remain in business for the long term, a person has
to think strategically, create a point of difference, and
seek continual improvement in the way they do things.
These are all entrepreneurial qualities.

Entrepreneur vs. Small Business Owner

The terms ‘entrepreneur’ and ‘small business owner’ are often used by people to refer to the same person. However,
there are differences in their approach to work. Figure 5 shows some typical characteristics of each. Note that, to be
an entrepreneur, not every single point in that column of the table needs to apply to you. You may, in fact, find you
possess characteristics from each column.
Figure 5: Small Business Owners and Entrepreneurs
Discussion Questions: What Does It Take to Be a Successful

Entrepreneur?
• Look at Figure 5. Which side sounds
more like you? Which side would you really
like to be on? “Dreams are extremely important. You
can’t do it unless you can imagine it.”
• Who are some successful entrepreneurs you
have heard of? – George Lucas
• Why have they become so successful?
• Do you think they have qualities you could
Every year, thousands of businesses open their doors
develop yourself, or things you could copy?
for the first time, and thousands also close their doors
for good. While many people dream of becoming
an entrepreneur, not everyone succeeds. One of the
biggest factors in business failure is underestimating
the amount of work involved. The hours are long, you
must give up a lot, and you will face new challenges
every day. While it is good to be your own boss, this
also means you are responsible for everything that
happens within your business.
Being successful in business depends a lot on your

character: in other words, on the sort of person you
are. This means that a lot depends on your personal
qualities. For example, entrepreneurs need to be brave

if they are going to take risks. They also have to be Self-control

fair if they are going to win the respect of employees
It would be very difficult to build a house without
and customers. In general, being a good person will
having a plan. Instead, people decide what kind of
help you do well in business. The same goes for being
house they want, and then make sure they have the
confident and being able to stick to your personal values.
materials they need to build it. Once they have started,
However, there are many qualities that are especially they may add a few minor things that were not in
important for business owners and entrepreneurs. the original plan or may make small adjustments to
The pressures on business owners are different from materials as better options become available. However,
those of ordinary life. Developing the right kind of it is unlikely they will change the entire structure,
character will help you deal with what can be stressful reduce the floor size to make it easier, or move the
situations. Good businesspeople react differently to location! At best this can be very expensive, and might
these situations. Where some of us might panic, they mean they cannot finish building the house!
react calmly and rationally.
It is the same in business. If you have a plan, you
There are many important business qualities, but the need to be able to stick to it and avoid temptation.
following are some of the most important. This is the quality of self-control. It is something that
successful businesspeople are very good at. It is why
they are able to put so many hours of work into a
Foresight business, where other people might give up.
Any entrepreneur will tell you that being good at
looking ahead is essential. It does not matter how
Flexibility and Adaptability
large or small the project is, you must stay organised.
The key to any project is planning. You have to plan As you can see, planning is an essential skill for an
your project before you can build it. Not planning your entrepreneur. However, planning is usually done in
project would be like taking off from an airport without an environment of uncertainty. Things do not always
a destination, route, or any knowledge of how much work out exactly as you expect. As a result, strategies
fuel you needed to get there. and plans often change when it comes to business.
You must always be flexible and prepared to accept
Entrepreneurs need good foresight: they need to be
change and adapt your business plan accordingly.
able to look ahead and see what is likely to come next
This does not mean giving up or making random
before it happens. In the same way that chess players
changes, it instead means making sure you are not so
can see three or four moves ahead, an entrepreneur
stubborn that you would stick with something that no
must be good at predicting what could happen. This
longer is the best option for you.
does not mean that they will know the future with
certainty. Instead, it means they have identified the One of the most important things to realise, from the
risks and the possibilities, and have a good idea as to very beginning, is that the plan you have at the start
how likely it is that each of these will occur. is probably not the one you will finish with. Projects
are about bringing about change, and all projects are
different. Where there is change, there is the chance
that costs will rise, deadlines will be missed, and
that any number of other things will go wrong. This
is when you need to be flexible enough to handle
any change that may come your way, and adaptable
enough to change direction or focus. People who feel
the need to stick to every aspect of their original plan,
no matter what, are unlikely to be successful in business.
As an entrepreneur, you will need to have, or be willing

to develop, the ability to adapt to unexpected problems
and opportunities. At times you may even have to
make a quick decision. You therefore need to develop
good instincts and trust them because depending

on other people can often make it harder to respond One of the tasks that you will need to schedule into your
when you need to. Sometimes you will need to make time on a weekly basis is planning. While you may
an independent decision that just ‘feels right’, and be find it useful to identify several small-to-medium tasks
prepared for the end result. You will probably have to get done each week, creating a detailed longer term
noticed that most successful businesspeople are very plan should be a priority. You can then use this plan
good at doing this. to guide your weekly plans. Throughout the process,
you can also identify some Key Performance Indicators
You might be worried that you do not have all of these
(KPIs) which you can use to measure your progress.
personal qualities or that they are not yet well-developed.
These could relate to, for example, sales numbers,
That is fine. Few businesspeople start out with all of
repeat purchases or even waste minimisation.
them. Just as you can learn to be brave by confronting
your fears, experience will help you develop the
qualities you need in business. The first step is to be DEFINITION:
aware of what the qualities are. This way, you can
Key Performance Indicators (KPIs) (tohu
actively develop them. Soon they will come naturally.
matua o te whakatutukitanga): Criteria that
measure the achievements, progress or areas
HEI TAUIRA: for improvement of something or someone.
Example: Lionel Business Terms in Aotearoa. (2012).
Lionel is the owner of Muncho Mania, a fresh

food delivery company located in Huntly. Lionel Procrastination is a big obstacle to business success.
discovers that Nutri-Starve, a commercial It happens when there is a task that the entrepreneur
provider of weight loss products and services, knows about, but keeps putting it off until sometime in
has purchased a small local competitor called the future. This may lead to the task being delayed until
Yumbo. Lionel is nervous when he reads about it must be done because of some deadline, or it may be
this in the newspaper as Nutri-Starve has a delayed indefinitely. Either way, procrastination often
multi-million-dollar market. Lionel is concerned ends up causing stress and overwhelming situations.
that Nutri-Starve is getting into the food
Procrastination often happens when a task is
delivery industry.
unpleasant or because there are other easier, quicker,
Lionel keeps paying attention to the situation more enjoyable (and often lower priority) jobs that
and waits patiently for his opportunity to act. can be done first. Sometimes the tasks that are
Within a few months, he learns that Nutri- procrastinated over are also the most important ones.
Starve is having problems with Yumbo. He acts Putting them off can thus have a bad effect on the
quickly and makes it known to Nutri-Starve and business, even before the business has started!
Yumbo that he would be interested in buying
Yumbo. This pays off, and Lionel purchases
Yumbo for a very good price. Lionel now
controls both businesses and does not presently
have any direct competition.
Time Management
As an entrepreneur, you often have to jump between
tasks, take phone calls, attend events, and be
extra careful with every decision that relates to
your business. Managing your time properly is an
important skill, especially when it comes to planning
and project management.

Time management involves self-control, as it can often

HEI TAUIRA:
be easy to put things off until later, but you also need
a good sense of time. Many of us find that time flies
Example: Alfonso
when we are working hard. This can result in us being
Alfonso has a business plan that he needs to late or having not enough time to complete our day’s
submit in order to have his loan application tasks. You will find that successful entrepreneurs have
considered at a local business development a good sense of time. They can make accurate guesses
organisation. He has one week to prepare the about how long something will take, and they can
business plan. Alfonso cannot afford to miss often reorganise their schedules quickly and easily.
this opportunity as he needs money to start his
business. He thinks a week is plenty of time, so
he leaves it.
TĪWHIRI:
Instead of working on the business plan and As an entrepreneur, it is hard to achieve goals
proposal, Alfonso spends hours playing video and complete tasks without understanding
games, downloading videos, and listening how you are managing your time (as well as
to music. He does do some work on the plan your staff’s time). You might like to attend a
though – he selects which four-wheeled ute he time management class if you have not been
would like to buy. He has always wanted to go to one before. These classes have tips and
ute shopping and is glad he has come up with a techniques to help you prioritise problems
business idea which requires him to have one. and interruptions, organise your day, and
manage your time.
Six days later, Alfonso is on his third pack
of energy drinks, while desperately putting
together a business plan and proposal. The next
day, Alfonso shows up to meet with the board People Skills
of the business development organisation,
obviously lacking sleep. Unfortunately for It is often said that people are the foundation of every
Alfonso, he did not have the energy needed business. This means that the people who make up
to get the business plan and proposal right. the staff of a business are essential to everything
He failed to impress the board and was not done by the business. Yet someone has to organise
awarded the loan he needed. them and make sure they are all working together for
the business. This means that an entrepreneur must
be good at dealing with people – they must be both an
Planning can also be the cause of procrastination! effective leader and manager.
It is very easy to spend too long planning and delay
starting a project unnecessarily, or never start it at DEFINITION:
all. This can happen if you are scared to start and use
planning as an excuse. People Management (whakahaere
tāngata): The management of human
“ Successful entrepreneurs have a good

sense of time.”
resources. This includes, for example,
staff recruitment, leadership and care and
administration of the staff in the business.
Procrastination can affect your projects and the Business Terms in Aotearoa. (2012).
productivity of your staff. If you have a team assigned
to investigate a business opportunity, you do not want
them pushing back the due dates a few weeks or It is not enough just to tell employees what you want
months or longer. You need to find ways to encourage them to do. You need to understand how they receive
your staff to not only deliver on time, but to deliver your instructions, whether they need an explanation,
their best work as well. and be able to notice if they are unmotivated or uncertain.
An effective entrepreneur motivates employees to
complete tasks rather than just ordering them.

Open-Mindedness and Continuous

An engaged and happy team is a productive Improvement
and successful team!
“Without continual growth and

progress, such words as improvement,
HEI TAUIRA: achievement, and success have no
meaning.”
Example: The Long Spoon Cakery
– Benjamin Franklin
Jeannie is the owner of the Long Spoon Cakery,
a small cupcake shop in Martinborough. Sales
have been steadily declining over the previous
Successful entrepreneurs consider the ideas and
six months. Dorothy, who manages the store,
opinions of other people. Open-mindedness is a
arranges a meeting with the eleven full-time
very important business quality. To be open-minded
and part-time staff. She informs the staff of the
means that, even if you believe in your own ideas,
declining sales and says she wants the sale of
you accept change and are willing to listen to (and
the cupcakes to go up 5% over the next three
consider) others’ views. This can be hard if they take a
months. At the end of the three months the sale
completely different view from yours. You must try not
of the cupcakes has not gone up 5%. In fact,
to let your own opinions get in the way of considering
cupcake sales are down a further 15%.
the views of other people. Nobody knows everything,
Jeannie discusses the situation with and even if you are the leader, you cannot always be
Dorothy, and is disappointed at her lack of right. It is better to accept that you might be wrong.
communication to her staff. Jeannie closes the That way you will be open to new information that
store early for the day and has a brainstorming might help your business improve.
session with the staff. She asks them to think
No entrepreneur starts a business without having
about what the store can do to increase sales.
learned lessons along the way, and you do not stop
She records the feedback from her staff on the
learning just because you have started a business!
store whiteboard. As a result of interacting with
So remain open to new ideas from other people. As
Jeannie, and contributing their own ideas, the
stated earlier, you must be flexible and willing to adapt
Long Spoon Cakery staff leave the meeting
to change. You cannot be flexible without also being
feeling more involved and committed to the store.
open-minded.
Maximus, one of the bakers, suggests creating
Do not be afraid to ask for advice. People sometimes
a sample batch of cupcakes to take to other
think that asking for advice makes you look weak.
businesses and to give away outside the
Even if it does, it is not as bad as not asking for advice
store, to attract more customers. This not only
when you need it – that actually makes you weak.
brings about an awareness of the store to the
Much the same is true of admitting your mistakes.
community, it also provides valuable feedback
People think that admitting their mistakes makes them
about the cupcakes. Minor changes to the menu
look foolish, but not admitting your mistakes definitely
and pricing result in a 25% increase in sales
makes you a fool. Successful entrepreneurs are people
over the next 12 months.
who do not let their egos get in the way of success.
The best way of thinking about entrepreneurship is to

In the example of the Long Spoon Cakery, Dorothy think of it as a process of continuous improvement. An
did not have any plan for achieving the goal. Her staff effective entrepreneur knows that they are not perfect,
were not given any guidance as to how they might but they know they can always get better. The same
achieve a 5% sales increase and did not feel involved goes for business ideas. There is always room for
in the process or committed to the goal. It was not improvement. A good way of thinking about the true
until Jeannie explained the goal in detail, and invited entrepreneur is that they are like a person who keeps
staff to contribute ideas, that the sales increase of 5% looking for ways to improve their garden, even while
was achieved. they are relaxing and enjoying the flowers.

Continuous improvement is essential for every lower cost and with fewer mistakes. Continuous
entrepreneur. If you develop an attitude of continuous improvement creates opportunities for ongoing positive
improvement with yourself and your team, the change. The results will benefit everyone; your staff,
likelihood of your business succeeding over the long your customers, and yourself.
run increases. The changes you make do not have
to be big, but they do have to be consistent. Every TĪWHIRI:
entrepreneur is busy, but you should never use
workload as an excuse not to improve. Continuous improvement does not mean
‘mistake-free’. Mistakes will still be made,
HEI TAUIRA: particularly if you are trying new things.
Continuous improvement is about avoiding
Example: Giuseppe the types of mistakes that can be avoided,
and not repeating the same types of mistakes
Giuseppe is the owner and head chef of
over and over again.
Zesty Pesto Italian Ristorante, an Italian
restaurant that is soon to open in Palmerston
North. Giuseppe, who designed the menu
Pātai:
himself, decides to create two pasta dishes in
preparation for opening night.
• What does being ‘open-minded’ mean
Giuseppe is a very accomplished and experienced to you?
chef, but he has never made pasta before. This • Which of the qualities covered in this section
is reflected in his first attempt, which is cold, will you need to develop most? Why?
soggy, and inedible. Giuseppe’s staff sample his
pasta dishes and politely suggest that he spend
a bit more time developing his technique. Discussion Questions:
Rather than repeat his first preparation in
future attempts, Giuseppe makes incremental • Can you think of a business that
changes to his cooking. He moves ingredients constantly looks for ways to improve?
closer together to reduce the time to make the How does it do this?
dish, and decides to use a large pot to cook the • What are some changes you have seen
pasta, instead of using a microwave. companies make?
By the time opening night comes around, • Do you think these changes were successful?
most of Giuseppe’s customers enjoy the Why or why not?
pasta. However, the feedback on the pizzas
is not nearly as positive. In fact, many
Key Points
customers leave without paying for their meals.
Giuseppe believes continuous improvement
SMEs are a significant source of innovation, economic
is a necessary business quality and a useful
growth, and job creation in New Zealand.
competitive tool, so he decides to attend an
evening pizza-making class. New Zealand has been identified as the easiest place to
start a business since 2009.
This dedication to growth has an impact on his
The key to any business is planning. You must plan your
staff, who then also look for ways to improve.
business before you can build it.
This has a positive effect on the business and
improves his relationship with his staff. Planning is important, even if things do not always go to
plan. Successful entrepreneurs accept change and adapt
their business plan accordingly.
The goal of continuous improvement is using the To be successful in business, you will need to have
experience gained from one project to inform future entrepreneurial qualities. These can be learned through
projects. This ensures any future projects can be experience, but it is best to work on developing them
completed at the highest quality, in less time, at before you go into business.

1.2 Sustainability and the

Multiple Bottom Line
“Everything is spiritual. Everything

has a spirit. Water is sacred. The air is
sacred. Our DNA is made of the same
DNA as the tree. The tree breathes what
we exhale. When the tree exhales, we
need what the tree exhales. So, we have
a common destiny with the tree. We are
all from the earth. And when the earth,
the water, the atmosphere is corrupted,
then it will create its own reaction.”
– Floyd ‘Red Crow’ Westerman
Most people have some idea of what is meant by the

phrase ‘the bottom line’. In business, the bottom line
usually refers to the actual line at the bottom of a
business’s Income Statement. This is the statement
that shows the profit (or loss) made by the business.
Money plays much the same role in business that

blood does in the human body. Businesses need
money to keep operating and the long-term financial
success of a business is ultimately dependent on
making money, but is it the most important part of
running a business? Are there other things that need
to be considered? If we think of a business existing
for the sole purpose of making a profit, we risk
overlooking the many things around us that we value
and consider important.
Sometimes it is not easy to see the impact that our

business activity has on the things that sustain us as
human beings. These include our environment, our
societies, and the cultures that make up what it is to be
a human being. The more we know about the effects
our business activities have, the more we can do to
make sure our business has a positive impact on the
people and the world around us.
DEFINITION:
Bottom Line (wāriu more): 1. The final

profit figure. (te tino whāinga) 2. That
which is most important to the survival of a
business. 3. The capacity to generate income
to meet expenses and generate profit.

