Should You Write Your Own Business Plan ?

Jul 31 21:00 2004 Jan B. King Print This Article

Should You Write Your Own Business Plan?If you are just starting a company and looking for funding, or looking for ... funding for growth, you will need to develop a ... business plan.

Should You Write Your Own Business Plan?

If you are just starting a company and looking for funding,Guest Posting
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.

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About Article Author

Jan B. King
Jan B. King

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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