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You’ve decided you need
a business plan, but you’ve
been struggling so much with it
that you’re ready to drop
the whole thing. Now may be the
time to ask yourself: should I
complete the plan by myself or
should I hire a consultant? If
you decide to hire a consultant,
what skills and qualifications
should you look for? What services
should they provide? Finally, how
much should you expect to pay?
Let’s explore the answers.
How
serious are you about the business? If
you are just toying with an idea,
or have not invested much time
in research and planning, you
may not be ready to think about
a business plan. If you aren’t
committed to your business idea,
you will just be wasting everyone’s
time --- and your own money ---
by hiring a consultant at this
stage.
Which
is more precious to you: your
money or your time? This sounds like
a silly question, but it really
isn’t. Many entrepreneurs
are unemployed or underemployed,
and have lots of time but very
little money. In that case, you
must be judicial about the level
of service you will need from a
consultant. If you are a good writer,
you can simply hire a consultant
to guide and advise you, but do
most of the writing yourself. This
is an excellent use of your hard-earned
money and will always be a good
investment as long as you choose
a real professional who understands
your business. Keep in mind that
good consultants are in high demand
and charge accordingly. It is far
better to budget for the planning
phase and only hire someone good
when you can pay their fees, rather
than hire someone who doesn’t
know what they are doing and waste
your money.
On the
other hand, if you are fully
employed, or have significant
funds, you may be in the enviable
situation of having more money
than time. In this case, you should
definitely hire a consultant to
guide you through the business
planning process, and maybe even
write the business plan for you.
However, if you want a useful business
plan, recognize that you still
need to be involved at every step
of the process, and understand
everything in the plan --- from
the mission statement through the
exit strategy. Otherwise you’ll
just end up with a very expensive
paperweight.
Have
you ever started a business before? If not, then you should
definitely consider hiring someone
to help you develop the concept,
research the market and competition,
construct realistic financial projections,
and help you explore some of the
risks involved. Furthermore, any
business plan consultant worth
his or her salt will be able to
provide some guidance in setting
up your company, finding office
or retail space, etc. Generally,
the consultant will refer you to
trusted experts in each subspecialty
(legal, real estate, accounting,
insurance, etc.), or at least steer
you in the right direction.
Do
you need to obtain bank financing
or other investment capital to
start the business? This is an
area fraught with peril because
you generally get only one shot
when it comes to investors. If
they don’t like what they
see the first time, they usually
move on to the next opportunity.
A professional consultant can increase
your chances of getting funded,
and your likelihood of succeeding
once you get funded. The key here
is to make sure the plan is based
on reality, not fantasy.
What
is the market potential for your
business idea, and how much of
that market do you want to capture? If the market is very large (say
billions of dollars), and you want
to grow the business to a sizeable
percentage of this, then the risk
of not getting things right from
the beginning far outweighs the
small cost of hiring a consultant
to make sure you get it right.
This is the one case where it never
makes sense to “do it yourself”.
The key, however, is to hire someone
who really adds value.
If you decide you need some professional
help, then you need to consider
a different set of questions.
What
should you look for when you
hire a professional consultant? First, and foremost, make sure
they really are professionals.
Look for the following:
- Do they have a credible website?
- Are they incorporated?
- Do they do this for a living, or
is it just a hobby?
- Do they have satisfied clients
and will they refer you to these
clients?
- Do they understand your business?
If the
answers to all of these questions
are “yes”,
then you might be in luck.
Do
you feel comfortable with this
person or group? The most successful
arrangement is “collaborative”.
You need to have some give and
take with the consultant. You should
feel comfortable asking questions,
and the consultant should be willing
to answer your questions. If not,
it just won’t work. Beyond
that, you need to trust this person
(or group). If you feel they are
playing games or don’t listen,
then walk away.
The same
holds in reverse. If you withhold
information from the consultant,
don’t return
phone calls, or play some other
sort of game, then you are wasting
your time and money.
How
many people will work on your
business plan? If the answer is “one” then
you may not get the highest quality
work. No single individual excels
at everything. In my experience
the best results come when you
have one person driving the project,
but 2-3 others (with different
skill sets) also involved. This
is a case where you need one executive
chef, but too many cooks spoil
the broth.
What
should you expect to pay? A professional
business plan consultant will
generally charge between $3,000
and $15,000 for a complete business
plan (although there are cases
where $50,000 is justified). The
low end applies for “simple” businesses
such as a pizza shop, a small retail
store, a hairdressing salon, etc.
If your business plan involves
new or complicated technology,
unusual or multiple revenue streams,
or requires significant investment
capital, you should expect fees
at the higher end of this scale.
Often I find clients come to me
claiming their plan is “simple”.
Once we start digging into the
details, we find things are a little
more complicated than they thought.
A good consultant will have enough
experience to figure out a way
through the complexity and identify
one or more possible solutions.
How
can you save money and still
ensure high quality? The key is
to figure out what you know, and
what you are good at. Then have
a consultant help fill in the gaps.
For instance, suppose you have
a strong background in sales and
technology, but have little expertise
in marketing and finance. Then
you should find a consultant who
excels in marketing and finance.
Of course they still need to understand
almost everything about the business,
but if you can focus on what you
do best and have them fill in the
gaps, you will save yourself some
money and also end up with a much
stronger business plan than if
you did everything yourself.
Andrew Clarke
is the CEO of Ground Floor Partners,
a business consulting firm that
helps early-stage, small and middle-market
businesses grow through design
and execution of sound business
strategies.
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