As a small business consultant, I get calls and e-mails every day from people who want to know if we can help them write a business plan.
Unfortunately, I have to turn most of those people away.
It’s not that we’re too busy to take on new clients. With the economy only now beginning to recover, I’d love to bring in more work for my talented team of spreadsheet wizards and business plan writers.
It’s just that somebody who’s starting a home-based business or a professional services firm doesn’t need to pay a consulting firm thousands of dollars to prepare a full-fledged business plan just to raise the small amount of money they’ll need for legal fees, accounting software, a website and maybe a new laptop. What they do need are clients–and the way to bring those big projects in the door is through networking, not spending money on an ad campaign, an office suite or full-time staff.
That’s why I tell prospective clients that, unless they’re looking to raise at least $250,000 from a bank, VC fund or angel investor, they’d be better off crunching the numbers on the back of an envelope than hiring a consultant to do the math.
Look at it this way: If you’re running a kitchen-table business with no rent, employees or inventory, then you probably don’t need to predict how much revenue your business is going to generate next year or how much it’s going to cost you to make those sales. If, on the other hand, you have something more ambitious in mind–a restaurant, a fashion label or an internet company that might just become the next Twitter, then you’re going to have to put some serious money behind that idea. And whether that capital is coming from you, your family or an investor, you’re going to need a road map to show you how you’re going to get to your destination and how much time and money it’s going to take to get there. That road map is your business plan.
Back when my partner and I started our internet marketing company, NetCreations, out of my house in Florida, we didn’t have a business plan–though, knowing what I know now, it would have been helpful to have had one. What we did have was a great product, a handful of paying clients and two people willing to work night and day to make our business a success. Instead of spending our money on a business plan, we invested our profits back into the company. Five years and one IPO later, I’m glad we did.
The bottom line: If you believe that you can get from startup to positive cash flow on less than $10,000, go for it. I’ll be cheering you on every step of the way.
This entry was posted on Monday, October 5th, 2009 at 9:43 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.Leave a Reply
