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Business Plan Basics

If you are just starting a company and
looking for funding, or looking for- How much time will you need of mine during
additional funding for growth, you will needthe  planning  process?
to develop a traditional business plan.
Creating a business plan is a business hurdle- When will the plan be completed, and how
that entrepreneurs seem to dread. Do you domany drafts should I expect to see and have
it yourself? Do you hire someone to do it?the  opportunity  to  comment  on?
How do you get it done quickly, but without
spending too much money on it? Will what you- Will you be writing the plan yourself or do
do  yourself  be  adequate  to  get  funding?you have associates who do the work with you?
In this article I will discuss the pros and- Will there be an opportunity for you to
cons of do-it-yourself business planningpresent the plan or for me to present the
versus having a business planning consultantplan to my other advisors before the final
do  it  for  you  or  with  you.draft  is  done?
The  Do  It  Yourself  Business  Plan- How do you work in collaboration with my
partners and advisors so their input is taken
Particularly if you are seeking capital ofinto consideration during the writing of the
less than $200,000, consider creating theplan?
plan yourself after taking a class or reading
some books or getting some coaching for- Do you do the market research and the
someone who has written successful businessfinancial spreadsheets, or are those things
plans.done separately (and charged for separately)?
Consider taking a three-hour business- Does your price include revisions or
planning class through SCORE or the localcustomization for certain types of funding
Small Business Development Center. Even if(to include different information needed by
you decide afterwards not to write your owninvestors  versus  lenders)?
plan, you will have a much better idea of
what you want out of the process and what to- Does your price include coaching to prepare
expect.me to talk with lenders or make financing
presentations?
There are some good reasons for an
entrepreneur  to  do  the  business  plan:- Will I have an electronic version as well
as a hard copy version of the final plan (so
First of all, because you can. If you've readI  can  make  changes  later  if  I need to)?
sample business plans and find their
accounting jargon intimidating, you are notThe  Optimum  Solution:  A  Blended  Approach
alone. But as long as you can clearly get
your message across and have other peopleAt best, the planning process should not be
such as you accountant look at the planat either end of the spectrum, but squarely
before it goes to lenders or others, you canin the middle. In my experience, plans that
do  this  work  yourself.win funding come from a true collaboration
between a skilled consultant/facilitator and
It is in learning the business planningthe entrepreneur's team of employees and
process that you develop analytical thinkingadvisors.
skills necessary to run your business with an
intimate understanding of your own businessA business planning consultant can act as a
model. Going through the planning process iscoach, first assessing the job to be done,
an  invaluable  business  experience.and then recommending who is best to do it.
The business plan should be a compilation of
You need to know the plan inside and out andwork between the vision and goals of the
really understand the variables involved. Youentrepreneur, the technical understanding and
are the one who will be asked the toughexpertise of his or her accountant and other
questions by potential investors or lenders,professionals, a consensus of employees or
such as "What will you do if only half yourothers, and the research and writing
expected revenue comes in?" or "What will youabilities of the business planning
do if you find out that direct mail is notconsultant. The consultant should meet with
working for you as your primary marketingall parties involved, talk about what is
tool?"needed for the plan, and use all the
resources available to get the work done as
Outsourcing  the  Business  Plan  Processquickly and cost effectively as possible. It
is the consultant's responsibility in the
Entrepreneurs are fire fighters. One of theprocess to take all the pieces and make the
most important jobs of an entrepreneur is tofinal plan into a readable, accessible
manage time, and do those things that you aredocument that will stand up to investor
best skilled to do. Many entrepreneurs decidelender  scrutiny.
to hire someone else to do their business
plans, often because they have an urgent needMy  final  caveats:
for the funding and can't afford the learning
curve to be able to develop a high-qualityDon't pay more than a few thousand dollars
plan that will meet the needs of lenders orfor a plan unless you are looking for capital
investors.of well over $1 million. I have heard more
than a few horror stories by people who have
In addition, if your funding requirements arehired university professors assuming they are
more than $500,000 my recommendation is tothe experts (they aren't) and paying tens of
get some professional help with this project,thousand of dollars for a poorly written or
even  if  you  do  some  of  it  yourself.incomplete plan. Ask your banker for business
planning consultant recommendations, or
Some reasons to consider hiring a consultant:better yet, talk with someone who had a good
experience having a business plan written for
- It will get done! Business planning is donethem. It is reasonable for a consultant to
much faster with someone who knows theexpect you to pay half of the fee up front
process. Every entrepreneur has goodand the other half at the completion of the
intentions about getting plans completed, butplan. And you can't hold the consultant
months later they still haven't done all theresponsible if you don't get funding based on
work. Planning should be high priority work,the plan - too much is based on your own
but it is hard to get to when customer callscredit  and  management  skills.
and employee problems require immediate
attention. The sooner the plan is completed,Don't expect to get a finished plan that is a
the sooner funding can be attained. And theroadmap of everything you need to do to have
price of hiring the consultant will be smalla successful business. That isn't the purpose
in comparison with the increases in growthof the business planning process. A
and  profitability  of  the  business.traditional business plan is intended only to
document your strategies for the business
- It will get done in a way financialvery briefly - but well enough to get
professionals will respect. Business planningfunding. If you are hoping for something that
is done better by someone who knows howwill tell you how to market or how many
finance people look at plans and what theypeople you need to hire, you will have to
will and won't question. Once you've beenstart with a deep strategic planning process,
through the business plan process many times,and probably buy lots of consulting time to
you know what it takes to get funding - whatget  you  going.
to  emphasize  and  what  to  play  down.
Don't expect a great a business plan from a
- The consultant's objectivity will allow forpoor business model. If your costs are too
non-emotionally-based projections andhigh to make your business profitable, the
expectations for the business. A consultantbusiness planning process will help you
will be much more objective in the processdiscover that. Then it will be up to you to
and question your assumptions, making it lessmake the hard decisions about changing your
likely that the business will have problemscosts structure to make the business work.
after  the  funding  comes  in.The business planning consultant is a skilled
professional, not a miracle worker. A good
No matter what, don't let a business planningbusiness plan can help you highlight your
consultant talk you into putting anystrengths and minimize your weaknesses, but
information into your plan that you aren'tit cannot make an unworkable business model
comfortable with. If it doesn't look right tointo  a  thriving  business.
you, it probably isn't. It is your business,
and you will be stuck with the plan longAnd one final thought: Don't go on to start a
after you've paid the consultant's bill. Makebusiness or make changes in your current
sure it is the plan that you want, one thatbusiness if everything in the business
matches your goals and objectives, andplanning process tells you it won't work.
captures the way you look at business and theThings don't get better out in the real world
spirit  of  your  company.if they don't work on paper. Deal with the
weaknesses - get more training, consider
If you do decide to hire a business planningproduct redevelopment, or have a home-based
consultant, here are some of the importantbusiness to reduce costs until you can
questions to ask to make sure you get thesustain the rent for an office. Businesses
greatest  value  from  your  investment:fail finally because they've run out of
money. If your plan tells you that you can't
- How many business plans have you writtenmake enough money to make the business work
for my type of business? How many of themfor the long run, pay attention to that
were  funded?reality.



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