OL 320 Module 8 Entrepreneurial Risk Discussion example

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This complete OL 320 Module 8 discussion post closes the course by asking a question most business plans avoid: what happens if the key test fails? The composite founder of the adaptive apparel startup has set a preorder target of 100 pairs. The post explains the idea of affordable loss from research on how expert entrepreneurs think, describes three outcomes of the campaign and the response to each, and argues that planning for failure is part of taking a risk well, then asks classmates how they would decide when to stop. The founder is composite; the research is real.

What this page holds

An OL 320 Module 8 discussion reply, about 350 words, on entrepreneurial risk: applying the affordable loss principle to a startup's preorder test, setting responses in advance for success, partial success and failure, and inviting classmates to consider when to stop. Searches like "ol 320 module 8 assignment", "ol320 module 8 entrepreneurial risk discussion" and "ol 320 module 8 example" land here.

The OL 320 Module 8 example, in full

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Module Eight Discussion: Risk, Failure and Knowing When to Stop

Re: What if only forty people preorder?

My opportunity analysis for a composite adaptive apparel startup hinges on one test: a preorder campaign that must sell 100 pairs of pants before the founder borrows money for production. Most plans describe what happens when the test succeeds. I think the more important question is what happens when it does not.

Research on expert entrepreneurs suggests a useful way to think about this. Rather than choosing actions by expected return, many experienced founders decide first how much they can afford to lose and then act within that limit, treating each step as a way to learn (Sarasvathy, 2001). For this founder, the affordable loss is about 15,000 dollars of savings, which is what the design phase and campaign will cost. If the campaign fails, she will have spent money she decided in advance she could lose, and she will know something no survey could have told her.

So the plan sets responses before the results arrive. If 100 or more pairs sell, she proceeds to the loan and production. If 60 to 99 sell, she treats it as a signal to change something, perhaps selling through clinics rather than online, offering one style instead of two, or targeting caregivers, and runs a smaller second test. If fewer than 60 sell, she stops before borrowing, sells the remaining samples and returns to her clinical work with her savings mostly spent but her household secure. Crowdfunding research suggests that campaigns tend to cluster at narrow success or clear failure (Mollick, 2014), so the middle outcome is less likely than it looks.

Deciding these rules in advance protects against the most common trap: continuing because so much has already been spent (Hisrich et al., 2020). It also makes the decision less personal. If the numbers say stop, stopping is following the plan, not admitting defeat, and the knowledge, contacts and prototypes remain useful for whatever comes next.

My question for classmates: for your own business idea, what result would convince you to stop, and did you decide that before or after you started?

What this page is doingThe post applies a research-based concept to the venture's own numbers and sets explicit stopping rules, which shows that planning for failure is part of the plan rather than an afterthought.
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References

Hisrich, R. D., Peters, M. P., & Shepherd, D. A. (2020). Entrepreneurship (11th ed.). McGraw Hill.

Mollick, E. (2014). The dynamics of crowdfunding: An exploratory study. Journal of Business Venturing, 29(1), 1-16. https://doi.org/10.1016/j.jbusvent.2013.06.005

Sarasvathy, S. D. (2001). Causation and effectuation: Toward a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of Management Review, 26(2), 243-263. https://doi.org/10.5465/amr.2001.4378020

How this OL 320 Module 8 example is structured

The post starts from the venture's decisive test and asks what the founder will do in each possible outcome. It introduces affordable loss as a way to think about risk, applies it to the numbers in the plan and ends with a question about stopping rules.

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Share your OL 320 Module 8 prompt and rubric, and a reply on risk, failure or your closing question comes back within 24 to 48 hours; your first is free. The paper above is an original model document written by our desk, not a submitted student paper and not an official Southern New Hampshire University document.

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OL 320 Module 8 questions, answered

What is OL 320 Module 8 usually about?

Entrepreneurship courses often end by reflecting on the entrepreneurial process as a whole, including risk, failure, persistence and ethics, and on what students learned from developing their own opportunity analysis. Discussions may ask how an entrepreneur should respond when a venture does not go as planned.

What is the affordable loss principle?

Affordable loss is an idea from research on expert entrepreneurs: instead of choosing actions by the largest expected return, the entrepreneur decides how much they are willing and able to lose, then acts within that limit. It keeps the downside bearable while still allowing the venture to be tested.

What is a pivot in entrepreneurship?

A pivot is a deliberate change in a venture's strategy, such as its customer, product, channel or price, in response to evidence that the original approach is not working. It keeps what has been learned while changing the part the evidence has disproved.