As most small business owners are usually on a shoe-string budget, cost is often at the forefront of their minds when making decisions concerning their business strategy needs.

As a result, a majority of them resort to writing their business plans themselves not considering the required expertise. The business owners end up consuming lots of time (as much as 400 hours per plan) and energy on the development process to an extent of eroding its worth, and limiting its perceived value.

Aside from the possibility of getting a custom, high quality professional plan developed at an affordable rate, below are many other valuable factors that most business owners neglect when considering to outsource the services of a business consultant.

Time Required

As already mentioned, many small business owners take on the business plan development exercise themselves as they automatically presume that it is expensive to hire a professional to handle the task. While you may save on costs, you will lose time that would have been better spent on more strategic business objectives such as management and networking.

If you look at how long it takes you to prepare the plan and compare that to the amount of time taken by a professional to do the same, – a professional consultant can develop your plan in as little as 40 hours – you will almost certainly realize that your time could be better used somewhere else. This could result into more revenue for the business.

Do you Possess the Necessary Skills?

There’s a skill to developing business plans; and logically, the more one does it the better they get. Instead of spending time going through the learning curve of business plan writing, allow a professional consultant to develop one for you. These professionals can most certainly do the job faster and with less difficulty because they have industry insights and business experiences that you may be lacking in-house.

Based on their experiences, these consultants also know what aspects of your business to focus on that will increase your chances of success. This not only offers much more convenience; but also gives you an opportunity to tap the writer’s knowledge.

Outsourcing to the Right Consultant

It’s imperative that you take your time when selecting a business plan writer and find the one that is a good fit for your business goals and objectives. One issue to take into consideration is their qualifications. An MBA (Master of Business Administration) and CPA (Certified Public Accountants) are just examples of essential qualifications to look out for.

You should also check for past client testimonials. There are several ways of getting this information. One way is by directly contacting the consultant’s past clients to get a feel of what it is like to work with them; or if hiring through an online marketplace, by visiting the consultant’s profile page. Looking up the consultants on the various search engines and social media can also give some of their details.

To avoid picking the wrong candidate, interview several consultants before you commit to one. Find out details like how long it will take to complete the business plan, their engagement fees, development methodology, etc.

Lastly, where possible, have a contract signed by both parties, detailing the deliverable and terms of engagement.

Whether you decide to outsource or not, it’s important to look beyond the cost aspect and consider the above factors as well.

If you’re in business, one of the most important questions that you must be asking yourself is “what is the best way to grow your business?” How can you take what you have, expand on it but keep your costs as low as possible?

Fortunately, history has given us plenty of good examples of how NOT to do this. Perhaps the best of these happened in 2001 – when thousands of companies went under in the dot com bubble.

But how did SO many go SO FAR WRONG?

In those days, start-ups (with little or no income) and existing companies (with dreams of expanding their business online) were renting the biggest and best offices. They were signing huge print advertising contracts, paying ridiculous sums for banner ads and taking enormous salaries.

When sales were lower than expected and the cash to keep paying all those expenses dried up, these businesses had no way of easily adjusting their monthly expenditures down – because they were primarily FIXED, not variable. Their only option was to declare themselves bankrupt and close down.

Compare this situation with Amazon.com which started in a suburban garage with old doors on sawhorses for desks. By keeping fixed costs down, they were able to stay in business long enough to start generating a profit. They are now a huge company (with real offices) making huge profits.

So how does all of this apply to your company?

No matter what the size of your current business is, the aim is to grow your business while keeping your fixed costs as low as possible as a percentage of sales. And there are many practical ways to do this.

Begin by creating a simple excel spreadsheet of your current revenue and expenses each month. Ensure that you have correctly separated the fixed and variable costs of doing business. Roughly speaking, the breakdown should look something like this:

Revenue
– Cost of Sales (includes cost of goods and variable wages for subcontractors or part time employees)
= Gross Profit

– Fixed costs (includes rent, wages, marketing, telephone, utilities, accounting fees etc.)
= Net Profit

Next, based on your current financial results, set your monthly revenue targets for the next 12 months and estimate the cost of goods sold. For example, if you currently generate $20,000/month in sales with a 60% gross profit margin, you might like to grow your sales by 15%? Therefore, you would use a projected sales target of $23,000 each month with Cost of goods sold at around $9,200 as a starting point. This would leave you with a gross profit each month of $13,800. If your sales fluctuate each month due to seasonal variations, manually adjust your forecast to reflect these ups and downs.

