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.