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
Particularly if you are seeking capital of less than $200,000, consider creating the
Consider taking a three-hour
- First of all, because you can. If you’ve read sample
business plansand 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 planningprocess that you develop analytical thinking skills necessary to run your businesswith an intimate understanding of your own business model. Going through the planningprocess is an invaluable businessexperience.
- 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?”
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
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 planningis 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 planningis 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 planprocess 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
- How many
business planshave you written for my type of business? How many of them were funded?
- How much time will you need of mine during the planning process?
- When will the plan be completed, and how many drafts should I expect to see and have the opportunity to comment on?
- Will you be writing the plan yourself or do you have associates who do the work with you?
- 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?
- How do you work in collaboration with my partners and advisors so their input is taken into consideration during the writing of the plan?
- Do you do the market research and the financial spreadsheets, or are those things done separately (and charged for separately)?
- Does your price include revisions or customization for certain types of funding (to include different information needed by investors versus lenders)?
- Does your price include coaching to prepare me to talk with lenders or make financing presentations?
- 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.
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 planningconsultant recommendations, or better yet, talk with someone who had a good experience having a business planwritten 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
planthat is a roadmap of everything you need to do to have a successful business. That isn’t the purpose of the business planningprocess. A traditional business planis intended only to document your strategies for the businessvery 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 planfrom a poor businessmodel. If your costs are too high to make your businessprofitable, the business planningprocess 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 planningconsultant is a skilled professional, not a miracle worker. A good business plancan help you highlight your strengths and minimize your weaknesses, but it cannot make an unworkable businessmodel into a thriving business.
And one final thought: Don’t go on to start a
Source by Jan B. King