Why successful startups never outsource their business plan

I’m in the midst of reviewing a book on outsourcing for a big publisher, and just bumped into a line that made me grind my teeth and wail in frustration. The author is recommending that businesses consider outsourcing their business plan development because they’ll “get a better business plan, faster, and at lower cost” than doing it in house.
What’s so maddening is that this is absolutely wrong-headed thinking. Having gone through four startups of my own and as someone involved in dozens more, I can personally guarantee that if you outsource your business plan process, your company will be more likely to fail, not less.

Why would this be the case? Because it’s the process of creating the plan that’s important not the end document. When you share your business plan with an investor or venture capital firm, they want to see something coherent and learn about a smart business, but just as importantly, they want to know that your team can sit in a room and hammer out a single, unified vision of your company, one that covers all the major bases, from marketing to defending your intellectual property, cost of sales analysis to partnership ideas.
And yet, pop over to Google (or even your local Chamber of Commerce) and you’ll find hundreds of companies advertising that they’ll write your business plan for you, that they’ll “help you clarify your business goals” (e.g., come up with their own goals for your company and then tell you to make sure that your business matches their goals, not your own) and that they’ll “help you get funded with a rock-solid business plan.”
Reject these companies. All of them. They are a hinderance, not a help.
About the only part of business plan creation you can safely outsource is unbiased analysis. Once you’re done with your plan, it can be a darn good idea for you to run it past a professional business startup consultant with some background in venture funding or angel investing, because they can give you unbiased feedback on “the investor’s view” of your plan without you wasting the time of a potential investor who probably won’t look at the same bizplan twice. Expect to pay at least $1000 for this service, then take their comments to heart and iterate again.
In the past, I’ve reviewed business plans for various Silicon Valley venture capital firms, stacks of them, “Dave, here’s 50, can you pick the one or two we should bother investigating?” sort of work. My first pass through the stack was always trying to quickly ascertain whether they did their own plan or hired a company to do it for them. You can tell, too: the beautifully laid out documents with margin notes, multiple typefaces, spreadsheets with 3D graphs, etc., are almost always outsourced, and those that are a bit more rough, those are the jewels we were looking for. The companies that forced themselves to stop and quantify their business in a coherent fashion.
It’s really like a Zen Koan, if you will let me get away with this cliché metaphor, but, trust me, the journey is the reward. If you think that having a beautiful printed business plan, perfect bound and with color illustrations is going to impress an investor more than one that your team has sweat over, fought over, and hammered out over time, you’re wrong. For one thing, remember that it’s the implementation, not the idea that investors are paying for: if you can’t even own your business planning process, the odds of you getting your product out the door, executing on your plan and generating a return on investment are pretty darn low.
So here’s some free advice from a serial entrepreneur and management consultant who’s been there and read hundreds of business plans: write your own plan. Fight your own fights with your partners, argue about sources of revenue, debate income projections, and force yourselves to figure out enough of Word and Excel to capture that moment of your company’s life.
Because business planning is all about process, not destination.

13 comments on “Why successful startups never outsource their business plan

  1. Thoughtful article on why you should never outsource your business plan

    For those of you that are of an entrepreneurial bent, there’s a good article just added to The Intuitive Life all about why it’s a bad idea to have outside help when you’re creating or updating your business plan. Written by someone with years of exper…

  2. Dave
    Could not agree more with you. If you contract out the plan, you might as well do the same for the biz idea and the business itself. If you cannot write the plan (ever only an average one) you have no business starting the business. We sell software for doing financial projections for businesses and live in dread that the software is used for “planning by numbers” based on assumptions like “the market is a zillion and we only expect a 1% share of it”.

  3. Here, here! My “favourite” (having seen a few plans in my day…) is when some people describe their target market as:

  4. – Confessions Of A Business Plan Consultant –
    Yes I was one of those. So now when I get contacted to “do” a business plan, I see it as an expression of need for a process facilitator (guess I’m showing my OD roots) and, while I am nominally responsible for the assembly of the artifacts of that process, the client is doing all of the heavy conceptual lifting. You are not going to get me locked into a room somewhere trying to wax exuberant about somebody else’s passion.
    What I can bring to the party is perspective, Excel, wordsmithing and scribe skills, and a few buckets of cold water to keep the entrepreneurs on the reality path. In the end, the entrepreneurs can speak the plan better than I can, and my work is done.

  5. Lee, thanks for adding your perspective here. I have to admit that I do have a friend who helps people improve their business plans, so I’m familiar with your perspective. What I think differentiates the two of you from the typical business plan consultant is that you let the client do the work, you just apply the polish.

  6. I get contacted all the time. I developed a friendly user guide to help clients, but I don’t write their plans for them anymore.

  7. Rarely do consultants or third parties know you, your resources and capabilities as well as you do.
    Two factors come into play here:
    1) The consultant’s job is to act as a sounding board so you can hear whether your ideas make sense, no more and no less. Take their advice, listen to their experience, but remember that they don’t know everything, or possibly enough about your situation to render ultimate judgement, and they also can be flat wrong.
    2) You are sole owner of your business plan. If you use someone else to come up with the business plan, you don’t own it and therefore will blame failure on the entity who came up with the plan instead of realizing that as the ultimate player in the business, it is you who causes the business to succeed or fail.

  8. Great article…it is what I tell all my start-ups. Often it is not what they want to hear..but its what they need to do. I do give them helps to guide their process…and review the plans…but they need to experience the pain and exultation that comes with the process.

  9. I have been opening and closing Business Plan Pro 2007, I know what I need to get done, I have ideas in my head but a huge writers block. I know the financials needed but I do not know how to work them. What would you recommend for someone like me?

  10. I’m starting the business planning process now and initially considered outsourcing some of the research components, but always felt a little uneasy. I think this was the article I was looking for.
    I wrote a 2 page company profile with my key objectives, mission, and vision, etc. and picked up a copy of Business Plans Kit for Dummies. Sounds funny but it’s actually very helpful. The forms and hard questions you’re supposed to answer about your business while reading actually help provide the ‘cold buckets of water’ and critical thinking that you may get from consultants.

  11. Dave,
    Thanks for the response to SKD; I found the article, particularly the part on assumptions, to be quite interesting.

  12. Hi,
    I agree with Lee, a professional business plan writer can certainly use his experience and skills to guide entrepreneurs to start or run business smoothly and keeping a track of progress.

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