April 18, 2013 | 5-minute read (860 words)
I’m going to cut right to the chase here. The answer is no. At worst, these “professionals” are a scam; at best, it’s still a mistake to outsource this important work.
In my experience, startups that succeed are those that wrote their own business plan (with their own blood, sweat, and tears, if need be!) rather than outsource their business plan development to a business plan consultant (not to mention those businesses that don’t think they need a business plan at all...!).
Part of creating a successful business is thinking through your business plan. This means going through the hard exercise of working it out, arguing it out, sorting it out, and writing it down. You may dread this kind of work and think that it’s a better, easier solution to outsource business plan development. While outsourcing many functions (from accounting to legal to financial strategy) does make good sense for early-stage startups, writing your business plan is not one of these functions.
Why’s it so important to create your own business plan?
Quantifies your business and clarifies your goals. This is the beauty of developing your business plan - it forces to you take a step back and quantify the market opportunity, identify competitive advantages, strategize for growth, and really think about the inner workings and potential of your business. It’s up to you and your team to identify the primary goals for your startup—it’s not up to some consultant to tell you what your goals should be. Who understands your company better? You or some hired consultant?
Forces collaboration with your team. Writing your business plan is a collaborative effort in working out your joint vision and mission. If you can’t agree with your team on your product development approach, your marketing strategy, and more, then how are you going to work together to run a successful company? Developing a business plan in-house is a good exercise for you and your team and proves—to you and to your investors—that you are able to reach consensus as a group.
You already know that investors are always very interested in a startup’s management team. Beyond the team’s relevant track record and industry experience, investors will be impressed by a team that proves its ability to work together to develop their business plan.
Positions you to execute on your plan. Your business plan is an essential document, and can seem like a journey unto itself. But the thing to remember is that your business plan is only one step on your journey. Once it’s done, you need to execute. You’re in a better position to execute on your business plan if you’ve taken an active role in its creation. For example, what better way to improve your cash flow then by calculating your burn rate, projected revenue, and capital investment needs? Not to mention, if you can’t even execute the development of your own business plan, what does this say about your potential ability to implement the plan?
Need help reducing your cash burn? Contact Early Growth Financial Services for financial support.
Once you’ve completed the process of developing your own business plan, then it might make sense to consult with a professional with the goal being to get objective feedback. This is particularly helpful if the consultant can wear her “investor goggles” during her review. In other words, it’s most useful to hire a consultant who has a background in investing so they can tell you how your plan will read to a potential investor, where the holes are, what works, what doesn’t. The key is, you need a consultant who has this insight and whom you trust.
Based on this objective feedback, you’ll want to rework your business plan—but, again, you should go through this revision process yourself rather than hand it off.
Having worked with many startups and investors, I know that investors are more impressed with a business plan that shows thought than in one that simply looks polished. Investors want to see the work that went into your finished product. They want to see that you were able to work through the process to reach agreement on such tricky subjects as your financial projections, market segmentation, and revenue streams.
Your business plan needs to be coherent and comprehensive—but it doesn’t need to be pretty. Paying a professional to create your business plan, cheats you out of this important process and, ironically, makes it less likely that you will achieve your business goals.
Having trouble writing your business plan? Tell us about it in comments below or contact Early Growth Financial Services.
David Ehrenberg is the founder and CEO of Early Growth Financial Services, a financial services firm providing a complete suite of financial and accounting services to companies at every stage of the development process. He's a financial expert and startup mentor, whose passion is helping businesses focus on what they do best. Follow David @EarlyGrowthFS.