1.2.1 Sustainability
These days it is becoming more important for
businesses to be sustainable. A sustainable business • How do you personally feel about
is one that does not destroy environmental resources, sustainable business practices?
but can instead operate in the long term without • What would happen if every business used
reducing the available resources. For example, the whichever resources it wanted without
oil industry is not sustainable. There is only a set considering the sustainability of doing so?
amount of oil in the ground, and eventually it will run
• If you think it is wrong for every other business
out. Solar energy, on the other hand, is sustainable.
to use whichever resources they wanted to,
It will last as long as the sun does, and using it does
can you honestly say that it would be okay for
not affect the sun (it would shine anyway!). We can
your business to do that, even if you are only
continue using solar energy without destroying the
operating a small business?
ability of the environment to keep producing it.
• Do you think environmental regulations should
be stricter, less strict, or as they currently are?
DEFINITION:
Sustainability (taimau): Capable of

continuing over a long term without 1.2.2 The Multiple Bottom Line
exhausting / using up resources available. The multiple bottom line is used by businesses when
Business Terms in Aotearoa. (2012). considering business sustainability. It is a way of
measuring a business’s impact on people and the
environment, as well as its finances. In the multiple
If we do not use sustainable practices, we risk bottom line approach, a business is accountable not
destroying the resources we need to live and to do only for its financial profitability, but also for its social,
business. We also risk destroying forever the resources environmental, and more recently, cultural bottom lines.
“
that are both culturally and environmentally important.
A business that sells products which
For example, New Zealand has numerous unique
mock or insult a culture harms the
native species of tree. Many of these trees produce
people from that culture.”
beautiful wood that can be made into high quality
products. If we just cut down whatever trees we While most of us are familiar with environmental
wanted to, there would be few or none left. The trees impacts, social and cultural impacts also matter. When
need time to grow back. If we only cut enough trees a business has a negative impact on society, it harms
so that the rest have time to grow, we will be able to other businesses as well. For example, alcohol sales
keep taking that amount of wood forever – this is a in New Zealand are heavily regulated. This is to stop
sustainable business practice. negative impacts of unrestricted alcohol sales. It is
easy to see how allowing a business to sell alcohol
There are many reasons to operate a sustainable
with no rules would have a bad impact on society and
business. Perhaps the most important are moral
on neighbouring businesses.
reasons – it is wrong to destroy the environment and
not leave enough for our children. Another reason is In a similar way, businesses can have a negative
that customers care about the environment. Many impact on cultures. For example, a business that sells
customers now choose to avoid businesses that are not products which mock or insult a culture harms the
sustainable. Yet another reason is that sustainability people from that culture. Many groups of people have
is a legal issue. In New Zealand the Resource long suffered businesses stealing or insulting their
Management Act 1991 covers the sustainable use of culture to make a profit. These actions harm those
the natural environment. As environmental issues cultures, people from those cultures, and the society
become more important, it is likely that the law will those people live in. At the very least, if your business
become even stricter. is not respectful of other cultures, people from those
cultures will avoid it as customers. However, it is more
likely that people from other cultures will also avoid it.

The basic idea of the multiple bottom line is that a business’s costs are not only financial. According to the
multiple bottom line, gain (and loss) should not be counted just in dollars. The true costs for a business include
environmental costs (for example, pollution), social costs (for example, diseases which result from our lifestyle), and
cultural costs (for example, harm to cultures and people from those cultures) as well as financial costs. Thus, the
multiple bottom line has four ‘layers’ (see Figure 6).
Figure 6: The Multiple Bottom Line
Economic Bottom Line

The economic bottom line includes the monetary figures that must be accounted for in any business. It looks at
profits, losses, revenues, taxes, growth, and anything else that is counted in dollars and cents.
Environmental Bottom Line

The environmental bottom line looks at the natural environment the business operates in. It considers the impact
business activities have on the natural world. A business with a negative environmental bottom line may, for instance:
• cause pollution,
• cause damage to specific parts of the environment,
• purchase supplies and products which support the loss of natural habitats worldwide, or
• produce a large amount of waste which cannot be recycled.
To understand how the business is performing in regards to the environmental bottom line, you need to identify
what to measure. This includes indicators such as air quality, water quality, energy consumption, natural
resources, and the amounts and kinds of waste produced.
By using this kind of information, a business can more easily identify environmental needs and set environmental
goals for the future. For example, a business might set a goal which involves reducing petrol usage to a certain
level. Using less petrol not only has a positive effect on the environmental bottom line, but also on the economic
bottom line. The less petrol a business uses, the less it pays for fuel. A business could do this, for example, by
switching to electric or hybrid vehicles where possible.

Social Bottom Line

The third level is the social bottom line. The
social world is the human environment in which
a business operates. This includes the local or
regional community. Social goods include things
like education, access to social resources, health and
well-being, and quality of life. The social bottom line
considers the extent to which a business impacts Cultural Bottom Line
on the local community. Does the business have
The cultural bottom line is important because it affects
a positive effect on the community, making the
people’s identity and their values. Culture helps us
community healthier and a better place to live? Or
learn and develop as people. Through the development
does the business have a negative impact on the
of culture, human beings have created everything
community, making it a worse place to live and do
from stories and literature to science and medical
business in?
cures from indigenous plants. Culture is an important
For example, a business which has a negative social part of knowledge. If we let a culture die, we lose a
bottom line may: valuable store of knowledge and wisdom – society and
the world then loses a great source of spiritual and
• Outsource work which was previously completed
material wealth.
by local residents to large companies that may not
even use human labour to complete tasks. Unfortunately, there are common business practices
that could harm individual cultures. For instance, the
• Produce goods that encourage unhealthy lifestyles.
misuse of Māori language and the inappropriate use
• Create stressful and unflexible work environments of Māori symbols and images to promote New Zealand
for staff, therefore affecting their family lives and businesses and products not only offend Māori, but
mental health. also threaten the continuity of the culture.
The more a business contributes to the local Whilst Māori culture is extremely important to New
community, the more it supports the health, well- Zealand businesses, it is not the only culture which
being, and quality of life of the people in that matters. As a business owner, you need to remember
community. Taking care of the social bottom line also that all cultures are important, and being respectful
helps to improve the economic bottom line. This is of each culture has benefits to the people from within
because the people in the local community are the those cultures as well as people from other cultures.
same people who will work for local businesses and
the same people who are their customers. When a business supports and respects culture, there
are many benefits. For example:
• The business becomes more appealing to

customers and employees. New Zealanders
increasingly do not like businesses with negative
cultural impacts.
• Employees of the business from those cultures
are likely to work harder and feel they are properly
respected.
• Our culture is sometimes our point of difference.
Therefore, when we support our culture we may
find that it attracts people to our business.
There is a growing community realisation

that New Zealand wins when Māori culture
is strong.

HEI TAUIRA:
Example: Mister Joe’s Food Market
Eric is the manager of Mister Joe’s Food Market,

based in Manukau City. It is a perfect example of a
multiple bottom line business as it does more than
just sell groceries and fresh fruit and vegetables
at affordable prices. It also supports the wider
Auckland community and surrounding environment.
The business has a strong focus on people and the
environment while still making enough money to
keep going for many years to come.
Mister Joe’s Food Market also hosts conferences
The purpose of the business is to provide affordable
and publishes newsletters on topics such as cooking
healthy food to the community. All directors of
using whole ingredients and eating well on a budget.
the business are passionate about this purpose,
The business offers store discounts for students,
and they chose to employ Eric as the manager as
allowing them to save money and to eat healthier on
he had demonstrated through his personal life a
a limited budget. Furthermore, Eric ensures that food
commitment to helping people achieve healthier
wastage is minimal. Any food nearing the end of its
lifestyles. Even employees feel strongly about the
life is donated to the local food banks and charities
purpose. They take pride in the fact that they are
which support the homeless. He makes sure the food
helping a local business grow while providing
donated is still in good edible condition, and he is
a much-needed service to the community and
not offloading substandard food to these groups.
supporting local and national charities. The co-
op recently sponsored a local kapa haka festival Mister Joe’s Food Market is environmentally
by providing healthy kai to all participants for the responsible and Eric is committed to selling only
duration of the festival. locally grown, organic fruit and vegetables. Using
organic fruit and vegetables means that harmful
The company currently has 40 full-time and
pesticides and fertilisers do not enter the farmlands.
part-time employees. Eric has a people-centred
This reduces the amount of farmland pollution.
philosophy and all employees receive a starting rate
of $20.00 per hour, which is well above the national As well as tracking the amount of money reinvested
minimum wage. While most supermarkets return in the local economy, the business also tracks its
a small portion of profits to the local economy, Eric carbon footprint and makes sure to try to reduce it.
calculates that about 70c of every dollar spent at his The business recycles every possible item that it can
business goes back into the local economy through and uses energy efficient equipment to reduce power
wages, the purchase of local produce and the usage. Eric recently installed energy efficient LED
support of community initiatives which align with lighting throughout the store. The new LED bulbs
the business purpose. use 75% less energy than the previous light bulbs.
• What are some examples of social impacts? How can they be measured?
• What are some examples of environmental impacts? Which ones do you think are most important?
• What are some examples of cultural impacts? Are different cultures impacted in different ways?
• What role does culture play in your life? Has this been impacted by businesses?
• Can you think of some ways a business like yours could improve their multiple bottom line?

1.2.3 Rethinking ‘Success’ • Providing healthy work environments and balanced

lifestyles for employees.
In the above ways, you can add value and be
“I failed my way to success.”
‘successful’ in non-financial ways. A business
– Thomas Edison environment that is not only making a profit, but also
adding value to the local community is an asset not
When people think of ‘success’, they often mean only to its owner, but to everyone.
financial success. It is true that creating and running a This will not be easy: it takes time and effort. Even
business can be very financially rewarding. However, so, you will need to start with a clear vision of how
it can be rewarding in other ways too. People have very the multiple bottom line will apply to your business.
different personal goals, so your idea of success might You can use this to set goals that will lead to the
be different from someone else’s or society’s. achievement of business projects and growth. It is a
In the same way, people have different goals for their good idea to communicate your goals to your team and
businesses. A business is successful when it meets wider community. This allows others the opportunity
the goals that its creator and owner set for it (we will to contribute and develop a commitment to the success
cover goal setting in Section 5 of this Kōnae Ako). of your business.
These might be different goals than those of other Learning from your mistakes is a key aspect of running
businesses. Again, there is no one standard of success a successful business. Very few successful people
that applies to every business. started by getting everything right the first time. It is
As we have seen, the multiple bottom line takes into no different in business. However, if you understand
account different kinds of value. A business that takes what success means to you from the start, you will
account of the multiple bottom line will thus have a be able to set effective goals. This will help keep your
different view of success from one that does not. Keep business on the right path.
this in mind when you are setting goals for your business.
Discussion Question:
Remember, it is your business: it does not have to
conform to society’s expectations of success if you
• How do you define ‘success’? What
do not want it to. Success does not need to mean,
about ‘business success’?
for example, owning a chain of businesses and
going on holidays overseas every year. Success can
mean getting to come to work every day and doing
something you care about. The following are examples Key Points
of different ways a business can be successful:
Keep in mind the impact your business will have on the
• Contributions to the community in the form of surrounding environment. At the very least, minimise
donations to a local charity. the negative impacts, and where a negative impact may
be unavoidable find ways to offset this by offering other
• Using your platform as a business owner to raise
positive benefits.
awareness for a cause.
There are many different ways your business can
• Recycling and eliminating waste.
have value and be a success. Whilst being financially
• Trading and co-operating with other businesses sustainable is extremely important, success should not
that use the multiple bottom line. be measured in dollar signs alone.
• Communicating with your employees and using You can grow your business and be an asset to your
their strengths to strengthen your business. community. This, in turn, will help further grow your
• Having the chance to familiarise yourself with other business as your community will support you.
cultures and their customs, and creating a work

environment that welcomes everyone.
• Being a source of inspiration and encouragement
to other people who would like to start their own
business.

1.3 Business Planning

TĪWHIRI:
“Tē tōia, tē haumatia.” 9 Thinking strategically is especially
– Māori Proverb important when you are starting a business.
You should always keep the end in mind
when you begin any business activity. This
Even if someone has a good business idea for which
means thinking about:
there is a real opportunity in the market, it does not
just follow that the idea will lead to the development • what you want to achieve with the
of a successful business. Poor planning can mean business,
that a business does not reach its true potential, and • when you want to achieve this, and
sometimes a lack of planning causes a business to
• how you are going to measure success.
fail. A good idea without a plan to make it work is not
much more use than a bad idea!
It follows that a business plan is an important part Developing a written business plan makes clear your
of running a successful business. A business plan dreams and plans for the business, and gives them
describes: direction. Having a clear idea of what you are doing,
why you are doing it, and how you are going to get
• Where you are now.
there, will help motivate you and your employees. After
• Where you want to go. all, the best way of motivating people is giving them a
• How you are going to get there. good, clear reason to do something. Some of the other
• How long it will take. benefits of a written business plan are that it:
• How much it will cost. • clarifies the purpose of your business,
There are many different kinds of business planning. • identifies the direction your business will take,
For example, you might have a short-term operational • defines clear goals,
plan to make sure that you make enough sales to • breaks down these goals to show how you will
cover your bills over the upcoming six months. In reach them,
this section, we focus more on a type of planning
• identifies risks and provides strategies for
which takes a larger view of your business. It is called
managing those risks,
‘strategic planning’.
• helps you focus your efforts on the ‘big picture’, and
DEFINITION: • allows you to monitor your business’s progress

towards its goals.
Strategic Planning (whakarite mahere
rautaki): A process that defines the ‘big
picture’ for your business and provides a “ It is much better to fail in theory
than in practice.”
solution on how your business will progress.
It is about identifying an ideal future A carefully researched business plan tests your ideas
business situation and then working out how on paper, before you try them for real. Planning can
you will get to that point. give you a good idea of your chances of business
Business Terms in Aotearoa. (2012). success. It is much better to fail in theory than in
practice. If you realise your plan is not feasible, you
will have only wasted time and paper. This is better
As its name suggests, strategic planning is about than finding out the idea does not work after a year of
finding a strategy for your business to meet its biggest increasing financial losses.
and most important goals.
9 Nothing can be achieved without a plan, workforce, and way of doing things.

Avoiding Poor Planning Lastly, it is no good having a plan if you do not check
to make sure that you are following it. Part of good
A well-researched business plan provides the
planning is setting up a system for making checks. It
information you need to improve performance, identify
is easy to forget the details of your plan, so making
opportunities, solve problems, and achieve goals.
regular checks will keep it on track.
Nonetheless, too often business owners fail to plan
properly. Some of the consequences of inadequate
planning are a lack of vision and direction, poor Discussion Questions:
performance, financial difficulty, wasted money and,
ultimately, greater risk of business failure. For these • What is your experience of planning?
reasons, it is important that you plan well. Have you had any good experiences? What
about bad experiences?
For example, you need to plan regularly, even if this
means revising and updating an older plan. If you leave • How do you normally plan? Do you do it in
planning for ‘when you feel like it’, you will probably your head or keep a record of your plans?
miss opportunities. Your plans also need to fit Which do you think works better?
together. It is no good having several different pieces • What does ‘strategy’ mean to you? Why is it
of plan that you cannot make work with each other. important in business?
It is very important that you are always operating • Why is it important to set up a system to check
under a plan. Too many businesspeople leave planning that a plan is on track?
for emergencies. A crisis strikes, and they think “I
should have planned; might as well do it now”. This
is called being a ‘reactive planner’ – it is planning
because bad things have happened. Instead, you
should be a ‘proactive planner’ – that is, someone who
makes plans to stop a crisis happening or make it
much less likely.
If you make a plan, you should take it seriously.

Writing a few random thoughts on the back of a
napkin may be the start of a plan, but most of us will
need more than this! You must think deeply about your
business and the threats and opportunities it faces. If
you just go with your first thought, you are less likely
to succeed. Planning can be hard. There are many
things to consider, and you need to be sure before you
commit money and time to a plan.
It is also important that your plan is realistic. While

everyone should dream big, it is not always a good
idea to plan as if your dreams will come true. For
example, you may dream that your small business
will one day become as big as Apple. While it is true
that Apple was once a very small business (it operated
out of a garage), it would be unrealistic to expect your
business to grow to this size without having the right
team on board and access to the resources you need.
If your plan is unrealistic, the best case scenario is
that you will become discouraged. The worst case is
that you will spend far too much money on the idea
and still not have enough resources to take the idea
through to the point where it is profitable.

Be a Proactive Planner
As noted earlier, good planners are ‘proactive’ rather
than ‘reactive’. In ‘proactive planning’ a business
owner decides to plan because they want to guide
the business towards a desired end goal. There are
no serious problems facing the business requiring
immediate attention. This means the business owner
has the power to steer the business in the direction
that they want.
‘Reactive planning’ happens when a business owner is

forced to react to events, and often this means reacting
to threats. Examples of common threats are greater
competition within the industry, substitute products
entering the market, and law changes. All of these
things can catch a business owner unprepared. They
will then be forced to react quickly to deal with the
threat. The lack of time sometimes means they make
poor decisions.
With proactive planning, business owners usually have

more time to properly examine the business environment
and evaluate strategies. They can then decide the best
path forwards. Being a proactive planner gives you
much more control over the direction of your business.
Even so, many businesses do not see planning as
urgent and thus end up continually having to react
to events. In other words, if you are not a proactive
planner, you will be forced to become a reactive
planner. This puts events in control of your business
instead of you. Always try to be a proactive planner.
Proactive planning saves time, money, and

your business.
1.3.1 The Business Planning Process

The business planning process can be broken down into four steps. These steps are shown in Figure 7.
Figure 7: The Business Planning Process

In this programme, we will look at identifying your

goals and objectives in Section 5 of this Kōnae Ako. It
is important that you complete this first step properly
• How fast is the business environment
before you start on the next step. You must take the
changing in your industry?
time to think about what you really want, before you
start putting strategies in place and committing to • Do you know of any businesses which
business decisions. experienced trouble because they stuck to
outdated plans and ways of doing things?
Throughout the remainder of the programme, you will
then be researching and writing your plan. However, • How often do you think a business plan should
at various stages through the programme you will also be reviewed and revised?
pause to review the parts of the plan you have written.
This is a 36 week programme, and it is quite likely that
over the duration of the programme there will be changes 1.3.2 Personal Planning
in your industry. For example, alternative methods for Many people go into business to develop a lifestyle
making your product may become available, suppliers that fits better with their personal priorities. However,
could change, and additional competitors may enter more than half of business owners work extra hours
the industry. As your industry changes, you will face and miss holidays to support their business. You often
new opportunities and threats. In addition, as you need to work long hours when you are setting up a
research your business strategy, you may discover business, but you should plan to avoid needing to do
flaws in the parts of the plan you have written. this in the long term. Even if you want to work long
Your business plan should therefore be a ‘living hours without taking a break, you might find that you
document’. That is, you should keep reviewing and cannot without it affecting your health or relationships.
updating your business plan to reflect changes in Remember, if you want to take care of your business,
the business environment and information you have you must take care of yourself.
discovered about your planned strategy. If you do not, the To work out what you want from your business, keep
plan will no longer be relevant. Instead of blindly keeping in mind your personal situation and goals. When
with the original strategy, it is better to update the plan you develop your business plan, compare possible
to take into account the new information or situation. If business strategies against your personal goals. You
you instead continue to develop (and then implement) need to ask yourself: ‘Will taking this path fit with my
an out of date plan, you might harm your business. personal goals?’ If a strategy does not align with your
Following the completion of the programme, provided you personal goals, it will be hard for you to stick to it.
develop a plan you are happy with, it will then be time to What this means is that you will have to do a bit
implement it. Do this by breaking the plan down into of personal planning before you start writing your
manageable tasks which can be included in your weekly business plan.
work plans. At the same time you are implementing your
plan, you should continue to monitor and update it.
TĪWHIRI:
It is no good storing it away in a drawer or

shelf, never to be seen again. Instead, keep
a printed copy of your business plan on
your desk. In addition, get into the habit of
making notes on it. This will help you to see
it as a continuous work in progress. If you
print it out, put it in a nice folder and try to
keep it clean and tidy, you are instead more
likely see it as a ‘finished’ product which you
should not alter.

