What type of Business Plan?
We get often asked about what “Type” of business plan we develop as if there is a specific number of layouts and formats. This is a common misconception of the entire process inherited from the DIY approach. A Business Plan can be as simple as wobbled financials on a cocktail napkin with lipstick stains on a side or as a complex as 1000-pages implementation guide. It all depends on the need and purpose of the plan.
Who will read it?
To identify the information to be included and the structure on how to portrait such information, it helps a lot to start with the simple question: What is it for? This question encompasses the purpose and the reader. And, as you can imagine, the possibilities are infinite. Financing, organizing ideas, finding a partner, hiring key team members, launching a new product / service, closing a division, opening a new location, quitting my day job, hiring my brother, buying a major equipment, and so on.
In any event, a Plan is needed. Now, do we need an external firm to prepare it for us? It all depends on the purpose. If the plan involves investment of resources – money and/or equipment, most likely we need an external firm to objectively analyze the situation.
ENTREPRENEURS – INCLUDING MYSELF, TEND TO INCLUDE EMOTIONS INTO BUSINESS DECISION.
Entrepreneurs – including myself, tend to always include emotions into decision making, especially when the decision involves expansion of operations.
This is the most important reason to include an external firm in the process. Let’s not forget that you are the expert in your particular field; however, you need an anchor to bounce back and forward your ideas. An anchor that will not move as you go. By doing this, you avoid running into a brick-wall when facts kick-in with situations you did not expect. We often fall in love with an idea, is it really a good idea?
In my case, my anchor is my German-style partner, she quite often manages to be realistic and well-grounded while I am always flying and finding positive ways to implement an idea. And still in some occasions, we both agree we need an external entity, a cold-head individual to help us see the forest. Yes, we specialize in Business Plans and we still need an external entity to help us plan our operations every now and then.
The involvement of the external firm is usually flexible. Besides preparing 100% of the plan, we have been contracted to review facts and financial mechanics and to administer “acid” tests to verify consistency and feasibility to avoid curveballs when pitching the idea to a potential investor. We have also been required to manage multidisciplinary teams within a joint venture to effectively prepare a sound business plan utilizing their expertise and knowhow.
The time to involve the external firm is optional; however, I think it is far more efficient to involve it from the get-go. The sooner the better. You don’t want to have all your research ready, financials almost complete, hours of time dedicated to the project and when presented to the panel you realize it did not hold the very first question. So you have to go back to the drawing board.
In any event, a Business Plan is designed to foresee as much as we can any situation when implementing an idea. There are many techniques and methods to estimate future market conditions. 100% accurate? absolutely not. But even if you are 51% right, it is much better that 50-50% of going blind. Therefore, a Business Plan is a must. Even those that claim that business plans are a waste of time, have some sort of plan. Maybe in their heads, but a plan that is.