| 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 need | | | | the 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 do | | | | many 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 planning | | | | present the plan or for me to present the |
| versus having a business planning consultant | | | | plan 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 of | | | | into consideration during the writing of the |
| less than $200,000, consider creating the | | | | plan? |
| 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 business | | | | financial 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 local | | | | customization for certain types of funding |
| Small Business Development Center. Even if | | | | (to include different information needed by |
| you decide afterwards not to write your own | | | | investors 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 read | | | | I can make changes later if I need to)? |
| sample business plans and find their | | | | |
| accounting jargon intimidating, you are not | | | | The Optimum Solution: A Blended Approach |
| alone. But as long as you can clearly get | | | | |
| your message across and have other people | | | | At best, the planning process should not be |
| such as you accountant look at the plan | | | | at either end of the spectrum, but squarely |
| before it goes to lenders or others, you can | | | | in 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 planning | | | | the entrepreneur's team of employees and |
| process that you develop analytical thinking | | | | advisors. |
| skills necessary to run your business with an | | | | |
| intimate understanding of your own business | | | | A business planning consultant can act as a |
| model. Going through the planning process is | | | | coach, 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 and | | | | work between the vision and goals of the |
| really understand the variables involved. You | | | | entrepreneur, the technical understanding and |
| are the one who will be asked the tough | | | | expertise 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 your | | | | others, and the research and writing |
| expected revenue comes in?" or "What will you | | | | abilities of the business planning |
| do if you find out that direct mail is not | | | | consultant. The consultant should meet with |
| working for you as your primary marketing | | | | all 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 Process | | | | quickly and cost effectively as possible. It |
| | | | is the consultant's responsibility in the |
| Entrepreneurs are fire fighters. One of the | | | | process to take all the pieces and make the |
| most important jobs of an entrepreneur is to | | | | final plan into a readable, accessible |
| manage time, and do those things that you are | | | | document that will stand up to investor |
| best skilled to do. Many entrepreneurs decide | | | | lender scrutiny. |
| to hire someone else to do their business | | | | |
| plans, often because they have an urgent need | | | | My final caveats: |
| for the funding and can't afford the learning | | | | |
| curve to be able to develop a high-quality | | | | Don't pay more than a few thousand dollars |
| plan that will meet the needs of lenders or | | | | for 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 are | | | | hired university professors assuming they are |
| more than $500,000 my recommendation is to | | | | the 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 done | | | | them. It is reasonable for a consultant to |
| much faster with someone who knows the | | | | expect you to pay half of the fee up front |
| process. Every entrepreneur has good | | | | and the other half at the completion of the |
| intentions about getting plans completed, but | | | | plan. And you can't hold the consultant |
| months later they still haven't done all the | | | | responsible 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 calls | | | | credit 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 the | | | | roadmap of everything you need to do to have |
| price of hiring the consultant will be small | | | | a successful business. That isn't the purpose |
| in comparison with the increases in growth | | | | of 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 financial | | | | very briefly - but well enough to get |
| professionals will respect. Business planning | | | | funding. If you are hoping for something that |
| is done better by someone who knows how | | | | will tell you how to market or how many |
| finance people look at plans and what they | | | | people you need to hire, you will have to |
| will and won't question. Once you've been | | | | start 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 - what | | | | get 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 for | | | | poor business model. If your costs are too |
| non-emotionally-based projections and | | | | high to make your business profitable, the |
| expectations for the business. A consultant | | | | business planning process will help you |
| will be much more objective in the process | | | | discover that. Then it will be up to you to |
| and question your assumptions, making it less | | | | make the hard decisions about changing your |
| likely that the business will have problems | | | | costs 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 planning | | | | business plan can help you highlight your |
| consultant talk you into putting any | | | | strengths and minimize your weaknesses, but |
| information into your plan that you aren't | | | | it cannot make an unworkable business model |
| comfortable with. If it doesn't look right to | | | | into a thriving business. |
| you, it probably isn't. It is your business, | | | | |
| and you will be stuck with the plan long | | | | And one final thought: Don't go on to start a |
| after you've paid the consultant's bill. Make | | | | business or make changes in your current |
| sure it is the plan that you want, one that | | | | business if everything in the business |
| matches your goals and objectives, and | | | | planning process tells you it won't work. |
| captures the way you look at business and the | | | | Things 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 planning | | | | product redevelopment, or have a home-based |
| consultant, here are some of the important | | | | business to reduce costs until you can |
| questions to ask to make sure you get the | | | | sustain 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 written | | | | make enough money to make the business work |
| for my type of business? How many of them | | | | for the long run, pay attention to that |
| were funded? | | | | reality. |