Assess your Personal Situation

The first step for personal planning is assessing your current position. You can use Figure 8 to help get a good
overview of your current personal situation.
Figure 8: Personal Situation Assessment
Current Employment Situation Yes No
Are you employed?
Do you enjoy your work?
Does your work make use of your skills and training?
Is your income acceptable?
Is your job secure?
Are there opportunities for progression?
Are the work hours acceptable to you?
Does your job allow flexibility in work hours?
Is it likely that you would be able to find another job that meets your needs better?
Family and Lifestyle Yes No
Do you feel you have a stressful lifestyle?
Do you have a good work / life balance?
Do you want (more) children? If so, do you want to be able to spend time at home
with them?
Do you have other dependent family members who you need to care for?
Do you have quality leisure time?
Do you have the time and money to participate in the family and leisure activities
that matter to you?
Health Yes No
Do you exercise as regularly as you would like?
Do you get enough sleep?
Figure 8 continues on next page...

Figure 8: Personal Situation Assessment (continued...)
How healthy is your diet?
Do you have any health concerns that could be affected by work or business?
Do you face any health-related costs (on an ongoing basis) that you need (or want)
to be able to financially provide for?
Are you happy with your overall health and the health of your family?
Could you do anything to improve your health?
Relationships Yes No
Do you have a good relationship with your family?
Do you have good relationships with your friends?
Do you think you need to make changes in regard to relationships with family and
friends?
If you have a partner, are they happy with your current personal situation? For
example, are they happy with the hours you work?
Skills, Experience, and Education Yes No
Do you have the skills and qualifications you want?
Do you think you will be able to get any skills or qualifications you need if you stay
in your current situation?
Use your self-assessment to identify areas in your life

Pātai:
you are happy with, and areas you would like changed.
Ideally, any business goals you identify should allow
you to keep the parts you like and address the areas • Can you think of any other information
you are not happy with. However, at the very least, that is relevant to your personal situation?
they should not prevent you from being able to achieve • Why do you think these questions are
them at all. important?
Quite often there will be a trade-off. For example,

you may identify a business goal which will make it
difficult for you to achieve a personal goal in the short
term, but will allow you to achieve it at a later time. In
these cases you will need to make the decision as to
which is more important to you. If delaying a personal
goal or making temporary unfavourable changes
in your personal life means giving up something
you value highly, it is probably better to try to set
alternative business goals or find different strategies to
achieve those goals.

Your Financial Position

DEFINITION:
You also need to assess your current financial situation.
Net Worth (wāriu more): The value of
A good way to do this is by putting together a personal
someone’s assets, less the value of their
balance sheet. This shows details of your personal
liabilities. Also known as ‘equity’.
assets and liabilities (debts). You can use it to calculate
your net worth. Your net worth is equal to the total value Business Terms in Aotearoa. (2012).
of your assets minus the total value of your liabilities.
Figure 9: Example Personal Balance Sheet
Assets Amount / Value
Main Bank Accounts $840.70
Savings Account $9,750.00
KiwiSaver Account $23,442.55
House $470,000.00
Car $6,500.00
Furniture and Household Items $18,350.00
Total Assets $528,883.25
Liabilities
Credit Card $1,674.00
Hire Purchase $1,250.00
Vehicle Loan $2,100.00
Mortgage $259,418.62
Total Liabilities $264,442.62
Total Net Worth $264,440.63
When completing a personal balance sheet, it is very important that you do not overstate the value of your assets.
Instead, use the current market values – how much you would get for your assets if you were to sell them right now.
Working out your net worth is important for potential business owners for several reasons:
1. It shows how much money you have readily available to invest in a business project.
2. It can be used to work out how likely it is that a bank (or other financial institution) will lend you money to invest
in a business, and how much money they are likely to lend.
3. It shows any assets you could sell to raise money to invest in a business.
4. It shows how likely it is that you will be able to support yourself if your business does not create enough income
to pay your living costs in its first year (or perhaps first few years).
Working out your net worth can help you understand whether now is the right time to start a business in which
you work full-time. If your net worth is low (or even negative), you should improve your net worth or continue to
work (full-time or part-time) while you launch your new business.

Your aim over time is to increase your net worth. You Setting Personal Goals
do this by investing in assets that grow in value over
The second step to personal planning is to set goals.
time, rather than assets that decrease in value. You
Imagine your ‘perfect life’ in respect to each of the
should aim for your business to become an asset that
areas of your life you assessed earlier. Once you have
grows in value. Putting together a proper business
a clear picture of what that life looks like, start to write
plan will help make this happen.
some goals. Think about long-term goals, medium-
term, and short-term goals.
Discussion Question:
Some examples of personal goals are as follows:
• Why is it a good idea to make your
• To have the freedom of being able to choose to work
business an asset that increases in value?
at least half of my regular work hours from home by
the end of 2025.
• To earn a minimum income of $80,000 per year by
Your Financial Needs
working a maximum of 30 hours per week within
If you are going into business, or making significant ten years.
changes to your business which require you to invest
• To run a half-marathon by the end of the year.
your money into the business, prepare a personal
budget for at least one year. This ensures you are fully • To go skiing with my brother for an entire week
aware of your financial needs. You will then know how next winter.
much you will need from your business to cover your • To enrol in, and complete, a Diploma in Graphic
living expenses. Pay special attention to your essential Design within the two years.
expenses in your budget. Although you may be used to
having ‘spare’ spending money each payday, you may Throughout the remainder of this programme, as you
need to go without that until your business is doing develop your business plan, regularly check back
well and has many customers. on your personal goals. Ask yourself the following
questions:
TĪWHIRI: 1. Will this business strategy allow me to achieve my

personal goals?
Building a customer base usually takes time.
2. How can I change my business strategy so that I am
If you are new to business, it may be a year
able to achieve my personal goals?
or more before you are able to pay yourself
full wages (or take the equivalent amount in 3. Do I need to change my entire business idea so I
drawings or dividends) from the business. can achieve my personal goals?
Refer to your personal balance sheet to see
what assets you have available that you could Part of the reason for developing a business plan is
use to help support yourself during this time. to make sure the business idea is right for you. If you
decide your business idea is unlikely to allow you to
reach your personal goals, do not be too disappointed.
When putting together your budget, look at your bank It is much better to find out now before you commit
statements to find out how much you are currently your money, effort, and time to the ‘wrong’ business.
spending. Ask yourself the following two questions: Save your money and energy for when the ‘right’
business opportunity comes along.
1. How much self-control do I have over my spending?
2. Do I need to do some work around my personal
Pātai:
financial habits before I commit myself to starting
a business (or investing personal funds in growing
my current business)? • Do you have defined personal goals?
• How realistic are these goals?
Only look at going into business when you are
confident that you have your personal financial • What steps have you taken towards these goals?
situation under control.

Factors to Consider:
Laura Humphreys, the author of ‘Liber8

your Business’, identifies the following five steps
to successfully building a business that someone
else will be interested in buying:10
1. Set your end goal: Write a goal that specifies
when you want to be able to sell the business
and how much you want to be able to get from it.
2. Name your buyer: Identify who it is that you
want to buy your business. This could be (for
1.3.3 Plan for an Exit example) a competitor, a business that offers
complementary products, a similar business
A business plan should be used to develop a business that covers a different market area or even
idea that works well in the market and allows you to one of your employees. You need to know this
achieve your personal goals. Before considering the so that you can develop a business that this
parts of a business plan, we will look at an important particular buyer would be interested in.
aspect of business development that is overlooked by
3. Remove the dependence on you: For your
many businesses – your exit from the business.
business to be of value to a potential buyer,
It may seem strange to be thinking about getting out of they need to know that it can operate without
your business before you have even started, but this is you. Put together a business plan that clearly
exactly the right time. shows how you will achieve this. Think about
things such as developing systems, delegating
Most books or resources about planning will tell you to
tasks, and eventually employing a manager.
first decide on your goals. After all, you need to be clear
about what you want before you can plan for it. You 4. Build a team as soon as you can: Your
must also set goals for your business, but you must set business will be dependent on you until you
at least one goal relating to your exit from the business. have put together a team of people who can
run the business.
While you might be eager to start your new business,
5. Secure future earnings: Having secured
you cannot assume that you will operate it for the rest
income greatly increases the likelihood
of your life. At some stage you may want to step away
of your desired buyer, or any other buyer,
from the business. You may even be forced out due
being interested in your business. Wherever
to ill health or other personal circumstances. If this
possible, look for opportunities to set up long
happens, the business needs to be able to operate
term contracts with customers.
without you. If it is not able to, the business will close
and you could be left with unsold stock on hand and
bills to pay. The sooner your business can survive without you, the
less risky your business venture. Being ready to exit
Planning your exit strategy is about making sure that
does not mean that you must exit – it gives you the
you will financially benefit from your business when
option if you want or need it.
it is time to leave. You could either sell the business or
receive income from the business while someone else
manages it. Either way, your goal should be to build a
business that has value if you are not there.
• Why is it better to create a business that
Do not assume that someone will want to buy your can exist without you?
business just because you want to sell it. You must • How easy is it for you to remove the
plan to develop a business that other businesspeople dependence your business has on you?
will value enough to want to buy.
10 Humphreys. (2013).

1.3.4 The Business Plan Outline 3. External Analysis (Kōnae Ako 2)

An external analysis involves identifying factors
“Planning is bringing the future into the outside of your control which may present
present so that you can do something opportunities for the business or may, on the
about it now.” other hand, create threats. Various tools such as
STEPP analysis and competitor profiles are used
– Alan Lakein
to help identify this.
There is no ‘one’ set format for a business plan. 4. The Operations Plan (Kōnae Ako 3)
When you are preparing a plan for a specific person This part of the plan looks at the logistics
or organisation, they may ask for certain things, and involved in producing your products and
may specify the order they want them arranged in. services. This includes, figuring out what
However, most business plans follow a similar format equipment is needed and what technology
and contain the same type of information. options are available to improve your processes
and reduce your workload.
TĪWHIRI:
5. The Human Resources Plan (Kōnae Ako 4)
The structure of the business plan used in This part of the plan analyses the staffing needs
this programme is quite comprehensive. of the business and should be used to help you
Thus, if a particular organisation requires identify which extra staff will be required and
you to prepare a business plan that follows when. It also looks at options for training and
a different format, it is likely that you will be motivating them.
able to draw all of the information you need
from the business plan you will develop in
6. The Marketing Plan (Kōnae Ako 5)
this programme.
The marketing plan is a significant component
of any business plan. It sets out key details
The parts and components of the business plan used such as what products and services you will
in the CSBM programme are set out in detail in the be offering, the premises from which your
Business Plan Template resource. You can refer to this business will operate, how you will promote your
at any time to see what will be required of you in order business and how your products will be priced.
to complete your business plan project throughout Creating a good marketing plan is dependent on
the programme. A summary of the seven main thorough market research. Therefore, you will
components is given below. be conducting two forms of market research in
this programme before putting together your
1. Strategic Profile (Kōnae Ako 1, Section 5) marketing plan.
This component of the plan involves setting out

7. The Financial Plan (Kōnae Ako 6)
what your business wants to achieve and why
it exists in the first place. It also looks at the The financial plan draws on information set
values your business will have and the general out in earlier parts on the plan. For example,
organisational culture it will have. it identifies the costs involved in promoting
products in the way planned in the marketing
2. Internal Analysis (Kōnae Ako 2) plan, and budgets for the cost of any staff you
planned to bring on in the Human Resources
An internal analysis involves identifying the
Plan. It is also an extremely important part of
strengths and weaknesses of the business and,
your plan as it identifies if your overall plan is
where possible, identifying how weaknesses
financially feasible.
can be overcome. Very importantly, this part
of the plan involves identifying your planned
competitive advantage and how you will
maintain this.

Factor to Consider:
Business Plan Dependencies
It is very important to note that some parts of the business plan are dependent on other parts. This means
you will have to complete some parts of the plan before you can move on to other parts. Since creating the
business plan is treated as a project in this programme, you must make allowances for this in the project plan
and schedule for your business plan project (see Section 4).
The Internal and External Analyses (Kōnae Ako 2) cannot be completed until the Strategic Profile is complete.
However, they are not dependent on each other. This means you can work on them in whatever order you like,
or even at the same time.
The Operations Plan (Kōnae Ako 3) and Marketing Plan (Kōnae Ako 5) are both dependent on the Strategic
Profile (Section 5 in this Kōnae Ako) as well as the Internal and External Analysis. However, you may work on
them in whatever order you like, or even at the same time. In fact, it can be good to work on them at the same
time as the information you put in one part will affect the other. For instance, when you do your marketing
plan, you will decide on the location of the business – this will affect the operations plan.
The Human Resources Plan (Kōnae Ako 4) depends on the Operations Plan (Kōnae Ako 3). This is because
the Operations Plan will identify what staff are required to meet sales or production requirements. This means
you cannot start work on the Human Resources Plan until the Operations Plan is complete.
Lastly, the Financial Plan (Kōnae Ako 6) depends on the Operations Plan, Human Resources Plan, and
Marketing Plan. These must all be completed before you start work on the Financial Plan.
Key Points
Your business plan should allow you to achieve your

personal goals. If a strategy prevents you from achieving
any of your personal goals, you will need to weigh up if
it is worth pursuing. A better business strategy may be
available.
Start your business with the end in mind. That is, plan
for an exit. This will ensure your business has value
even when you do not work in it on a regular basis (or
at all).
You should stick to your business plan, but only as

long as it is relevant. It will need to be updated as the
business environment changes and new information
becomes available.


2.0
Introduction
to Project
Management
and the Lean
Canvas
“Of all the things I’ve done, the most
vital is coordinating the talents of those
who work for us and pointing them
towards a certain goal.”
– Walt Disney
Many things that people do, both in business and

ordinary life, are projects. These range from small
activities, such as planning and building a garden shed,
to huge projects, like designing and constructing
skyscrapers. Many people just organise their projects as
they go along, or they do what has worked before. While
this approach can get results, it is more likely to be
inefficient, lead to cost overruns, and even result in
failure. It would be better if there was a system that could
help you plan, monitor, and complete projects of all
kinds. Luckily, there is: it is called ‘project management’.
This section is a very general overview of what project

management is and how it is used. Later in the
programme we will focus on each part of the project
management process in much more detail. For example,
in Sections 3 and 4 of this Kōnae Ako, we cover the
first two stages of a project: initiation and planning.
Project management involves skills, processes, and tools

you can use to manage almost any project. This means
that becoming a skilled project manager will help you
in your business life. Furthermore, it can also help
with any other projects you might undertake outside
your business. For example, if you wanted to organise
a charity fundraiser or help build a new playground for
local children, being a skilled project manager would
allow you to make valuable contributions.
35
We might wonder why we need special project

management knowledge. After all, we have all
completed projects at one time or another. Even so,
the point of project management is to do it in a more
organised and focused way, taking advantage of tools
and processes that have been developed by skilled
project managers. It is better to take advantage of their
experience than to try and work it all out by ourselves.
Project management is an extremely valuable skill

for a small business owner. At some point or another,
every small business owner will want to start a
project. This might be about moving the business to
a new location, expanding your existing premises,
or even designing and producing a new product line.
In fact, if you have started your own business, this
would have been a project in itself! No matter what
your project might be, if you want to develop your
business, project management will help you stay
organised and within budget.
In this section, we cover what projects are and the role

and qualities of a successful project manager. We then
move on to the five stages of the project management
process. Every successful project includes all five
stages, so it is important that you have a good general
understanding of how the overall process works.
Lastly, we will look at how to use the Lean Canvas to
help you monitor a business project.
The Lean Canvas is a planning tool which is specially

designed to make it easy to revise plans. As you revise
your Lean Canvas, you should keep the older versions
– this will give you a good idea of how your project has
changed over time. It will also enable you to retrace
your steps if you made a change that did not work the
way you wanted it to.
The Lean Canvas is used throughout this programme

as a tool for monitoring your progress towards
completing your full business plan. The Canvas
does not replace your business plan, but can help
you develop a successful business model and viable
business idea as early as possible. For this reason
it is a useful tool for monitoring and reviewing your
business plan.
Learning Outcomes Covered
1. Develop a project plan

2. Develop a framework to guide and review
business plan development

2.1 Projects and Project Managers The goal of a project can be many different things. It
can be:
The two essential parts of any project are the project
` A product. This could be a standalone product, or
itself, and the project manager. For this reason, we
one that is part of something larger, like a new IT
must first get a clear understanding of what makes an
network or the routers that it requires.
activity a project, as opposed to just business as usual.
` A service. This could be a service itself, such as
hosting a business conference, or it could be the
2.1.1 What is a Project? ability to provide a service. For example, the owners
of a hotel could upgrade that hotel to be able to host
business conferences.
DEFINITION:
` An improvement. This could be an improvement to
Project (paemahi): A temporary endeavour a product, such as making a car more fuel efficient.
undertaken to create a unique product, It could also be an improvement to a service. For
service, or result. The temporary nature of example, a business could aim to develop systems
projects indicates that a project has a definite which will improve its customer service.
beginning and end.1 ` A result. This could be an outcome or a document.
Project Management Body of Knowledge For example, a scientific research project could
(PMBOK). (2013). tell us about the effects of a chemical on our water
supply. Alternatively, a project could create a new
business education programme.2
A project is different from business as usual, because
a project has a definite beginning and an end. For
A project involves something new and useful
example, a clothing shop does business as usual when
it is buying clothes wholesale, setting up displays, and The goal of a project must be something new and
selling clothes to customers. This process will keep useful. Meeting your sales targets for each week is
going until the business winds up. not a series of projects, because it does not change
the business. A project makes a difference in your
A project is not like this: it must have a specific
business. It sets a business on a new course, expands
beginning and a definite end. The end of a successful
it, or gives it capabilities that it did not have before or
project is the achievement of a goal. For example, the
solves a problem that if left unaddressed could harm
owner of a clothing shop might decide to double the
the business or cause it to miss a deadline (i.e. fixing a
storage space at the back of their store. The project
wall that needs strengthening inside the factory).
will start with the initiation stage and planning, move
on to actually doing the work, and end when the new For example, building more storage space for a
storage space is complete. This is different from the clothing shop would allow that shop to carry more
usual business of the shop, which may go on while the stock. This might allow the shop to stock a wider
storage space project is in progress. variety of clothes and sizes and increase its customer
base. Or it might mean that less stock has to be kept
on the shop floor, giving customers more space and
making the shop look tidier and less crowded.
“ An important part of project

management is being able to get the
right people to do the right things at
the right time in the right place, and
in most cases to do it together. ”
1 PMBOK. (2013). p.3.

