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Should_You_Write_Your_Own_Business_Plan_
| Should You Write Your Own Business Plan ?
Should You Write Your Own Business Plan?
If you are just starting a company and looking for funding, or
looking for additional funding for growth, you will need to
develop a traditional business plan. Creating a business plan is
a business hurdle that entrepreneurs seem to dread. Do you do it
yourself? Do you hire someone to do it? How do you get it done
quickly, but without spending too much money on it? Will what
you do yourself be adequate to get funding?
In this article I will discuss the pros and cons of
do-it-yourself business planning versus having a business
planning consultant do it for you or with you.
The Do It Yourself Business Plan
Particularly if you are seeking capital of less than $200,000,
consider creating the plan yourself after taking a class or
reading some books or getting some coaching for someone who has
written successful business plans.
Consider taking a three-hour business planning class through
SCORE or the local Small Business Development Center. Even if
you decide afterwards not to write your own plan, you will have
a much better idea of what you want out of the process and what
to expect.
There are some good reasons for an entrepreneur to do the
business plan:
•First of all, because you can. If you’ve read sample business
plans and find their accounting jargon intimidating, you are not
alone. But as long as you can clearly get your message across
and have other people such as you accountant look at the plan
before it goes to lenders or others, you can do this work
yourself.
•It is in learning the business planning process that you
develop analytical thinking skills necessary to run your
business with an intimate understanding of your own business
model. Going through the planning process is an invaluable
business experience. •You need to know the plan inside and out
and really understand the variables involved. You are the one
who will be asked the tough questions by potential investors or
lenders, such as “What will you do if only half your expected
revenue comes in?” or “What will you do if you find out that
direct mail is not working for you as your primary marketing
tool?”
Outsourcing the Business Plan Process
Entrepreneurs are fire fighters. One of the most important jobs
of an entrepreneur is to manage time, and do those things that
you are best skilled to do. Many entrepreneurs decide to hire
someone else to do their business plans, often because they have
an urgent need for the funding and can’t afford the learning
curve to be able to develop a high-quality plan that will meet
the needs of lenders or investors.
In addition, if your funding requirements are more than $500,000
my recommendation is to get some professional help with this
project, even if you do some of it yourself.
Some reasons to consider hiring a consultant:
•It will get done! Business planning is done much faster with
someone who knows the process. Every entrepreneur has good
intentions about getting plans completed, but months later they
still haven’t done all the work. Planning should be high
priority work, but it is hard to get to when customer calls and
employee problems require immediate attention. The sooner the
plan is completed, the sooner funding can be attained. And the
price of hiring the consultant will be small in comparison with
the increases in growth and profitability of the business. •It
will get done in a way financial professionals will respect.
Business planning is done better by someone who knows how
finance people look at plans and what they will and won’t
question. Once you’ve been through the business plan process
many times, you know what it takes to get funding - what to
emphasize and what to play down. •The consultant’s objectivity
will allow for non-emotionally-based projections and
expectations for the business. A consultant will be much more
objective in the process and question your assumptions, making
it less likely that the business will have problems after the
funding comes in.
No matter what, don’t let a business planning consultant talk
you into putting any information into your plan that you aren’t
comfortable with. If it doesn’t look right to you, it probably
isn’t. It is your business, and you will be stuck with the plan
long after you’ve paid the consultant’s bill. Make sure it is
the plan that you want, one that matches your goals and
objectives, and captures the way you look at business and the
spirit of your company.
If you do decide to hire a business planning consultant, here
are some of the important questions to ask to make sure you get
the greatest value from your investment:
1.How many business plans have you written for my type of
business? How many of them were funded? 2.How much time will you
need of mine during the planning process? 3.When will the plan
be completed, and how many drafts should I expect to see and
have the opportunity to comment on? 4.Will you be writing the
plan yourself or do you have associates who do the work with
you? 5.Will there be an opportunity for you to present the plan
or for me to present the plan to my other advisors before the
final draft is done? 6.How do you work in collaboration with my
partners and advisors so their input is taken into consideration
during the writing of the plan? 7.Do you do the market research
and the financial spreadsheets, or are those things done
separately (and charged for separately)? 8.Does your price
include revisions or customization for certain types of funding
(to include different information needed by investors versus
lenders)? 9.Does your price include coaching to prepare me to
talk with lenders or make financing presentations? 10.Will I
have an electronic version as well as a hard copy version of the
final plan (so I can make changes later if I need to)?
The Optimum Solution: A Blended Approach
At best, the planning process should not be at either end of the
spectrum, but squarely in the middle. In my experience, plans
that win funding come from a true collaboration between a
skilled consultant/facilitator and the entrepreneur’s team of
employees and advisors.
A business planning consultant can act as a coach, first
assessing the job to be done, and then recommending who is best
to do it. The business plan should be a compilation of work
between the vision and goals of the entrepreneur, the technical
understanding and expertise of his or her accountant and other
professionals, a consensus of employees or others, and the
research and writing abilities of the business planning
consultant. The consultant should meet with all parties
involved, talk about what is needed for the plan, and use all
the resources available to get the work done as quickly and cost
effectively as possible. It is the consultant’s responsibility
in the process to take all the pieces and make the final plan
into a readable, accessible document that will stand up to
investor/lender scrutiny. My final caveats:
•Don’t pay more than a few thousand dollars for a plan unless
you are looking for capital of well over $1 million. I have
heard more than a few horror stories by people who have hired
university professors assuming they are the experts (they
aren’t) and paying tens of thousand of dollars for a poorly
written or incomplete plan. Ask your banker for business
planning consultant recommendations, or better yet, talk with
someone who had a good experience having a business plan written
for them. It is reasonable for a consultant to expect you to pay
half of the fee up front and the other half at the completion of
the plan. And you can’t hold the consultant responsible if you
don’t get funding based on the plan – too much is based on your
own credit and management skills.
•Don’t expect to get a finished plan that is a roadmap of
everything you need to do to have a successful business. That
isn’t the purpose of the business planning process. A
traditional business plan is intended only to document your
strategies for the business very briefly – but well enough to
get funding. If you are hoping for something that will tell you
how to market or how many people you need to hire, you will have
to start with a deep strategic planning process, and probably
buy lots of consulting time to get you going.
•Don’t expect a great a business plan from a poor business
model. If your costs are too high to make your business
profitable, the business planning process will help you discover
that. Then it will be up to you to make the hard decisions about
changing your costs structure to make the business work. The
business planning consultant is a skilled professional, not a
miracle worker. A good business plan can help you highlight your
strengths and minimize your weaknesses, but it cannot make an
unworkable business model into a thriving business.
And one final thought: Don’t go on to start a business or make
changes in your current business if everything in the business
planning process tells you it won’t work. Things don’t get
better out in the real world if they don’t work on paper. Deal
with the weaknesses – get more training, consider product
redevelopment, or have a home-based business to reduce costs
until you can sustain the rent for an office. Businesses fail
finally because they’ve run out of money. If your plan tells you
that you can’t make enough money to make the business work for
the long run, pay attention to that reality.
About the author:
Jan B. King is the former President & CEO of Merritt Publishing,
a top 50 woman-owned and run business in Los Angeles and the
author of Business Plans to Game Plans: A Practical System for
Turning Strategies into Action (John Wiley & Sons, 2004). She
has helped hundreds of businesses with her book and her ebooks,
The Do-It-Yourself Business Plan Workbook, and The
Do-It-Yourself Game Plan Workbook. See www.janbking.com for more
information.
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