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. (more…)