2 ibid. p.3.

A project is also a single, complex activity Projects involve uncertainty and risk
A project is not a collection of different, unrelated Even if we have a good idea of a project’s goal, we
activities. Everyone who is working on a project is sometimes do not have a good idea of what we need to
focusing on the same thing – they are working towards do to reach that goal, or how much money and time it
the same goal. They might be working on different will take. This uncertainty creates risk. For example, it
parts of the project, but what they are doing makes no is possible that our project will cost too much or take
sense outside of the project as a whole. For example, too much time.
the tradespeople who are building the extension to the
With any project, we risk losing the resources and time
storage space are all working together for a common
we invest in it. Sometimes we will be able to revise our
purpose, even though they are doing different jobs.
goal and reach that new goal. However, sometimes
Since projects are often complex, most have a team projects just fail. Whatever happens, we must think
that comes together just for the project. Some small carefully about what we learned during the project.
projects can sometimes be done by one person That knowledge and experience can help us with
working alone, but most will require a team. This future endeavours.
means that an important part of project management is
being able to get the right people to do the right things
at the right time in the right place, and in most cases A project also has a single point of ultimate
to do it together. responsibility for delivery
This is the project manager. It is their job to make
sure that the project runs smoothly, and is completed
Every project should have a budget
on time and under budget. With this responsibility
The aim of the project is to achieve the goal within the comes great power: the project manager can make big
budget. When we talk about a project’s budget, we changes to the project if they need to. Note that the
are usually talking about its monetary cost. However, project manager’s responsibilities cover the project.
projects usually use other resources as well. For The project might be someone else’s idea, or someone
example, they use people, and sometimes spaces. else may be responsible for hiring the project manager,
Sometimes it is very easy to put a money value on but they do not have direct control over running the
these resources; at other times, it is harder. Whatever project. Only the project manager has that.
the project, there will be a set amount of resources
In conclusion, a project is always going to have a
available for completing it.
beginning and an end, as well as specific goals,
resources, and timeframes. A project is a success
when it achieves its aims on time, under budget, and
A project also has specific timeframes and
to an acceptable quality.
performance requirements
Time is also a resource – everyone wishes they had
more time to complete their projects. However, a well- TĪWHIRI:
managed project needs proper timeframes. This will
involve due dates and times for the parts of the project, Being able to answer these five questions
and for the project as a whole. In addition, each part of will give you a good general overview of any
the project and the project itself must be done to a set project.
standard. For example, if we are building an extension
to a house, each part of the extension has to meet • What is to be done?
proper safety requirements. • Who is going to do it?
• When must it be done by?
“ A project is a success when it achieves

its aims on time, under budget, and to
• What resources are there available to do it?
• What standard of work is needed?
an acceptable quality.”

2.1.2 Why Use Project Management?

We might wonder why we should bother with project
• Can you think of any large projects you management. After all, people seem to complete
have been involved in? What where they? projects all the time without needing any special
Who was in charge? knowledge or training in project management. There
are several reasons why project management is
• Can you think of any projects that you
becoming more important in business.3
organised or were in charge of? What were
they? How well did they go?
• How were the projects you were involved The Pace of Change
in organised? Do you think they were well Business moves a lot faster than it used to. Consider
organised, or not? how fast technology changes. Thirty or forty years
• Do you think a specialised body of knowledge ago, the technology involved in business changed
about project management is needed for very slowly. These days, technologies change quickly
complex projects? Why or why not? and can soon have a big effect on the business
environment. For example, smartphones with touch
screens were developed in 1992, but no-one then could
NGOHE: have predicted how popular or powerful they would be
later on. It is hard to think of a technology that has had
Projects often involve resources which you a greater impact on almost every business.
do not directly budget for. Sometimes it is Many projects will involve a business keeping up
easy to identify the monetary cost of these with change or working to take advantage of new
resources, at other times it is difficult. technology. A very common example is a business’s
• Identify three types of resources a project website and social media presence. Several years ago,
may use which you will not pay extra for there were a large number of business owners who
(one example is use of staff time during did not think their business really needed any type
their usual work hours). of online presence and therefore did not even have a
website. This is becoming a lot less common now as
• For each resource you identify, think of
even long-established business owners with physical
at least one way you could work out the
stores have seen the importance of this.
monetary cost of using that resource for
your project. Setting up a website and developing social media
strategies are projects. A business owner might do
these to give the business a competitive advantage. On
the other hand, they might find themselves forced to
do this to keep up with customer expectations. Either
way, these are projects.
Complex Processes
Projects are now a lot more complex than they used to
be. For example, installing a new payment system for a
retail business used to just mean buying a new
mechanical cash register. These days, most payment
systems do much more than just take payments. For
example, many are tied into stock management systems.
Therefore, a decision regarding a payment system
may involve overhauling the entire accounting system,
inventory system, and potentially even the website.
3 Larson, Honig, Gray, Dantin, & Baccarini. (2014). pp.10-13.

Not only is the technology more complex these days, The Importance of the Customer
but there are many more laws and regulations to think
Customer choice has become much more important
of as well. Keeping track of all this is difficult. Project
in business. Customers are now less likely to put up
management is a way of maintaining control. A poorly
with getting a common version of a product or service.
managed project may break laws that an average
Instead, they want products and services that are
person may be unaware of. Ignorance is not considered
specific to their needs. If a business does not provide
a legal excuse for breaking rules or laws, and you may
exactly what they want, they will go elsewhere.
risk being prosecuted if something goes wrong and
you have not ‘complied’ or taken ‘due care’. Moving to provide a wider range of products or
services is a project. So is changing your business
to allow customers more choice about how they
customise their purchases. For example, many
customers now want to be able to buy a car with
exactly the options they want. Not only does the car
maker have to provide enough options to suit all
customers, they have to change their manufacturing
so that they can produce customised cars quickly and
efficiently. Again, all of these changes will be projects.
‘Business as Usual’
In Section 2.1.1 we defined a project as a ‘temporary
endeavour’ that was not ‘business as usual’. The
problem many business owners face is that what
counts as ‘business as usual’ changes so quickly and
so often. A business which opens today may have to
make big changes every two or three years as opposed
to every ten years.
A Changing World
Several decades ago, businesses did not tend to
worry much about their impact on the environment.
In hindsight, they probably should have. These days,
businesses need to think about their impacts outside
the financial bottom line (see Section 1.2.2). With
the threat of global climate change, it is now even
more important for businesses to adopt sustainable
practices and reduce their impact on the environment.
Businesses may find that new regulations force them

to become more sustainable. They might, on the other
hand, find that there is a competitive advantage in it.
They may want to become sustainable as part of their
vision or mission, or simply because the business
owner is committed to the environment.
Whatever the reason, making a business more

sustainable will involve one or more projects. These
types of projects are likely to require large changes
in the way the business operates. It is very important
that you get the changes right the first time, or you will
face the cost of having to do it again. Using project
management tools can help make sure you do get it right.

HEI TAUIRA:
Example: Don’s Donuts
Don has owned a small chain of donut shops To add to this, Don has had to start using computer
for over 40 years. For the first 20 years he was in technology in other areas of his business. Where he
business, he did not have to make many changes. could once manage everything on paper, he now has
After all, once you could make great donuts, the rest to use more complex systems. These have had to be
was easy. upgraded as well. His customers hardly ever pay in
cash anymore: they use electronic methods. Don is
But in the late 1990s, things started to change. Don
now thinking about having a smartphone app or a
noticed that more customers were using the internet,
function made for his website so that customers can
so even though he had a food-based business, he
order their coffee and donuts and have them waiting
decided to get a basic business website. He thought
when they enter one of his stores.
that he could do this once and then not have to
worry about it ever again. But after three years, his However, it is not only technology that has changed.
children started making fun of his website. They Don thinks back to what his shops used to look like
said it looked like it was from the ‘dark ages’. Don in the first five years he was in business. Back then
pointed out that it was only three years old. His he sold five different kinds of donuts and filter coffee
children showed him other websites for businesses only. Now he sells 30 different kinds of donuts, along
like his. They all looked much more modern than with muffins, sandwiches, and cakes. Don looks at
Don’s old website. the gleaming espresso machine in his shop, which is
used to make the 16 different coffee-based drinks he
As a result, Don had his website remade. He paid
sells (as long as customers want that and not one of
a lot so he would not have to change it again soon.
the 15 kinds of tea on offer).
But technology got better, and soon he was forced
to pay for another upgrade. After 20 years Don has Although all of these changes cost time and money,
changed his website five times! He has also had to Don understands that if he had not changed, he
make it work well with mobile phones. Fortunately, would have gone out of business years ago. Dealing
over time the cost of a website upgrade reduced as with change is therefore just part of what it takes to
the website development industry became more be in business.
efficient and competitive.
If you look at the example of ‘Don’s Donuts’, you will

see that Don’s business has changed a lot. These were
all projects. Somebody (in this case Don) had to make
a business case for the changes, plan them, and make • Can you think of any businesses you
sure that they were carried out. He may have managed know that have had to make a lot of changes
to do this quite well, or he may have struggled to over the past 20 years? How big were
juggle making changes at the same time as running
these changes?
a chain of stores. It would have helped Don if he had
project management skills. • How much has technology changed the way
that people do business? How often do you
think businesses have to change to keep up
with technology?
• How have customer expectations changed
business? How often do businesses have to
change to keep up with their customers? What
kinds of things have they had to change?

2.1.3 The Project Manager Being an Effective Project Manager

Although a lot of project management is about
knowing the right processes and using the right tools,
“The buck stops here.” you also need the right personal qualities. The good
– Harry S. Truman news is that if you do not have these qualities, you can
often develop them with practice. Even if you do not
have them yourself, they are still what you should look
Project managers are a type of manager. This means for in a project manager.
they do many of the same things other managers do,
These qualities include the following:
such as overseeing a team, planning work schedules,
and so on. The difference has to do with what they ` Ability to plan. A project manager must be able
manage. A project manager manages projects rather to plan well. They must be able to work out the
than organisations or departments that are engaged steps needed to get to a goal, and what is needed to
in business as usual. Project management, therefore, accomplish each step. A good planner understands
requires different skills and a different sort of person the ‘big picture’ and knows how to start from there
than ordinary management. to create a detailed plan which is easy for others to
understand.
Unlike ordinary managers, project managers do not
have the luxury of ‘business as usual’. For example, if ` Foresight. Like a skilled chess player, a good
you are managing a restaurant, you are usually dealing project manager must always be able to see a few
with established policies and processes. You will order moves ahead. They must have a good idea of what
kitchen supplies at regular intervals, make sure that could happen next. They can then plan in advance
your team is following set policies, and so on. for changes they might need to make.
A project manager, on the other hand, is doing ` Willing to be involved. Nobody likes a manager
something new. The project manager cannot rely who stands apart and refuses to ‘get their hands
on things running ‘normally’ because projects are dirty’. A good project manager is willing to get
not ‘normal’ business. For example, while a regular involved, even in the physically hard parts of the
manager will be dealing with long-term staff, a project project. This helps motivate the team, because
manager will usually have to organise a team of people they can see that their manager is willing to do
from different backgrounds who may have never met what they ask others to do. Getting involved also
before, let alone worked together. It takes a lot of skill helps the project manager recognise how the job
to get such different people to work together for a is experienced by team members. This can make it
common goal. easier to understand and deal with team members’
problems.
Another difference is that a project manager is much
more likely to be managing people with specialised ` Knowledge. Although a project manager is not
skills which the project manager does not have likely to have the specialised knowledge of many of
themselves. For example, a project manager might the people in her team, they do need to have good
be in charge of carpenters, electricians, IT service knowledge of the project area. For example, if you
providers, accountants, and plumbers. hire a project manager for a commercial building
project, you should expect them to have a reasonably
Someone in an ordinary management position has detailed knowledge of building processes and
often done the jobs of the people they are now in regulations. It is not a good idea to hire a project
charge of. Even if they have not, their team is generally manager who is only experienced in IT to help
made up of people doing similar jobs. This is much organise building your business premises.
less likely for a project manager. They will probably
have a very large team doing lots of different jobs. ` Fair and reasonable. Although they are in charge,
Thus, the project manager must be a skilled listener, a good project manager is not a dictator. Instead,
as well as able to ask the right questions to get the a project manager should respect other people,
information they need. their expertise, and their viewpoints. They must be
reasonable when they direct others, and when they
listen and respond to them.

` Commitment. If you want other people to be committed to a project, you need to show commitment yourself. A
project manager who is not committed to a project is less likely to succeed, and they will not be an effective leader.
` Time Management. Projects can be complex and time consuming. A project manager must be able to manage
their time well. Even if you work many hours every day, you will not be successful unless you organise and use
that time wisely.
` Leadership and communication. A project manager is a leader. They must show authority, but at the same
time be able to make team members confident in their manager, themselves, and the project. A great leader gets
the team to ‘buy in’ to the goals of the project – this means that team members will come to see the project goals
as their own goals, and of importance to their own well-being.
` Assertive. As a leader, a project manager must be assertive. Sometimes they will need to take charge. Being
assertive is not only useful for this, but shows that the project manager is confident, which helps make team
members more confident in the project. However, leaders who are too assertive quickly become unbearable, so a
good project manager must consider how others experience the way they use their authority.
` Honesty. The project manager must tell the truth and they must be trusted by the team. Lying to the team is one
of the quickest ways to destroy trust and efficiency. Everyone involved in a project needs accurate information so
that they are able to fulfil their role.
Pātai:
• How many of these qualities do you

think you already have?
• How many do you think you will need to work
to get?
• Are there any of these qualities that you think
will be hard for you to develop? If so, can you
think of ways you could work on getting those
qualities?
• What does being ‘assertive’ mean?

• How can someone be assertive, but respect
other people’s views at the same time?
• If someone does not have these qualities, do
you think they should hire someone else to
manage their projects?
• How many of these qualities do you think can
be learned ‘on the job’?
2.1.4 Project Roles

An important part of project management, and of the role of the project manager, is to define the roles of the people
who are involved in the project. Each person has a clearly defined role. This includes not only the people who are
working on the project, but everyone who has an interest in it or is affected by it.

DEFINITION: DEFINITION:
Role (mahi): function, purpose, duty, part, Stakeholders (hunga whaipānga): People
task, job. who have an interest in an organisation
who do not, necessarily, have shares or
ownership in that organisation. Examples
of stakeholders may include, employees,
shareholders, the community, customers, the
Clearly defining the role of all people involved in (or
general public, neighbours, etc.
affected by) the project helps the project manager
organise the project and manage any impacts it has. At Business Terms in Aotearoa. (2012).
the start of a project, the project manager will have to
make a list of all roles in the project and start thinking
about who will be filling them. Discussion Questions:
Some of the roles people can play in a project include:
• Why is it important for a project to
` Project manager. The person who has the have clearly defined roles?
authority to run the project from day to day.
• Why are the senior user and senior supplier
` Project funder. The person or organisation who is such important roles in a project?
paying for the project.
• How many different kinds of stakeholders
` Senior user. Represents the people who will be using can you think of? Why are stakeholders so
the result of the project. For example, this might be important?
someone who will be using a product or providing a
• How can a project manager manage
service. They will be looking to see that the result of
stakeholders?
the project meets the needs and expected standards.
` Senior supplier. Represents the people who are
designing or developing the product of the project. Key Points
They can be held accountable for the quality of the
products. A project is not ‘business as usual’. It is an activity
` Project team. These are the people who will be with a beginning and an end that creates some new
doing the work of the project. Without them, there capability for a business, or solves a problem which may
impact the safety or ability of the company to perform.
could be no project.
Project management is a special body of knowledge that
` Stakeholders. This is the group of people who have
deals with the planning and executing of projects. These
an interest in a project, or who will be affected by
projects can be of any size and any complexity.
the process or the outcome. Many will not be part
of the project. It is very important that the project Since the business environment changes so quickly,
manager identify all stakeholders and manages the businesses are forced to make changes more quickly.
impact the project has on them. Some stakeholders These changes are not ‘business as usual’ either: they
are internal; some external. are projects. For this reason, project management
knowledge is increasingly important in business.
Internal Stakeholders. These are people within
The project manager is the person ultimately responsible
the organisation who have an interest in or
for the day-to-day management of a project. Although
are affected by the project. Examples include
this person may be the business owner or an existing
managers, employees, and business owners.
member of staff, it may also be someone with specialised
External Stakeholders. These are people from project management skills who is hired for the purpose.
outside the organisation who have an interest in
or are affected by the project. Examples include
government, councils, local people, shareholders,
customers, creditors, neighbouring businesses,
and suppliers.

2.2 The Stages of a Project

While every project is different, all projects go through the same five basic steps. These steps relate to:
• Starting a project (Initiation Stage),

• Organising and preparing a project (Planning Stage),
• Doing the actual work (Execution Stage),
• Monitoring the work (Monitoring and Controlling Stage), and
• Closing the project (Closing Stage).
The stages of a project are shown in Figure 10.
Figure 10: Project Stages
There are certain processes involved in each of these

steps. For example, the initiation stage has initiation
processes, the planning stage has planning processes,
and so on. Although the steps are started in this order,
the execution and monitoring steps will overlap. In
other words, while the team is executing the work of
the project, the project manager will be monitoring and
controlling that work. This allows the project manager
to identify any problems that arise and deal with them.
As each project objective is completed, the project
manager will mark it off as done.
The beginning and end stages of a project (initiation

and closing stages) usually cost the least and require
the fewest team members. The middle stages, where
work is actually being done, involve more people
and higher costs (see Figure 11). This means if
you abandon a project in the initiation or planning
stage it will cost a lot less in money and time than
if you abandon it towards the end of the execution
stage. Therefore, you must take great care during the
initiation and planning stages – failing to do this could
see you wasting a great deal of time and money.

