By RK Fischer & Associates

06/04/2012 I met with a potential client that was referred by the local bank who was looking to have their business plan assessed before submitting it to the bank for a small business loan. They had found a company online that only developed business plans and sent me a copy. The client had already spent over $1K on the plan and owed $1K more. The plan was poorly written and did not even include the required sections a bank will look at in order to determine credibility of the business. The numbers in their financial plan did not add up and supposedly they had an accountant develop them. I am shocked at how many times that this happens. If you think you are getting a good deal on a business plan - then it falls under it is probably not. I am not even sure if this client's business plan would have made it past the branch.

The issue with most start-up businesses is they have a concept for their business, but are not aware of the detail that has to go into a business plan or what the bank or investor is looking for. This was a highly sophisticated business model and there was no marketing plan, sales plan, or operations plan. The company spent more time embedding graphical pictures in the document and even one of the charts was illegible because the font was white on pale grey.

I provided a copy of my own business plan to the client to give them an idea of what would be required by the bank. They were in shock and when they talked to the company that wrote the plan outlining what was included in my plan - the business plan company told them that was a strategic plan, not a business plan. If they wanted this kind of plan - that would cost them 10K. These business plan companies exist everywhere and are truly taking advantage of small businesses and start-ups who are not aware. In this case, even if the client had all of the necessary pieces for their business plan and the company was just providing writing - this was still a travesty.

There are some businesses that have all of the pieces for a plan and are just looking for someone to write it, and then there are others that need a business plan written but are not sure what is required. In both cases - if you are just going to a company that writes business plans and does not have people on staff that are business people to go through it and provide feedback and help, then you are most likely going to spend a couple thousand dollars and have a mound of paper that you can use for a paper weight.

Something also to make sure of when finding someone to develop your business plan - make sure they know what is required for your type of business. The layout of a business plan for a retail store, a web company, and a manufacturing company are very very different and if they are providing one size fits all - this will land you in a mound of hurt. You need to be working with someone who understands your business model and what the bank or investor will require.

Even for a company that writes a business plan, if they are going to provide you with adequate service - they should have some level of template/questionnaire that they have you fill in about the required sections of a business plan. If as a business, you are not able to provide the information - they should send you back to someone who can help you develop the plan, as they are just taking your money without any regard of whether you will get financing or not. If you are looking to have your business plan developed from scratch - then there should be a consulting engagement at the beginning to review your business and find out what areas need to be developed. This company should either have people on staff to provide consulting to help with this or refer you to someone that has this level of experience and expertise.

So many companies I talk to are looking to a bank or an investor to provide them with $100's of thousands of dollars, but yet they are looking to scrimp on the one document that lies between them and the funds. If you are already an established business and have a record with the bank then this is a different story - in many cases you are looking to add funds for a particular reason (equipment, renovations ...etc) - then we are talking a business case versus a full plan. If you are a start-up and you have never had funding and the bank, lender, or investor is not familiar with your business and you are looking for over $50K , if you pay less than $3K for a business plan for most businesses - then you will get exactly what you paid for. The more sophisticated the business - the more detailed the plan especially the financials. You also want to make sure that the person that is helping you develop the financial model has experience or is working with an accountant. This can either be one they work with or your own. It the plan does not support the financials - you will not get your funding.

A good business plan does not ensure funding, as the bank, investor, or lender has to feel secure in the idea and that they will get their money back or see a see a return on their investment. On the other hand, a poorly developed and written business plan will ensure you do not get the funding, even if you have a viable idea. If you are not able to portray this in your business plan - you have lost your one shot with that bank or investor.

RK Fischer & Associates

RK Fischer & Associates is a business consulting and coaching firm that helps business owners increase value in their business by improving their operational and bottom line financial performance which enables them to achieve profitable growth. All of the services we provide are focused on meeti…

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