Don't Outsource the Business Plan
One of the most common requests we see coming through our consulting is a budding entrepreneur who wants us to prepare their business plan in its entirety. Often, they are looking for a turn-key plan that they can take straight to an investor or bank.
We can’t…. absolutely can’t express how strongly we advise against this.
Let’s breakdown the why.
When we talk about developing a ‘business plan’, the entrepreneur must conduct a collection of specific investigatory processes that allows them to determine if their idea is feasible. This ‘market research’ helps you decide if there is a market and most importantly if its viable.
Market research consists firstly of the traditional aspects such as market segmentation (researching your target market), looking at market trends, and performing a SWOT analysis; followed by lean methodology and customer development. This discovery process allows you to convert an insubstantial idea into a business model and it can require iteration, steps backward and pivots. This process builds a deep understanding of where the market currently is, where it is going and how an entrepreneur can fit themselves into it. It is essential that a founder is in the middle of this and to outsource this is paying someone to take away your business’ chance at succeeding.
Once you have a business model and a validated customer, you have developed an understanding of the business processes and systems you need to now scale. “Scale’ in this regard could be anything from your new 'SaaS' application to your clothing line going from the Sunday market to a full online content and e-commerce platform. If you understand very clearly what processes, systems, and likely employee roles you will need to succeed, you can accurately cost your growth. Your financial models will be grounded in hard facts rather than arbitrary 5-year projections. Most importantly though is the fact that you will have your hand on the pulse of the business. To understand the processes, means data, and if you collect and action this data, you will create opportunities, organizational inefficiencies, and operational flexibility. Why would you want to outsource this before you even know what you have?
You might be asking, ‘but wait you keep referring to a running business, but the article is about outsourcing the business plan?’
The point we want to make clear is that a business plan isn’t just a document. At least not anymore. You have plenty of other documents to capture the intended purpose of a business plan i.e. feasibility study, investor proposal etc. A business plan now needs to represent a functioning if nascent business model. In our modern age, your market research and customer development needs to represent real data and that holds true for a local barbershop or the next Silicon Valley unicorn. It is because we live in age where it has never been easier to create a business that market trends and competition can move incredibly fast. This uncertainty means investors or banks will generally not commit to a document alone.
What is the role of the outside expert? There must be exceptions, right?
There is nothing wrong with seeking outside expertise. To look at a market closely, to review your business processes, to bring a fresh strategic perspective, or to oversee the roll-out of a new product/service or social media campaign; experts are ‘experts’ because they bring domain knowledge. This is far-removed from handing over the development of your entire business model.
The main argument put forward as an exception is for the entrepreneur who believes they understand the market well, but are also too busy with the many opportunities they are currently juggling and are thus unable to focus on this one alone.
This is a weak excuse.
Realistically, if you can’t commit to developing a business model properly at the exploratory stage, there is absolutely no way you are going to be able to oversee a functioning business. Even in the unlikely event you have the good fortune to stumble upon blind funding for your plan you are merely now going to go through the same process but with so much more opportunity to spend your capital inefficiently.
It comes down to a question of commitment. Without a willingness to work or the driving passion to see it through, the business won’t succeed with or without a business plan.
If you are considering hiring someone to write you a business plan, all we can recommend is self-honesty. If the work deters you, save yourself money until you find something that you are truly passionate about. If you are willing, get out and experiment. Learn and test your idea.
You will quickly realize it couldn’t have been any other way.