Figure 11: Project Costs and Staffing Levels by Stage 4
In the previous subsection we said that projects involve uncertainty and risk. There is most uncertainty and risk at
the beginning of a project. As the project moves towards completion, risk and uncertainty reduce. This is because
much of the project is already done and the project manager and team have a better idea of how well the overall
project is going.
However, when you are at the very start of a project, it costs very little to make changes. After all, you are probably
still in the initiation or planning stage. It costs little to make changes to a plan, and even if you abandon the project
you will not have wasted much money or time on it. As the project nears completion, changes will tend to cost a lot
more. For example, if a building is three-quarters complete, it will cost a lot to make major structural changes to it.
The relationship between uncertainty, risk, and cost of changes is shown in Figure 12.
Figure 12: Project Risk, Uncertainty and Cost Over Time 5
4 Content from PMBOK. (2013). p.39.

5 PMBOK. (2013). p.40.

The rest of this section provides a brief overview of 2.2.1 The Initiation Stage
how each stage works and how it is related to the other
The first stage in any project is the initiation stage.
stages. In the next two sections of this Kōnae Ako we
This is where you consider a project and work out
will cover the initiation stage and planning stage in
whether it is worth doing. This is not the same as
more detail. The remaining stages will be covered later
making a detailed plan for the project. At this stage,
in the programme.
you are only doing a feasibility study to work out
whether it is worth going forward with the project.
DEFINITION:
• Why does change cost more towards
the end of a project? Feasibility study (tātaritanga
• Why is monitoring and controlling a project so whakatakanga): Research to work out
important? how viable a project is. Business feasibility
• Why do you think there is a separate closing studies include, amongst other things,
stage in the project management process? whether a project is profitable.
The goal of the initiation stage is to get approval for

a written business case for the project. To do this,
you need to make sure that you understand your own
business. This means carefully considering the needs
and wants of stakeholders. For many small businesses,
the most important stakeholders will be the business
owner, employees, and customers.
For example, if your desired project involves

developing a new product or service, you should
talk to customers. There will be no point spending
time and resources on a new product or service if
customers do not want it. Similarly, there is no point
going forward with a project if it will destroy your
relationships with suppliers, employees, the council,
or the local community.
TĪWHIRI:
It can often be worth making a stakeholder

list. This is simply a list of everyone who
will be affected by the project. It is best to list
these people as groups, if you can (e.g. ‘my
neighbours’). You must then work out what
impact your proposed project will have on
them. You should then order the list to place
the most important stakeholders at the top.
If you are a small business owner planning

a project, your most important stakeholder is
yourself! After all, the project is supposed to
be a positive change for your business.

The aim of the initiation stage is to work out, at a very basic level, whether the project makes business sense. The
steps of the initiation stage are shown in Figure 13.
Figure 13: Initiation Stage
Draft Business Case and Approval

DEFINITION:
You should not write a full business case to start with.
Instead, write a draft of about half a page in length. Sponsor: A person or group who provides
The draft must identify a need and show how that resources and support for the project… and is
need can be met by a project. It should also include accountable for enabling success.6
your best estimates of cost and timeframes. Lastly, the
Project Management Body of Knowledge
draft should list the benefits of the project.
(PMBOK). (2013).
The completed draft business case is then taken to the
funder (sometimes called the ‘sponsor’). The funder
is the person or organisation who will pay for the project.
In business, the funder is often the business owner or
company directors. If you are in business by yourself, it
is quite likely you will be the funder. However, it could
also be someone external to the business.
For very large businesses, the funder might be a

lower level manager – someone in charge of a part or
division of the business. The funder is almost always
the most important stakeholder. After all, they are
paying for the project, which means they have a lot of
power over it.
6 PMBOK. (2013). p.3.

If the funder approves the draft, you then write a full ` Expected Impacts
business case. If they do not, you must rewrite the These are the bad things. They include only things
draft business case and try again. that will definitely (or at least most likely) happen.
Note that potential bad things are listed under ‘Risks’.
TĪWHIRI:
` Scope Statement
If you are managing a project for your own This describes exactly what will be done. It must
business, you are the funder. In that case, be very detailed. For example, if you are building
you will just be trying to make the best case something, the exact measurements must be listed.
you can before you move on to providing a The scope of a project is very important, because
more detailed business case. you want to avoid ‘scope creep’. This is where the
project (and cost!) keeps getting bigger and bigger.
However, you need to be careful. People are Being clear about the scope of a project helps you
often not very good at seeing the faults in work out the costs and timeframes.
their own ideas. In other words, it is easier to
‘Scope tolerances’ should be included as well. A
get approval from yourself for a bad project
tolerance shows how much you are allowed to vary
than it is to get approval from other people.
from the scope before you must get permission to
For this reason, you should try to be critical
make a change.
of your own ideas. If you can, talk with a
business mentor about your ideas. They ` Costs
might be able to see problems with your This part of the case must be very detailed too.
project that you cannot see. The scope of the project will help you work out the
costs. After all, you cannot work out how much it
will cost if you do not know what you are going to do.
Sometimes a project does not go any further than the
‘Cost tolerances’ should be included as well. These
draft business case. The funder might not like the
will show how much extra cost is acceptable. For
idea, or there might just not be a good business case
example, if something turns out to cost $5 more
for it. That is fine. The point of writing a short, half-
than planned, that is likely to be within the cost
page draft business case is to not waste a lot of time
tolerance, but if it is $500 more, it may not.
on bad ideas.
` Timescale
This is how long you expect the project to take. You
Full Business Case should also build in a tolerance to show how much
Once the draft business case has been approved, a full extra time is acceptable. Timescale tolerances will
business case must be written. This should detail: be based on scope and cost tolerances.
` Executive Summary ` Risks
This introduces the project and its overall goals. It These are things that might happen. If they are
says what the project is and why it must be done. most likely to happen, they might be benefits or
It will include a brief statement about the business impacts instead. For example, if you are renovating
need which the project addresses. It must also a shop, ‘impacts’ might include the noise and mess,
include business options. These are the different whereas a ‘risk’ may be damage to some of the
solutions to the need. You could either do nothing, fittings you would like to keep.
do the minimum required to meet the need, or do Note that risks are not always negative. They may
more than is required. For most situations, however, also include opportunities (chances of good things
doing nothing is not really an option. happening).
` Expected Benefits ` Project Team Key Roles

A detailed list of the benefits of the project. This This shows who will take up the key roles in the
includes benefits to both internal and external project and why they are suitable for it. The key
stakeholders. Your stakeholder list will help you roles in a project are the executive, the project
write this part. manager, the senior user, and governance.

Identifying and Appointing Key Roles

DEFINITIONS:
You will also need to identify and / or appoint people
Project Scope: The work performed to into the key roles for the project. This will include the
deliver a product, service, or result with the project team (the people who will be carrying out the
specified features and conditions.7 project), as well as:
Tolerance: A specified range of acceptable ` Executive. This is the person paying for the project
results.8 (often called the ‘funder’).
` Project Manager. The person who will manage the
project from day to day.
(PMBOK). (2013).
` Governance. The person or people who will check
to make sure the project is still meeting its expected
outcomes.
` Senior User. A person who represents the people
who will be using the outcome of the project. It is
this person’s job to check the quality of the outcome.
“ Building existing knowledge into the

business case makes it stronger.”
Incorporate Existing Knowledge

When you are writing a full business case, you should
take advantage of any relevant knowledge you have.
This could be knowledge learned from experience
on previous projects, or it could be knowledge you
have from a previous career, or just knowledge of
the business. Building existing knowledge into the
business case makes it stronger.
At the end of the initiation stage you will have a full,

detailed business case for the project. If it is approved,
you can move on to the next stage: making a detailed
plan of all the work to be done.
• Why is it worth writing a draft business

case first? Why is it still worthwhile doing this
even if you are also the funder?
• Why is ‘scope’ so important when writing a
business case for a project?
• Why do you think a project needs ‘tolerances’?
7 PMBOK. (2013). p.555.

8 ibid. p.250.

2.2.2 The Planning Stage

Once the full business case has been approved, the next stage is planning. The basic idea of this stage is to plan
out in detail how the work will be done and checked. This involves assembling ‘project initiation documents’. All
of these documents make up the complete ‘Project Plan’. Once the complete plan is approved, work can start (the
execution stage).
The steps of the planning stage are shown in Figure 14.
Figure 14: The Planning Stage
Project Initiation Documents ` Project Team Structure. This shows who is in

The documents which form part of the project plan are charge of whom. For example, an organisational or
as follows: ‘org’ chart. This needs to tie in with:
Role descriptions. Describes in detail who is
` Full Business Case. This was already completed
responsible for what. When everybody knows
as part of the initiation stage.
exactly what their own job is, it is easier to avoid
` Individual Deliverables. This is a list of each a culture of blame.
item within the project that must be completed Which team member (or members) each work
and checked off. Note that these concepts will be package is assigned to. There should be no
explained more in the subsection. unassigned activities, and no unassigned team
The individual deliverables are broken down members.
into smaller parts in the Work Breakdown
` Quality Management System (QMS). This
Structure (WBS). These are then organised
explains how each deliverable is to be checked and
into work packages.
who will be checking and approving it to make sure
Milestones (Checkpoints). Once the deliverables it is fit for purpose.
and WBS are completed, the project manager
must detail all the checkpoints in the project. ` Change Control. Sometimes parts of a project will
These are places where work will be checked need to be changed. This document sets out who is
and approval needed before it can continue. allowed to authorise changes.
All of these will be used to create a project ` Risk Register and Risk Management Plan. This
network diagram and a project schedule. is a list of the risks identified in the business case
These show all the work in the project, when it along with an explanation of how you will manage
will be done, and who it will be done by. those risks.

` Communications Management Strategy. A large Individual Deliverables

part of project management is making sure that
Within the list of project initiation documents are
stakeholders and team members are kept informed.
‘Individual Deliverables’. These are an extremely
This document outlines what is being said, by who,
important part of the project plan.
to whom, how often, and by what method. It will
also detail what will happen in emergencies. Every project will be made up of a set of objectives that
must be completed. These are the ‘deliverables’. They
` Daily Log, Lessons Log, Issues Register. You
are significant parts of the project. The deliverables
must keep proper records of what happens in the
for any project depend on the project’s scope. For
day-to-day management of the project.
example, if you are building business premises, the
` Legal Requirements. This covers any law or deliverables will include things like completing the
regulation that affects the project. It also lists any plumbing or electrical work. Often one deliverable will
approvals that are needed, for example: council have to be completed before others can be started. For
approval, landlord approval, etc. example, when building premises, the plumbing might
need to be installed before the flooring can be put in.
` Health and Safety Legislation & Requirements.
This is a list of every health and safety regulation
that is relevant to the project. DEFINITION:
` Budget. You must create a budget for the project and
list any resources that are available to you or that you Deliverable: Any unique and verifiable
will need for the project. product, result, or capability to perform a
service that is required to be produced to
Once the project plan is complete, it must be approved. complete a process, phase or project.9
You must also make sure that it aligns to the business
case. If it does not, you will have to rewrite the business Project Management Body of Knowledge
case (this means returning to the initiation stage). But (PMBOK). (2013).
if everything looks good, it is time to start work!
Note that this is a very simple overview of the planning

stage. We will cover the planning process and all of the The Work Breakdown Structure (WBS) and
project initiation documents in much more detail in Project Network Diagram
Section 4 of this Kōnae Ako. This means that by the end
of this Kōnae Ako, you will have covered all you need Each deliverable will be produced by a process that
to start and plan a project. However, the ‘Individual includes a series of activities. The plan must identify
Deliverables’ component is explained further below. each of these activities and show how they produce the
deliverable. Identifying all of these activities is called
the Work Breakdown Structure (WBS). The WBS is
Discussion Questions: then used to create a Project Network Diagram.
• Why must roles be clearly defined? DEFINITION:

Why do we need to make sure that everyone
knows who they are supposed to report to? Work breakdown structure (WBS): A
• Why is a Quality Management System (QMS) hierarchical method that successively
important for a project? subdivides the work of the project into
• Why do you think it is important to have a smaller detail. 10
document about Change Control in your Project Management: The Managerial Process.
Project Plan? (2014).
9 PMBOK. (2013). p.537.

10 Larson, Honig, Gray, Dantin, & Baccarini. (2014). p.641.

A Project Network Diagram sets out everything that needs to be done to complete a project in a visual form (as
a map or flow chart). It shows all activities and when some activities depend on others being completed. As
it is visual, it provides a simple way of showing what needs to be done first, and which activities can be done
independently of each other.
Figure 15 shows a project network diagram for a very simple task that many of us have seen take place, or have
done ourselves: making a ‘flat white’ coffee.
Figure 15: Project Network Diagram – Making a Flat White
Figure 15 shows that the machine must be turned on

before anything else is done. This is because both
processes use the machine (the machine steams the
milk and brews the coffee). It also shows that the
coffee can be prepared at the same time the milk is
prepared (these deliverables are independent of each
other). So, for example, one employee could do the
coffee while the other did the milk.
The diagram also shows us that certain things must be

done in order. If we did not do this, we would make a
mess. For example, if we did not place the cup before we
brewed the coffee, it would spill everywhere as it came
out of the machine. It is easy to see the final product: it
is the cup of coffee that is served to the customer.
We could divide this job between three people. One

could brew the coffee, another could steam and
pour the milk, and the last could serve the coffee to
the customer. If we did this, there would be three
deliverables: the coffee; the pouring of the milk; and
the serving of the coffee to the customer.
• The person who steams and pours the milk would be

The example of the flat white can also be used to
waiting for the coffee brewer to deliver the coffee, and
understand the scope of a project. In this case, the
• The person serving the customer would be waiting scope is the work required to produce a basic coffee
for the steamed milk to be poured. with steamed milk. If the project was to produce the
Each of these is a deliverable – an objective that must same coffee but with sugar, or in a takeaway cup,
be completed to produce the final product. After all, it the scope of the project would increase – more (or
is not a flat white if it has no steamed milk! different) activities would have to be added.

Project Milestones
NGOHE:
Lastly, a project will have milestones (sometimes
called ‘checkpoints’). These are important events Consider any common small project that
in the project. A milestone is a place in a project you have a lot of experience with (like the
where progress is checked and authority is needed to example of making a flat white). For this
keep going. Milestones are often placed when major project identify:
deliverables are completed. For example, in a building
• the scope,
project, completing the plumbing work would be a
major milestone. That work would then have to be • the deliverables,
checked before work on the project was allowed to • the milestones, and
continue. Each milestone marks the end of a section of
• all activities that must be completed for all
work in the project (a milestone section).
deliverables.
DEFINITION: Then draw a simple project network diagram

like Figure 15 that shows how all the
Milestone: A significant point or event in a activities and deliverables are related.
project.11

(PMBOK). (2013). Relationship of Project Plan to Business Case
It is very important that your project plan is based
on your business case. In fact, the project plan must
In the example of the flat white, the three main always align with the business case, especially its
deliverables give us the milestones. When the coffee scope. The plan must never go outside the scope
is brewed and the milk has been steamed, it is a (or scope tolerances) of the business case. If it does,
good time to check their quality. If they are not good this is called ‘scope creep’. This is one of the main
enough, they will have to be done again. Similarly, ways that projects lose focus, break budgets, become
when the milk is poured, the coffee is ready to be unmanageable or fail altogether.
served to the customer, but it should be checked before
it is handed over.
Making a flat white is a very simple project. Most The project plan must align with the
business projects will have many more deliverables business case!
and a more complex work breakdown structure (WBS).
Even so, the basic idea is the same:
1. Break down the work of the project so that Discussion Questions:

everyone can clearly see the order in which things
need to be done. • Why are deliverables and a Work
Breakdown Structure important in a project plan?
2. Assign team members to each activity. Every
activity must have at least one team member • Do you think they are the most important part
assigned to it, and there should be no unassigned of the project plan? Why or why not?
team members.
11 PMBOK. (2013). p.546.

2.2.3 The Execution Stage

At the execution stage, the actual work of the project is carried out. Team members will start completing activities,
producing deliverables, and reaching milestones. During this stage, the project manager will be co-ordinating
people and resources, following the overall project plan, and keeping in touch with stakeholders. The steps of the
execution stage are shown in Figure 16.
Figure 16: The Execution Stage
It is important to understand that this stage and the time and keeping track of milestones. Each milestone
next stage, monitoring and controlling (see Section section has its own activities and deliverables.
2.2.4), happen at the same time. That is, you will need Everything in a milestone section must be completed
to be monitoring progress and making checks as work within tolerances before work on that part of the
is being done. This is why you proceed to the closing project is allowed to continue. If milestones are not
stage after the execution stage. reached, progress on that part of the project stops until
they are reached or approved changes are made (see
Section 2.2.4).
TĪWHIRI:
When work first starts, the project manager HEI TAUIRA:

will have to spend some time introducing
team members to each other and explaining Example: Rocket Launches
to everyone their roles in the project. This is A useful way of understanding project
important because team members may have milestones is that much the same system is
never worked together before and some may used to launch rockets into space. A rocket
be doing work they have not done before. launch always has a series of checkpoints
Remember, a project is not ‘business as during the countdown. At each one, checks
usual’. The project manager will also have are made to make sure everything is working
to put in place a monitoring system (see properly. If a check is failed, the countdown
Section 2.2.4). stops and the rocket is not allowed to launch.
Every checkpoint must be passed before the
rocket can be launched. Sometimes, the problems
In the execution stage, the project manager’s main might mean that the launch is cancelled.
responsibilities are making sure that work is done on

Each milestone section requires approval before it can Project Cancellation

be started. The project manager must check that the
Not every project is a success. If we are lucky, we
section of work aligns with the business case and all
will find out about a project-ending problem in the
legal requirements are met. Once the project owner
initiation or planning stages. If we do so, then we will
gives approval, work can start. The overall work plan
not have spent much time or money on the project
will show all the activities and deliverables that are
(see Figure 3). However, sometimes project-ending
needed to reach the milestone. Once a milestone is
problems are only discovered once the work has
reached, the process repeats for the next milestone
already started. The milestone system allows the
section until all milestones have been met. When every
project manager to stop the project when there is a
milestone has been met, the project is complete.
problem. If the problem cannot be solved, the project is
an ‘early closer’ and you must move on to the closing
stage of the project management process (see Section
2.2.5).
Cancellation does not mean that the project manager

did a bad job. There are always risks in a project, even
when it is nearly complete (see Figure 12). Even if you
have a good risk management strategy, something
might still happen that causes the project to be
cancelled. However, you should not just ‘drop your
tools’ and walk away. It is important to close even a
failed project properly – you must work out what went
wrong and try to learn what you can from the failure.
• Why are checkpoints important? What

would happen if you did not have checkpoints?
• Why is it important that change be authorised?
What might happen if team members make
changes by themselves, without permission?
• Why should you try to learn what you can from
a cancelled project?
2.2.4 The Monitoring and Controlling

Stage
The monitoring and controlling stage happens at the
same time as the execution stage. The project manager
cannot create the perfect plan, tell the team to start the
project, and then go on holiday, leaving the team to
manage themselves. Instead, the project manager must
monitor the project to keep up with how things are
going and keep control to make sure that the project
plan is being followed. Sometimes unexpected things
will happen and the project manager must decide how
they will be dealt with. The processes of the monitoring
and controlling stage are shown in Figure 17.

Figure 17: Monitoring and Controlling Stage
UPDATE BUSINESS UPDATE PROJECT CONFIRM NEXT

START
CASE (IF NEEDED) PLAN & LOGS MILESTONE SECTION
ESCALATE TO TEAM
PROJECT PLAN MEMBER AND TAKE
APPROPRIATE
ACTION
No No
TRACK / REVIEW
PROGRESS USING CHANGE No ALL OUTCOMES Yes ALL MILESTONES
APPROPRIATE NEEDED REACHED? REACHED?
SYSTEMS
Yes Yes Yes
ALL CHANGES INITIATE CHANGE PROCEED TO

CHECKPOINT
ACCEPTED CONTROL CLOSING STAGE
No
Monitoring
Monitoring a project requires you to keep track of what
is happening in the project. For this reason, you will
need to establish a Project Management Information
System (PMIS). This is a system for collecting and
organising information.
In some cases, a project management information

system can be as simple as a notebook, but you can
also use a computer and / or special software or
smartphone apps to help you. The idea is to have all
the information you need to see the state the project
is in at any time. Without this information, a project
manager will not have much idea of how the project is
actually going.
DEFINITION:
Project Management Information System (PMIS): tools and techniques used in project management
to deliver information. Project managers use the techniques and tools to collect, combine and distribute
information through electronic and manual means.12
Project-Management-Knowledge.com. (n.d.).
12 Project-Management-Knowledge.com. (n.d.).

For example, an important part of every project is realise that they are on their own and will find their
the schedule. Team members need to complete their own solutions – this can create problems for the
activities on time, and you need to know as soon as project. It is at this stage of the project management
possible when there is a delay. This gives the project process that leadership qualities are most important.
manager time to plan how to work around the delay. The project manager must show that they are an
It can also show if the project is ahead of schedule, in effective leader and motivate the team to work well.
which case it gives the project manager an opportunity
Part of keeping control is making sure that
to work out how to take advantage of this (or what
everyone in the team knows and remembers their
effects this may have). A wall calendar is one of the
responsibilities. For this reason, the project manager
simplest ways to write and monitor a project’s schedule.
should regularly remind everyone of how the project
Another important aspect of monitoring is ensuring is going and what their current responsibilities are.
the project keeps to the budget. You will need a system If you do not communicate with team members, they
that shows you when money comes in, and when and will start to doubt.
where it goes. This helps avoid cost overruns. You
Remember, when you wrote your business case, you
must also keep proper logs. Any issues that arise, any
included tolerances. These give you some ‘wiggle
changes that are made, and anything else that might
room’ if the project does not turn out the way you
matter should be recorded in a log. Again, it is possible
expected. For example, we include cost tolerances
to do this using pen and paper, but technology can
because prices can sometimes change or there might
often make it easier and more manageable.
be small, unforeseen extra costs. However, what
A good PMIS will keep the project manager informed of happens if the project goes outside tolerances or
how well things are going, but stakeholders will want to something unexpected happens?
know as well. For example, if you do not keep the owner
For example, what happens if a part needed for the
or funder properly informed, they may lose confidence
project is no longer available, but you can swap it for
in the project or the project manager. This can endanger
another? All such changes must be authorised. The
an otherwise successful project. Your communications
‘Change Control’ document in your project plan will
management strategy should set out how and when
say who is allowed to authorise changes. In many
you will inform different stakeholders of progress that
cases, it will be the project manager’s job, but at times
has been made or problems that have come up.
they may be required to consult with the Senior User.
We will cover Project Management Information Remember that you cannot just leave it to anyone to
Systems – including technology options – in detail make changes. Changes in one part of the project
later in the programme. However, in Section 2.3 we could cause big problems later on. For this reason,
will briefly cover how the Lean Canvas can be used as keeping track of change requests is an important part
a simple tool for monitoring a project. of a successful project.
Always keep in mind that if you need to change the

Discussion Questions: scope of the project, or costs, or timeframes, you will
have to go back and make changes to your business
• Why is it important to monitor the case (and then project plan). Remember, the project
progress of a project? plan must always align with the business case. You
• What sorts of things do you think could be used cannot let a project go outside tolerances and ignore it.
as Project Management Information Systems? You must update the business case and make sure that
the revised plan aligns with it.
Control
The project manager has to keep control of the project. • What will happen if you monitor, but
Remember, the project manager is ultimately responsible do not control, a project?
for the project and has authority over it. There is no • Why is communication so important? What
point monitoring a project if you notice problems but part of the project plan covers communication?
never take action. The team members will quickly

2.2.5 The Closing Stage
“The struggle of man against power is the

struggle of memory against forgetting.”
– Milan Kundera
Unlike ‘business as usual’, a project has a definite end.

This might be because the project has had to be closed
early (see Section 2.2.3), but usually it is because the
project is successfully completed. While it may be
tempting to hand over the completed project and go on
holiday, this would be a mistake. It is important that a
project be closed properly. The project manager must
make sure that all ‘loose ends’ are tied up.
The closing stage also includes making sure that

you learn whatever you can from the experience. Too
often people leave a successful project and do not
understand what made that project a success. This
means they cannot apply what they learned to their
next project. For this reason, the second part of the
closing stage is evaluation. An outline of the closing
stage is shown in Figure 18.
Figure 18: Closing Stage

Project Closing Project Evaluation

At the end of the project it is important that Once the project has been formally closed, time should
stakeholders accept the final results of the project. In be set aside for evaluation. This is a chance to examine
particular, the funder (or whichever other stakeholder the results of the project. It is a chance to understand
is responsible) must sign off on the project to give what worked and what did not. Proper evaluation can
formal acceptance. provide lessons that will be useful for future projects.
There may be outstanding issues with other Often it will be useful to have an evaluation meeting
stakeholders as well. For example, a building with team members and other important internal
project could have left a mess or a bad impression stakeholders. Topics that can be covered in the
on neighbours. It is important that such issues are meeting include:
followed up and dealt with. Even if a project is not
` Outcome. Was the result of the project what was
completed, it should be formally closed to make sure
expected or originally planned?
there are no outstanding issues such as unpaid bills.
` Schedule. Was the project completed on time? Did
Properly closing a project includes:
some parts take longer than they should have? Why?
` Verifying Acceptance of Deliverables. This is
` Budget. Was the project within budget or over
making sure that each and every deliverable has
budget? If there were budget problems, what were
been accepted. In other words, every milestone in
the causes?
the project plan must have been met.
` Problems. Were there any problems with the
` Final Budget and Timeline. This must include all
project? How were these managed? Could they
approved changes. It is important that people know
have been managed better?
the true cost of the project and how long it took.
This will give everyone a good idea of how realistic Some project managers might also want to hold a
the original budget and timeframes were, and it will meeting with external stakeholders. This is a good way
show the effect of approved changes. to find out how the project impacted on these people.
This can also provide useful information to guide
` Client Approval. The project manager must get future projects.
formal approval from the funder (or whoever is
responsible) to show that the results of the project
are acceptable to the client.
` Handover. This is handing over the outcome of the • Why is it so important to close a project
project (the product) to the client. properly?
` Close procurement. The project manager must • Why is it important to evaluate a project once it
ask for final invoices from everyone involved in the is finished? Why not just get on with business?
project. These must be paid in full. • Where would you store a project archive and
the final report?
` Sign off acceptances. Any acceptances, for example
from builders or electricians, must be signed off. • Why might it be useful to hold an evaluation
meeting with external stakeholders such as
` Project Archive. During the project, a large amount customers or neighbouring businesses?
of information will have been gathered. This is an
asset that could be useful for future projects. It is
important that this information is stored properly.
The archive will include any information from
project evaluation (see below).
` Final Report / Presentation. Often, the project

manager will be required to give a final report
or presentation to the funder or other important
stakeholders.

Key Points 2.3 The Lean Canvas

A project has five different stages: initiation; planning;
execution; monitoring and controlling; and closing. The “The future depends on what we do in
monitoring and controlling stage occurs at the same time the present.”
as the execution stage.
– Mahatma Gandhi
The beginning of a project involves preparing a draft
business case. Since this is only about half a page in
length, preparing this before putting together the full In this section we look at a tool that can be used
business case can avoid wasting a significant amount of to develop a business model and form part of
time if approval for the project is not given. the planning process. In its simplest definition, a
The planning stage involves the most detail. The business model is the design and style of a business,
project manager must break down the project to show but ‘business model’ can also mean how a business
milestones, deliverables, and activities. The work plan operates to deliver goods or services and make a profit.
will show how all of these relate to each other and who For example, The Warehouse’s business model is to
is responsible for each activity in the plan. sell a wide variety of items at low prices. It uses the
same business model as the American retail giant
The project plan must always align with the business
case. Thus, if major changes are made to the project, the
Wal-Mart. In the same way, many fast food chains use
business case must be properly revised. business models that are very similar to each other.
It is always important to close a project properly. A

project is not properly finished until everything has been
DEFINITION:
signed off, important stakeholders have accepted the
results, and a proper evaluation has been done.
Business Model (tauira pakihi): The design
and style of a business.
Most businesses begin by writing a long, detailed

business plan, which is then presented to investors.
These investors, such as banks, lending trusts, or
potential business partners use the plan to decide
whether to provide start-up funding for the business.
A different trend is beginning to emerge, with

businesses using a method known as ‘lean start-up’.
Instead of developing a detailed plan that is then
shown to investors, the lean method uses repeated
customer feedback to create a plan. The idea is to
write a very basic plan and test it with customers. The
plan is then revised and tested, again and again in the
same way. This allows an entrepreneur to develop a
business model very quickly, and be confident that
it is feasible.
The lean method has several advantages. One is that it

is very quick and easy, so you do not need to commit a
lot of time and resources to it. In contrast, a traditional
business plan takes a long time to write. The lean
method also allows the entrepreneur to change the
business model very quickly as customers respond to
it. Sometimes this means that the resulting model is
quite different from what was started with.

Lastly, the lean method is customer-led (that is, it is ‘customer-centric’). Since customers are the people who
must buy the product, showing that the business model is directly developed using customer feedback makes the
business more attractive to investors. The ‘Lean Canvas’ is based on this approach.
In this programme, you will use the Lean Canvas as a tool to help you write a full business plan. This is because
organisations such as banks may still request a full business plan, and there is value in writing a detailed plan for
your own use. Although the lean approach is presented as an alternative to traditional business planning, nothing
stops us using lean tools to help develop a full traditional business plan.
The Lean Canvas, shown in Figure 19, was invented by Ash Maurya.13 It uses a single piece of paper. You can just
use an ordinary A4 size piece of paper. However, a larger piece of paper is usually better, especially if you would
like to put your Lean Canvas on a wall and be able to read it easily. Another option is to put it on a whiteboard.
Figure 19: Lean Canvas
The Lean Canvas is designed to be revised, so if you

use a piece of paper to create it, it is best to fill it in
using sticky notes. You can then change the sticky
note when making changes to the canvas instead of
writing the whole thing again. There are also online
tools available that can be used to produce an online
version of a canvas, such as ‘Canvanizer’.
USEFUL WEBSITE:
• Canvanizer – http://canvanizer.com/new/
lean-canvas.
13 Maurya. (2013).

The Lean Canvas is designed to be written very The Lean Canvas and Your Business Plan
quickly. It should take no longer than an hour, but
When beginning the process of developing a business
some people write theirs in half an hour or less. The
plan, the use of your Lean Canvas can help you
first canvas you write represents a ‘snapshot’ of your
identify and focus on:
thoughts about your business. It is all right if you do
not know what to put in some boxes. The Lean Canvas • what you are hoping to achieve in your business, and
is designed to be revised. You will fill in more detail as
• what areas of your business plan may need to
you test it against the real world. By the time you are
be investigated further as you progress through
done, the canvas will probably look quite different to
the course.
what you started with. This is fine: the Lean Canvas is
meant to work that way. Each box in the Lean Canvas represents an area that
is covered in a full business plan. In this programme,
Each time you write or revise the canvas, you test the
you will be able to use the Lean Canvas to give you a
business model. For example, you might do a market
quick start. You can then utilise what you learn from
research survey or you could even make a very basic
the Lean Canvas to guide the development of your full
version of your product or service (this is called a
business plan.
‘Minimum Viable Product’). You then test it with
customers to get feedback. The information you get Imagine if you had to write a full business plan before
from the test allows you to revise the canvas. If you you tested your ideas. It might take you years to
continue testing and keep making changes, you should develop a working business model if you did that. The
end up with a business model that ‘works’. Lean Canvas is quicker. You just write a ‘bare bones’
plan and start testing. You can do more tests this way
and your final canvas will have evolved to fit what
customers are looking for.
As you work through this programme, you will be

researching your business strategy, the industry and
your customers. The information you learn can be used
to improve your business model. Therefore, at various
points through the programme, you will revise your
Lean Canvas to take into account this information. At
the end of the programme, you will have both a full
business plan and a one-page Lean Canvas which
summarises your ‘final’ revised business model.
• Why is it important to have a customer-

based focus?
• What is the difference between a business
model and a business plan?
• What does ‘lean’ mean? How does it apply to
business planning?
• What advantages does a ‘lean approach’ have?
What disadvantages?

2.3.1 Filling Out the Lean Canvas

The Lean Canvas is divided into nine boxes, which are
filled out in a particular order. In this programme, we
recommend that you fill out the canvas in this order:
1. Customer Segments and Problem(s)

2. Solution
3. Unique Value Proposition
4. Channels
5. Cost Structure and Revenue Streams
6. Key Metrics
7. Unfair Advantage
This is the broadest market segment there is, but in
fact not everyone likes ice cream. Many people (in
Step 1: Customers and Problems particular, members of some indigenous populations
such as Native Americans), are intolerant to milk sugars
Since the Lean Canvas is customer-focused, you
and so tend to avoid milk products, including ice cream.
should always start by describing who your customers
will be. This means you need to focus on a market When identifying your customers, you split broad
segment. This is a group of customers who have customer segments into smaller ones. The idea is to
common features. For example, mothers with young have a segment that is broad enough to make money,
children are a market segment. Of course not all but narrow enough so that you can provide a product
mothers with young children are the same and want or service which has a competitive advantage. For
the same thing, but they do have many common example, a mechanic who repairs luxury cars or cars
needs and problems that they do not share with other of one brand might have a competitive advantage
segments. For example, elderly people do not usually over a mechanic who repairs every kind of car. This
have to take care of babies. is because people who own luxury cars or cars of that
brand would think that the first mechanic would know
People are generally part of many different market
more about their car than the second.
segments at once. For example, some mothers with
young children may own luxury cars or be interested
in fitness. These people would also be members of DEFINITION:
the ‘luxury car owners’ and ‘personal fitness’ market
segments. Competitive advantage (huanga pakihi):
The advantage that you have over your
competitors because of strengths you have
DEFINITION: that they do not.
Segmentation (wehenga): The process of Business Terms in Aotearoa. (2012).

dividing the market for any given product into
segments and deciding which segments of
You can write a separate Lean Canvas for every
potential customers a business / organisation
segment of customers you are targeting. This is
will market to. Dividing customers into
because different segments have different needs and
groups based on common characteristics.
problems. For example, if your product or service
Business Terms in Aotearoa. (2012). targets more than one segment, you might have to
advertise using different channels or use a different
pricing model. If you can fit all of your customers on
When starting out, many businesspeople think of their one canvas, it is ok to do that too, but try to be clear as
customers in very broad segments. As an example, we to which strategies relate to which customer segments.
might think that selling ice cream would be the easiest Make the customer segment(s) you are targeting the
thing in the world, because ‘everyone’ likes ice cream. title of the canvas.

HEI TAUIRA: The ‘Customer Segments’ box
Example: Brian – Part 1 To begin with, identify the customer segment which
you think is most feasible and viable. That is, the
While Brian was in Alaska on his ‘OE’ segment which you are most likely to be able to cater
(overseas experience), he worked in a fish to and which is likely to be profitable. In other words,
canning factory in a rural community. He think about who are likely to be your best customers.
noticed that many of the local people would use Write a description of these people in the ‘Customer
the services of an expeditor, someone in a major Segments’ box. This segment will often include your
city who would shop for items and ship them to ‘early adopters’ – that is, people who try your service
people in rural communities. or product first. You can list your early adopters in the
Towards the end of his stay in Alaska, Brian same box, if you want to.
worked with some expeditors. Upon returning Sometimes a product or service will be bought by one
to New Zealand, he decided that he wanted kind of person (‘the customer’), but used by another
to develop a business based on the idea. He (the ‘user’). For example, if your business’s service
decided to use a lean canvas to map out his involves dressing up as a clown for children’s birthday
business model. His first step was to identify his parties, your customers are parents and your users
customer segments. The way he segmented his are the children. Similarly, if you sell products to retail
customers was as follows. stores, the owners of those stores are your customers,
His broad category was all rural customers but the goods will eventually be used by consumers. If
in New Zealand. Possible specific customer your business has separate customers and users, write
segments included: both into your ‘Customer Segments’ box.
• North Island rural customers

• South Island rural customers The ‘Problems’ box
• Local rural based communities At the same time you identify customers, write down
• Rural commercial customers in local in the ‘Problem’ box the main problem(s) they need
communities solved. List three problems at most.
• Rural residential customers in local Then work out how your target customers are currently
communities solving these problems. List their current solutions
• People who have difficulty shopping on in the ‘Problem’ box under the heading ‘Existing
their own Alternatives’. This will show you who your customers
• People needing goods quickly are, what they need, and the existing solutions you will
be competing with.
• People unable to source local goods
Brian looked at his list and saw that some

segments were still quite broad. He could join
these together to be more specific. For example,
North Island rural people, who need goods
quickly, but are unable to shop on their own.
After looking at the options, Brian decided to

focus on commercial customers in his local (rural)
area which needed goods quickly. He felt this
was the segment that would be most likely to
afford his services. He also thought that starting
locally would give him time to work out how
to extend his service throughout New Zealand.
The title of his canvas is: Need It Now Expeditor
– Local Rural Based Commercial Customers.

HEI TAUIRA:
Example: Brian – Part 2
After Brian decided on his primary customer segment – local rural based commercial customers – he went
on to list the other top three customer segments. He also decided that his early adopters would most likely be
farmers, mechanics, and manufacturers who need machine parts quickly when something breaks down.
The problems Brian identified were:
• The need to get parts quickly

• Not being able to find parts locally
• Lost revenue and lower efficiency due to the break down and delay of repairing machinery.
The alternative solutions to these problems were to delay work until parts could be sourced, make repairs with
available parts (resulting in lower-quality repairs), or spend valuable time making their own parts.
An example of the lean canvas can be seen in Figure 20, with Brian’s Customer Segments, Early Adopters,
Problem, and Existing Alternative sections filled in.
Figure 20: Lean Canvas for Need It Now Expeditor
Pātai:
Thinking of your own business or business idea:
• What will be your broad customer segment?

• Will you have early adopters? What will they be like?
• Who will be your primary target customer?

Step 2: Solutions Step 3: Unique Value Proposition

In the ‘Solutions’ box, write down how your product or The Unique Value Proposition (UVP) is a single
service solves the problems listed in the ‘Problems’ box. statement that shows why your product or service
If your product or service does not solve at least one of is different from others and why it is worth buying.
these problems, it is hard to see why those customers Your UVP should be based on the main problem you
would pay for it – you might need to start again with a are trying to solve. Note that the term ‘unique value
different market segment, or change your product. proposition’ is very similar to the term ‘unique selling
point’. For the purposes of this programme, you can
When you fill out this box, try to look at the solution
think of them as being the same.
and problem from the customer’s point of view. Put
yourself in their shoes. Not only must your product or
TĪWHIRI:
service solve their problem, it must look like a credible
solution. There is no point having something that
You can choose to create a ‘high concept
works if you will never be able to persuade potential
pitch’ and include it in the ‘Unique Value
customers that it works.
Proposition’ box. A high concept pitch puts
a business’s vision into a sentence that
HEI TAUIRA: customers can relate to. Some use familiar
businesses to get the point across.
For example, LinkedIn can be pitched as
Brian decided that the solutions to the problems ‘Facebook for business and job seekers’. In
he identified include: other words, it shows in a short sentence
• Locating parts and goods through contacts that LinkedIn is a social media network for
with major manufacturers business and for people who are looking for
work opportunities. Anyone who knows what
• Nationwide and, if needed, international
Facebook is will now have a good idea about
sourcing
what LinkedIn is.14
• Fast, direct delivery to the customer.
USEFUL WEBSITES:
• Venture Hacks, High Concept Pitches

for Startups – http://venturehacks.com/
articles/high-concept-pitch.
• Pitcher, The Importance of High Concept
Pitches for Startups – http://thepitcher.org/
the-importance-of-high-concept-pitch-for-
startups/.
TĪWHIRI:
The information in the solution box, USP,

and revenue stream help to establish what
we call a Minimum Viable Product (MVP).
The MVP is the smallest solution that can be
delivered, which still delivers customer value,
and that you can still get paid to deliver.
14 Pitcher.org. (2016).

Many people starting out in business feel they have the Step 4: Channels
ultimate solution to a given problem. The reality is many
In the ‘Channels’ box, you will write about how you
businesses change their business model over time, as
are going to get your product or service to customers
they receive feedback from customers and gain
and how you will make them aware of your business.
experience in the market place. If developing a product
These are the two kinds of channels that matter in the
or service, a ‘lean start-up’ solution is to start a
Lean Canvas.
business with a minimum viable product and develop
an evolving, and hopefully successful, business model ` Distribution channels. These are the paths
over time. A minimum viable product is the simplest your product or service takes to get to customers.
solution that can be offered which delivers customers Examples include selling directly from your
value and which they are prepared to pay for. business to customers or selling to retailers or
wholesalers who then on-sell to the final customer.
HEI TAUIRA: ` Promotional channels. These are the ways in
which information about your business reaches
customers. This is where you will look at the
Brian realised that the ability to get parts promotion part of your marketing strategy (this will
from major manufacturers may not be the be covered further in Kōnae Ako 5).
main reason customers would use his service. For example, you can do things that will let
Instead, the main reason may be that it saves customers find your business, such as creating
the customer time and the trouble of having to a business website, using Google My Business,
call around to various places to find the parts and social media.
themselves.
You can also list channels you will use to actively
Brian decided that the reason a customer will find customers such as buying advertising in
choose his expeditor business is that it will newspapers or on the radio.
make their business life less difficult. Brian then
realises that his UVP can be summed up by the
HEI TAUIRA:
statement ‘helping to take the hassle out of your
business life’.
Brian decided on the following promotional

Discussion Questions: channels:
• Friends • Facebook
• Why is it important to communicate
• Family • Website
your UVP to customers?
• Advertising in • Google My
• Can you think of some UVPs for well-known
Local Media Business
businesses?
• What about high concept pitches? Can you His distribution channel would be direct courier
think of any that would apply to well-known delivery from the manufacturer to the customer.
businesses?
• What are some of the most important

promotional channels for a business these days?
• In the example of Brian, he is using Google My
Business. What is this?
• How many of the channels Brian is thinking of
using would you think of using?

Step 5: Costs and Revenues Pricing is important. It affects customers’ view of

your product. A cheap price may be seen by some
These two boxes together give a good picture of the
customers as a sign that the product is of low quality,
profitability of your business model and whether or not
and that they should choose a more expensive
it is going to be viable.
competitor. It is important to consider the price that
your target customers would be prepared to pay. Many
businesses think that price should be based on the
The ‘Cost Structure’ box
cost plus a set mark up. But you may be able to charge
In the ‘Cost Structure’ box you need to list the main an even higher price if customers feel they are getting
costs involved in running your business. This could good value for money. For this reason, it is important
include fixed overhead costs such as rent as well as to think about price from the customer’s point of view
the variable costs associated with buying materials for and consider the price of existing alternatives.
your product (or buying the products to on-sell). You
do not need to list every single cost – just the main
ones. If you do not know the exact costs, just make HEI TAUIRA:
your best guess and you can find out more later.
While Brian was looking at the Revenue box of

The ‘Revenues Stream’ box
the Lean Canvas, he realised that if his service
In the ‘Revenue Stream’ box, write down the price you is too costly, customers might decide to deal
want to charge for your product or service and the with the problem themselves or just accept
pricing model you will use. Working out the pricing of delays. As such, Brian has decided to keep his
your products can be a complicated process. However, pricing simple and focus on the price that he
it does not matter if you are not sure about prices right feels early adopters would be willing to pay.
now. As you move through this programme, you will Brian decided that his revenue model would be
get a better idea of what you will charge. For now, just to use a mark-up. He will add a mark-up of 30%
put your best guess in the box. to the suggested retail price of the product. He
thinks this will be enough to cover his expenses
In regards to the pricing model you will use, there are
and provide a profit.
numerous options to choose from. A few examples
include: Brian also thinks the 30% mark-up will
enable him to offer free delivery. However, he
` Skimming pricing. This is charging the highest
understands that he will need to review this
price that customers are willing to pay, then over
assumption, especially once he learns more
time gradually lowering the price to make the
about the average price of products he will source.
product and / or service available to a wider market.
` Penetration pricing. This is setting prices low in

order to gain a larger market share.
` Competition pricing. This is setting a price based
on what competitors are charging.
• Why is it important to put yourself in the
` ‘Freemium pricing’. This is providing a product customers’ shoes when considering price?
and / or service free of charge, but charging
• Can you think of any recent examples where
money for premium features, such as increased
you experienced bad pricing? For example,
functionality or larger data storing capability.
did you see something that you felt was very
under-priced or something that was very
“ A cheap price may be seen by some

customers as a sign that the product
overpriced? Do you think you were in that
business’s target market?
is of low quality.”

Step 6: Key Metrics Step 7: Unfair Advantage

A metric is a measure that is used to track and compare In this last box, ‘Unfair Advantage’, you need to write
performance. In the Lean Canvas the ‘key metrics’ are down your competitive advantages. You will have
how you will measure the success of the business. already thought about these when you were writing
These are different for each business. For example, your unique value proposition in Step 3. These are
some businesses will want to build a large base of things that will make it hard for others to copy your
repeat customers; others might want to make a certain business model. For example, if you are a highly
amount of sales by their second year of operation. skilled worker with a rare skill, it will be much harder
for others to set up business in competition with you.
When you are filling in this part, consider the goals
If you have access to an excellent retail location, that
you set for the business. These goals will help you
will also be something that other businesses will find
decide on your key metrics. However, you might
hard to copy.
decide to include some of the objectives towards these
goals instead. If your business meets these objectives, It can sometimes be difficult to come up with a
you will know that it is on track to achieve the goals competitive advantage. After all, many successful
and be a success. businesses are not ‘first leaders’. In other words, being
in business is not always about being first, it is often
HEI TAUIRA: about finding a way to do something better. Keep in
mind that there are some simple things that can be
Example: Brian – Part 7 competitive advantages. For example, if you open a
new car repair shop which is similar to others, it will
Brian decides that his key metric would be the
not have much of a competitive advantage. However,
number of sales orders he receives. He also
if you set it up in a place where it is much easier to
decided to identify his success metric as his
get to than others then, even though it is just another
goal to build a business which makes sales of
car repair shop, its location will be a competitive
$85,000 per year by the end of the second year
advantage.
in business.
Remember you are looking for an ‘unfair’ advantage.
This does not mean that you are engaging in
unfair business practices – it just means that your
competition cannot do much about it.
• Can you think of some common key

metrics that businesses might use? Discussion Question:
• In Section 1.2 we discussed the multiple bottom
line. How might this figure in the key metrics • How could a common business, such as
for a business? a takeaways store or hair salon, create a
competitive advantage?
HEI TAUIRA:
Brian felt that having experience in the field of

expediting, through his Alaskan experience,
provided him with a competitive advantage. Not
many people in New Zealand have lived where
there are expediting services, and most people
would never have heard of them or have any
idea of the work involved.

Completing Your Lean Canvas
You will now have completed your first version of your Lean Canvas. The next step is to test it and find out where
you have to make revisions. If you have made guesses, then you should probably start looking for information to
replace those guesses first. Sometimes new information will mean you have to make big changes to the canvas. For
example, you might find that you do not have as much of an unfair advantage as you thought. You might then look
for some other way to solve the customers’ problems – one that does have an advantage which competitors cannot
easily copy.
In any case, when you have completed your Lean Canvas it will look something like Brian’s, which is shown in
Figure 21.
Figure 21: Completed Lean Canvas for Need It Now Expeditor

2.3.2 Using the Lean Canvas to Help ` Cost Structure and Revenue Streams. This
Write a Full Business Plan information will be part of your financial plan
(Kōnae Ako 6). However, it will also affect earlier
Although the Lean Canvas was designed to replace
parts of the plan, such as the operations plan
a traditional business plan, nothing stops you from
(Kōnae Ako 3), the human resources plan (Kōnae
using it in addition to a full business plan. The Lean
Ako 4), and the marketing plan (Kōnae Ako 5).
Canvas helps you to quickly create and revise your
business model until you have one that works well ` Channels will be identified and discussed in the
with customers. You can then use this information to marketing aspect of the business plan (Kōnae Ako
help write and revise a full business plan. As you write 5) and in operations (Kōnae Ako 3).
your full business plan, the canvas can be useful as a
visual aid for remembering the basics of your business ` Key Metrics relate to several parts of the business
model – put it on a wall so you can see it and always plan. Depending on what metrics you choose,
be reminded. they may be reflected in your goals in the Strategic
Profile (Section 5.2), or even in the financial plan
The information you provided in the boxes of the Lean
(Kōnae Ako 6).
Canvas can help to clarify and support many key parts
of your business plan. The following will identify areas ` Unfair Advantage. As this is the main strength
of this programme where the Lean Canvas information of your business, it is discussed in the Internal
is important: Analysis component of the business plan (Kōnae
Ako 2), and reflected throughout the remainder of
` Customer Segments. This will be used when
the plan.
identifying target markets. This is discussed in the
marketing section of the programme in Kōnae Ako The Lean Canvas is a tool that can help you focus on
5, and is also important for market analysis (Kōnae the key aspects of your business. It can help you gain
Ako 2) and customer service (Kōnae Ako 3). insight into the core parts of your business. It can
also provide important information to be used in the
` Problems. This provides information used to
development of your business plan.
complete the external analysis section of the
business plan (Kōnae Ako 2). The assumptions
made in identifying the problems to be solved by Discussion Questions:
your business can be tested in the market research
aspect of the programme. • How easy do you think the Lean
Canvas is to use?
` Existing Alternatives can impact pricing and
• How can a lean approach help you in your
other parts of your marketing strategy. These will
business?
affect your marketing plan (Kōnae Ako 5), financial
plan (Kōnae Ako 6) and will be an important part of
industry analysis (Kōnae Ako 2).
Key Points
` Solution. The solution you choose has far reaching
impacts on the business plan. It influences the The Lean Canvas is ‘customer-centric’. It focuses on
goals and objectives of the business and will be the development of a business model that will provide a
reflected in the strategic profile section of your solution to customer ‘problems’.
business plan (see Section 5.2), as well other key The canvas is designed to be filled out in a short period
areas such as the marketing plan (Kōnae Ako 5), of time and provides a ‘snapshot’ of your current
and financial plans (Kōnae Ako 6). thinking on your business model. This changes as you
get more information.
` Unique Selling Point. This is discussed in the
The lean canvas is used to help you form your thoughts
context of the marketing section of the business
and assumptions on your business model. You can use
plan (Kōnae Ako 5). In addition, the high concept
this to help develop a full business plan.
pitch may be useful when considering the vision
and purpose statements of the business plan
(Section 5.2).

2.4 Creating and Monitoring 2.4.1 Initiation Stage

Projects with the Lean Canvas The Lean Canvas is useful for creating a quick draft
business case for a project. Remember that the Canvas
In the previous subsection, you were introduced to must be filled out in the following order:
the Lean Canvas. The Lean Canvas can be used
to help plan out a new product or strategy for your 1. Customer Segments and Problem(s)
business, or even plan a new business itself. The Lean 2. Solution
Canvas cannot replace detailed knowledge of project
3. Unique Value Proposition
management, but it can be used as a quick planning
and monitoring tool for a business project. The Lean 4. Channels
Canvas was shown in Figure 10 of Section 2.3. 5. Cost Structure and Revenue Streams
The Lean Canvas is a tool that can help you create a 6. Key Metrics
quick business model which can be easily revised. As 7. Unfair Advantage
such, it is a useful tool for smaller projects, or projects
The Lean Canvas is very easy to revise. You just keep
where you will need to make a lot of changes. As a
making changes and testing them until you get the result
tool, the Lean Canvas can be used to help you with
you want. For this reason, it is a useful tool for writing
the initiation and monitoring stages of the project
a draft business case, even if you later go on to write
management process. While you will save time, and be
a full business case. You can show the canvas to the
able to progress more quickly using the lean approach,
funder and very quickly make changes (sometimes you
you are giving up a lot of detail, which will increase risk.
can even make the changes right in front of them, or
On the other hand, the Lean Canvas has advantages. get them to work with you on the canvas).
A detailed approach to project planning takes a long
time, and it can often take quite a long time to make The Customer and their Problem
changes to the project. Remember that changes to a
project’s scope require the project manager to change A major benefit of the Lean Canvas is that it is
the business case. It is very quick and easy to make customer focused. In other words, it treats the
changes to a Lean Canvas, so it is a very useful tool customer as the central stakeholder. The business
for managing change during a project. It is especially strategy, including the product or service, is then
good when you have a project that will experience designed around the customer’s problems.
frequent changes. Remember that the customer does not have to be the
actual customer of your business. Your business could
be the customer. For example, if you were thinking
about installing a new computer system in your
business, then your business would be the customer.
In fact, one large benefit of using the Lean Canvas
where your business is the customer is that you know
the customer and understand their problem very well –
after all, it is your problem.
The Solution
Once you have identified the customer and the
problem, you must decide on a solution to that
problem. Creating this solution will be the project and
will define the project’s scope. For example, if the
problem is that customers find most surfboards to be
too heavy and too expensive, then the solution is to
create a cheaper, lighter surfboard. Remember that you
do not have to have a full product. A minimum viable
product (MVP) is often enough to start with.

Unfair Advantage
TĪWHIRI:
The last box of the Lean Canvas, ‘Unfair Advantage’,
Remember that there might be more than one is where you list the competitive advantage that the
solution to the customer’s problem. In this project will give your business. For example, it might
case you would write more than one Lean be the lightest surfboard on the market, or provide
Canvas. You should keep all the canvases enough storage space in your shop to allow you to
you write. You might want to come back to carry a wider variety of products than the competition.
them later and try one of the other ideas. Although an unfair advantage should be something
that is hard for others to copy, the reason you may
be starting a project could be to catch up to your
competition. This is okay too. For example, if your
Unique Value Proposition
competitors already have a lighter, cheaper surfboard,
You must then identify the unique value proposition you might need to also get one to stay in business. In
(UVP). In other words, why is this solution better this case, the fact that your competitor’s advantage is
than any other solution to the customer’s problem? easy to copy makes the project more feasible.
Answering this question is central to showing that
the project is feasible. If the solution has no UVP, the
Factors to Consider:
project is unlikely to create a product or service that
will meet the customer’s needs better than alternatives.
Keep in mind that the Lean Canvas is not
The UVP should show the core benefit that the project
the right tool for developing a detailed project
will provide to the customer as a stakeholder.
plan. You will still have to make a detailed work
plan, organise team roles, and put in place all the
other details described in the project initiation
Channels, Cost and Revenue Streams
documents. There is no room for most of this
Working out the channels to the customer and cost and information on the Lean Canvas. Even so, the
revenue streams will help you discover whether the Lean Canvas can replace your full business case,
project is feasible. For example, a product might solve especially for smaller projects.
a customer’s problem and provide them a lot of benefit,
but it might also be too expensive for them to afford.
Key Metrics • Why might a lean approach be an

The key metrics relate to the most important advantage in initiating a project?
deliverables and milestones of the project. For • When do you think a lean approach would
example, if you are creating a new, lighter surfboard, be an advantage? When would it not be an
a key deliverable might be that you want to know how advantage?
many boards you would need to sell at a certain price
• Why can the Lean Canvas not replace a proper
for your business to make a profit.
project plan?
• Would you choose to use a Lean Canvas for
your full business case, or only for writing a
draft? Why?
“ An advantage of the Lean Canvas

is that it is very easy to revise.”

2.4.2 Using the Lean Canvas to Monitor and Revise a Business Project
An advantage of the Lean Canvas is that it is very easy to revise. This makes it useful as a replacement for a full
business case. Remember that any changes to the project which are outside set tolerances mean that you must
revise the business case. It is thus much easier to revise a Lean Canvas than it is to rewrite a full business case.
For example, let’s say that your Lean Canvas only contains a minimum viable product. When you started the
project, you started with a minimum viable product because you might not have been sure it would work, or you
were not sure what other features the final product would have. In this case you have a definite aim for your project,
but you have not yet worked out all the details. From the point of view of a project manager, this creates a risk of
‘scope creep’. Since you have not specified what the final product will look like, you might just keep adding features
and the project will never end, or the cost of making the final product may outweigh the benefits.
HEI TAUIRA:
Example: Hangman Surfboards
T ene makes custom surf oards. He has been with no artwork. He builds one and then lends it to
making them for quite a few years, and they are some of his friends to try out.
very popular. However, he knows that many casual
The friends like the idea, but they think that the
surfers want lighter, cheaper boards.
board is still too big, and the shape is not quite right.
T ene decides to start a project to design a series T ene goes back to his lean canvas and revises
of light, cheap boards. He creates a Lean Canvas to his product, price, and costs. Eventually after many
help him focus his idea and to draft a business case redesigns, he has a board that people in his target
to show his silent artner T ene ill e the onl market seem to like.
person working on the project, and it has no definite
T ene looks at his workshop. In the corner is a big
timeframe, although he would like to be finished in
folder with all of this old Lean Canvases in it. He
under a year.
takes them out to see how the project has changed
His canvas identifies the customer segments he over time. He realises that his original idea was
is interested in. These are people who do not surf quite far from where the project is now.
very often, younger and older people who have less
However, while his friends all like the oards T ene
money to spend on a board, and smaller people who
has made, they say they would not buy one. They
want a lighter board.
all have surfboards that are good enough, and they
T ene’s solution is just to create a board that will think that his boards need something more T ene
suit all of these people. He shows his Lean Canvas decides to try developing a new brand for the boards.
to his business partner, but the partner refuses to He hires a local artist to produce some New Zealand
approve the roject He thinks that T ene needs to designs. This will increase the price of the boards,
do more market research before he starts to design but they will also stand out more. Again, he revises
the board. At resent T ene is just going ith his his Lean Canvas to reflect this.
feelings about what people would want.
Eventually T ene and the artist get it right He
fter doing some market research T ene has a begins making the boards for sale. The New Zealand
good idea of the size, weight, shape, and price of the artwork attracts a lot of people and he can charge
board he needs to design. His partner approves the a higher price than he had first thought. He picks
roject so T ene mo es on to lanning the ork. up the very full folder of old Lean Canvases. The
As he will be working by himself, but still has other project has changed a lot as he tested his products
duties, he designs a work schedule that will give with real-world customers, but he learned a lot from
him enough time to work on the boards while still the experience and he thinks he will be able to do it
running the business. He decides to start by creating quicker next time.
a minimum viable product. This is a plain board

The example of Tīpene shows that the best way to Monitoring

reduce the risk of some projects is to keep testing
The Lean Canvas not only makes it easy to change
the product with customers. Over time, the product
your project, but also to keep track of the changes you
improves to the point where it can be sold. If Tīpene
have made. In this way, it can be an important part of
had written out a detailed plan for each and every
your Project Management Information System. If you
design he had tried, he might have spent well over a
keep copies of older versions of the Lean Canvas, you
year working through the process. A lean approach
will be able to see how the project has changed over
meant he did not have to do this. Instead, he could
time. Keeping older versions can also be very helpful if
make small, customer-led changes to his project until
you find you have made a mistake. You will be able to
he got the right result.
go back to where the change was made and start again.
However, Tīpene would also need to be careful to set a
For example, in the example of Tīpene, if he had
budget and some time limits for this process. Although
made a series of boards that became more and more
he is testing his product with his stakeholders and
unpopular with his testers, he could have gone back
identifying a solution which will meet their needs,
through his canvases to see where that started. He
there are risks involved. In particular, the changes
could then have found the change that had caused it
to his project (such as the addition of artwork) could
and done something else instead.
increase the costs to the point where the solution
could not be offered at a price agreeable to customers. Even so, the Lean Canvas cannot replace every project
Furthermore, in his case, he was doing the work in management tool. For example, it will not be much
his own time. If he had instead needed to employ use in creating a work plan or a schedule. It may not
other people, the project would have been much more be suitable for every project, but its simplicity and
expensive – he could have run out of money before customer focus make it an option worth considering.
developing an acceptable board.
The lean approach is not right for all projects. If you Discussion Questions:
have a very good idea of what you want the end result
of the project to be, it is better to use the normal • Can you think of some kinds of projects
method. On the other hand, if you think that the that do not need a lot of revisions? Would the
project is likely to change, and you will need to test Lean Canvas be useful for these projects?
your product or service many times to get it right, the • Do you think the lean approach works well for
lean approach might be useful to you. Tīpene? Why or why not?
• If you used a Lean Canvas as part of your project
management information system, would it be
enough? What else might you have to include?
Key Points
The Lean Canvas can be used to help write the business

case for a project.
It can also be used instead of a full business case. This

can be very useful when the final product of the project is
not yet clear.
The Lean Canvas is easy to revise. This makes it very

useful for projects that might experience a lot of scope
change.

2.5 Using the Lean Canvas to

Monitor a Business Plan Project
In this programme, your main project is to produce a
full business plan. This is to be treated as a project.
The contents of the business plan are set out in the
Business Plan Template resource provided with this
Kōnae Ako. While the Lean Canvas can be used to
help create a business plan, you can also use it to help
you monitor and review your full business plan as you
develop it. This can work in one of two ways:
1. Start with the Lean Canvas. You create your

business plan using the Lean Canvas, use what
you have in the Lean Canvas to develop the parts
of your full business plan (Strategic Profile, Internal
Analysis, and so on). You then update the Canvas
with the new information you get from writing
those parts. For example, after completing the
Financial Analysis, you would update the costs and
revenue boxes.
2. Start with the full business plan. If you do not

want to use the Lean Canvas to help create your
business plan, you can still use it to monitor and
review your progress. You just fill in the sections of
the canvas with your best guesses and as you work
on each part of the business plan, you then revise
that part of the canvas.
The Lean Canvas gives you a quick way of seeing

your whole business plan ‘at a glance’. It shows the
basic framework of your business model. The parts
of the business plan that correspond to parts of the
Lean Canvas are shown in Figure 22. Each part of the
business plan makes some contribution to a box on
the Lean Canvas and vice versa.
For example, your Strategic Profile sets out the overall

aims of your business as well as its organisational
culture and values. This is likely to affect what you write
in the UVP and Solutions boxes for several reasons:
• The purpose (or vision or mission) for your business

is likely to be related to solving customers’ problems.
• Any solution you offer must be in line with your

values and the way you want to do business.
• Your solution, together with your unique value

proposition, need to be able to allow you to reach
your business goals.

Figure 22: Relationship between the Lean Canvas and the Business Plan
NGOHE:
Refer to Figure 22. Identify how each box in the Lean Canvas relates to the parts of the business plan
listed. For example, identify how the business ‘Channels’ relates to the External Analysis and the
Marketing Plan.
It is important to understand that the various parts of the Lean Canvas affect each other. The same is true of the
business plan.
For example, in the Lean Canvas, the cost and revenue boxes depend on each other. This is because the revenue
you make from selling your product or service must be enough to cover your costs, at least in the medium to long
term. In the same way, if you have a financial key metric, it will be related to the cost and revenue structures of your
business. If you aim to make a certain number of sales or make a certain amount of money in a particular period of
time, you might have to adjust your cost and revenue structures.
In the same way, the parts of the business plan depend on each other. For example, your marketing plan and
financial plan are related. If you change your marketing plan to use a more expensive form of promotion, this must
be reflected in your financial plan. Furthermore, if the more expensive form of promotion is expected to increase
sales considerably, this may also affect your operations plan and human resource plans (as you may need more
equipment and staff to handle the increase in sales).
What all of this means is that a business plan is not a series of independent documents. Each part of the plan
affects the other parts. Sometimes you might learn new information which means you will have to go back and
make changes to earlier parts of your business plan. Since the Lean Canvas presents your whole business plan on
one page, it is the perfect tool to help you do this.

HEI TAUIRA:
Example: Robyn
Robyn wants to start her own business creating adds better information to the canvas, she uses a red
jewellery made from seashells and polished stones. marker. When she looks at the canvas, she can see
She has a basic business idea which she wants to how far she has got with her business plan by seeing
write a full business plan for. Robyn has never run how much red writing there is. She can also easily
a business before, so she does not know what to see the parts that are not red: these show where she
expect. She decides to use the Lean Canvas as the has to do more work on her business plan.
framework to guide and review the development of
Later on Robyn has completed her Strategies, Legal
her business plan.
Plan, Marketing Plan, and Financial Plan. While she
Robyn starts by buying a large whiteboard which is doing this, she updates her Lean Canvas with the
she fixes to the wall of her home office. She then new information. As she finishes the financial and
draws a Lean Canvas on the board. She fills in her marketing plans, she finds out that her business will
best guesses. cost more to run than she thought. In particular, the
costs of advertising and promoting her business will
Over the next few weeks Robyn works hard on her
be more expensive if she wants to meet the sales goals
business plan. She completes the Strategic Profile
she has written in the ‘Key Metrics’ box of her canvas.
and the Internal and External Analyses. When doing
her external analysis, she discovers that she was Robyn can think of several responses. One is to
wrong about the size of the market for her product. target a wealthier segment of customers, which
In fact, it is likely to be at least twice as large as would allow her to increase her price. Another is
she had originally thought. She also finds out that, to only sell online, as this will reduce her costs.
although she has very few direct competitors, she Alternatively, she could cut back her sales target.
has many indirect competitors. She realises that this The more she thinks about the problem, the more
means she may need to be careful about the prices options she comes up with.
she charges – if they are too high, customers may
Rather than going back and revising her earlier
simply use an alternative. Robyn realises that she
business plan documents, she uses the Lean Canvas
needs to work more on her unique value proposition
to figure it out. She tries various ideas by changing
to ensure customers are willing to pay a high-enough
the boxes in the Canvas and seeing what effects the
price to make the business profitable.
changes have on the business model as a whole. After
Robyn takes her findings and uses them to update four or five tries, she is happy and then starts revising
her Lean Canvas. She has to make changes to her earlier business plan documents. Robyn is glad
many boxes on the canvas, including the Customer she had the Lean Canvas. It allowed her to collect
Segments, Unfair Advantage, Unique Value her thoughts and work out where she was going,
Proposition, and Cost and Revenue boxes. As she without having to shuffle through huge piles of paper.
Discussion Questions: Key Points
The Lean Canvas can be used as a framework to guide

• Refer to the example of Robyn. Why does you in writing your business plan and help you review it.
using the Lean Canvas make it easier for Robyn? The parts of a business plan depend on each other,
as do the parts of the Lean Canvas. Making a change
• Why do the boxes in the Lean Canvas depend
to one part often means you have to make changes to
on each other? Can you give some examples?
another part. Using the Lean Canvas to figure out the
• How often do you think you might have to revise effects of changes you are considering can save you time.
your business plan documents? What kinds of The changes you make to your canvas – once you
information might make you want to do this? are happy with them – will guide you in writing the
necessary changes to your business plan documents.

References
Humphreys, L. (2013). Liber8 Your Business: The revolutionary business planning technique that will set every small
business owner free. Liber8me.
International Finance Corporation. (January 2012). Interpretation Note on Small and Medium Enterprises and
Environmental and Social Risk Management. Retrieved 26 May, 2017 from http://www.ifc.org/wps/wcm/
connect/topics_ext_content/ifc_external_corporate_site/ifc+sustainability/learning+and+adapting/
knowledge+products/publications/publications_policy_interpretationnote-sme
Investopedia.com. (n.d.). Opportunity Cost. Retrieved 3 July, 2017 from http://www.investopedia.com/terms/o/

opportunitycost.asp
Larson, Honig, Gray, Dantin and Baccarini. (2014). Project Management: The Managerial Process. North Ryde, NSW,
Australia: McGraw-Hill.
Maurya, A. (2013, Jan.). Capture your Business Model in 20 Minutes-Lean Canvas [Video File]. Retrieved 31 May,
2017 from https://www.youtube.com/watch?v=7o8uYdUaFR4
Ministry of Business, Innovation & Employment. (May 2016). Small Business Factsheet. Retrieved 25 May, 2017
from http://www.mbie.govt.nz/info-services/business/business-growth-agenda/sectors-reports-series/
pdf-image-library/the-small-business-sector-report-and-factsheet/small-business-factsheet-2016.pdf
Ministry of Business, Innovation & Employment. (2014). The Small Business Sector Report 2014. Retrieved 25 May,
2017 from http://www.mbie.govt.nz/info-services/business/business-growth-agenda/pdf-and-image-
library/2014/The%20Small%20Business%20Sector%20Report%202014%20-PDF%208.8%20MB-1.pdf
Organisation for Economic Co-operation & Development. (2005). OECD SME and Entrepreneurship Outlook: 2005.
Paris, France.
Project Management Institute. (2013). A Guide to the Project Management Body of Knowledge (PMBOK Guide). (5th
ed.). Newtown Square, Pennsylvania, USA: Project Management Institute.
Project-Management-Knowledge.com. (n.d.). Project Management Information System. Retrieved 31 May, 2017 from
https://project-management-knowledge.com/definitions/p/project-management-information-system-
pmis/
Statistics NZ. (2016). New Zealand Business Demography Statistics as at February 2016. Retrieved 25 May,
2017 from http://www.stats.govt.nz/browse_for_stats/businesses/business_characteristics/
BusinessDemographyStatistics_HOTPFeb16/Data%20Quality.aspx

NOTES



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He mea tuku nā:

He Mahere Whakahaere i te Pakihi Level

– Business and Project Planning 4

Tauira use of reference materials

Special Boxes and Icons 2

1.0 Introduction to Planning for Small Business 5

1.1 Introduction to Small Business and Entrepreneurship 6

2.0 Introduction to Project Management and the Lean Canvas 35

2.1 Projects and Project Managers 37

KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning 3

Kōnae Ako 1 Outline

Learning Outcomes Covered

1. Develop a project plan

• K1A1: He Mahere Pakihi – The Business Plan Project

KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning 1

Special Boxes and Icons

Explanations of each of these features are as follows.

A definition box is used to explain an unfamiliar term or piece of language.

“Life itself is a quotation.”

- Jorge Luis Borges

Although these quotes might be amusing, their real

2 KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning

Discussion Questions: USEFUL WEBSITES:

KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning 3

4 KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning

Business Plan (mahere pakihi): A document

Business Terms in Aotearoa. (2012).

In the first part of the section, we outline what

Lastly, in the third part of this section we will look at

Learning Outcome Covered Starting your career as an entrepreneur can be an

1.1.1 What is an SME?

The most commonly used definition of an SME is the

1 Statistics New Zealand. (2016).

6 KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning

Figure 1: Indicators for SME Definitions 3

Indicator Micro-Enterprises Small Enterprises Medium Enterprises

Small Business (pakihi pakupaku): A business with fewer than 20 employees.

The Ministry of Business, Innovation and Employment (MBIE). (2014).

SMEs by the Numbers

KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning 7

1.1.2 Small Businesses in New Zealand

Figure 2: Number of Enterprises in New Zealand by Size 6

This table shows that 98.9% of businesses in New

To be ‘economically significant’ a business must meet

• has annual expenses or sales (on which GST is

8 KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning

Figure 3: Small Businesses in New Zealand 7

The Ease of Doing Business in New Zealand

Figure 4: The Easiest Economies to do Business 8

Economy Ranking Economy Ranking

KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning 9

This ranking considered the ease of starting up a

1.1.3 Entrepreneurship • Someone who creates new products or services.

To others, however, an entrepreneur is a clever and

Someone may consider that anyone who runs

10 KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning

Entrepreneur vs. Small Business Owner

Figure 5: Small Business Owners and Entrepreneurs

Discussion Questions: What Does It Take to Be a Successful

Being successful in business depends a lot on your

KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning 11

if they are going to take risks. They also have to be Self-control

As an entrepreneur, you will need to have, or be willing

12 KŌNAE AKO 1: He Mahere Whakahaere i te Pakihi – Business and Project Planning