Now here is where most business owners will go wrong…

Most will mistakenly assume that fixed costs are fixed. Meaning, the owner will start to place the existing amounts for rent, marketing, wages, telephone etc. into the financial projections. Fixed costs are referred to as fixed because they are fixed at a point in time. This does not mean however, that they are fixed forever and cannot be altered. In fact, when you are preparing a business plan and financial projections for the future, you should consider almost every aspect of your business as “up for debate and re-adjustment”.

That is why we prepare business plans – we use them to re-evaluate and plan for the future so that we can improve and grow. Without a concrete plan, in all likelihood we will continue to get the exact same results that we got in the past.

Where you will get the most value in this exercise is by going back over each cost (fixed or variable) to identify opportunities to “make the most of what you have already got”! Cutting costs may be possible and advisable in some areas of your business. However, cutting costs [in isolation] is not usually an effective strategy to grow a business. In order to grow and improve your bottom line, you will need to ask yourself the question – “how can I expand my business without expanding costs”?

Can you think of ways to partner with others to expand your reach and sales without actually having to open another location or hire more full time employees? You may already have underutilized capacity to increase your sales right now.

Can you introduce products or services that complement the ones that you currently have and contribute more to the bottom line of your business? Can you renegotiate the terms or prices you have with your suppliers to increase your gross profit margin?

Do you have a website and a fully functioning payment gateway? Do you make it easy for customers to buy from you? Selling online is a very cost effective way to increase your reach without increasing fixed costs.

If you manufacture goods, you could identify ways to increase production simply by tidying up, rearranging the layout of machines and planning more cleverly (to reduce work in progress and downtime). Often mistakes and rework can be costly to your business and surprisingly, they can be prevented by taking time during the business planning process to brainstorm solutions.

Making better use of time is another fantastic way to increase production with minimal impact on fixed costs.

Surprisingly, 95% of business owners never take the time to create a business plan and forecast of revenues and expenses. Of those that do, only a small portion refer back to the plan and measure their progress against the targets and KPIs. That is why so many businesses go under each year.

A business plan doesn’t have to be 50 pages in length and take 100 hours to complete. It just has to be realistic and useful. To do this properly, following my basic outline for projected revenues and expenses above should take 48 hours of your time. 48 hours of your time, in exchange for better bottom line results and peace of mind, is a small price to pay…

One of the most common questions we hear from potential entrepreneurs is “Where do I start?” The short answer is Plan Your Business. You don’t need a formal, extensive business plan at the earliest stages, but you do need to have a clear idea of the business idea. That is, you should know what a typical workday will look like, who your customers will be, how they will find and buy from you, where you want the company to go, and the like. Planning your startup will also give you a good idea of how much money you will need to get your venture off the ground and force you to think through any potential obstacles in your way. Here are a few options to get your business planning started.

There are hundreds of free business plan templates available on the web. They all cover basically the same topics, and most include the broad areas that you need to consider to really plan your business. However, many first-time entrepreneurs have trouble actually making a plan from these templates, and for good reason.

In general, those outlines are useful once you already have a pretty clear plan in mind and just need to organize it for the bank or investors. They do not help you decide what to look for, or how to evaluate your idea, or even really explain what each section means. For most startups, the ready-made, fill-in business plan forms are not the best option.

There are also several good business plan software programs out there, but they have a similar problem to the templates. They are excellent tools for putting your developed ideas into a logical, presentable order for investors and banks, but don’t really help with the actual planning process.

A fairly recent addition to the small business outsource community are planning consultants. For a fee, these folks will tell you, step by step, what you need to do during the startup process and beyond. While this kind of hand-holding can be very tempting, it is also very expensive…costing money that would be better spent on marketing your new venture!

One popular consultant charges $750 per session and leaves you with a “homework assignment” of the next three steps to starting your business. Can they help you improve your business? Probably, because they should be experienced with the startup learning curve. Will they give decent advice? Possibly, though since it is an unregulated industry just about anyone can claim to be an expert. Will using a planning consultant make your business a sure success? Definitely not. YOU need to become the expert yourself in order to ensure long-term success for your startup.

Rather than relying on business plan templates or disconnected consultants, look for opportunities to learn the fundamentals of entrepreneurship for yourself. Most successful entrepreneurs will tell you that learning to plan effectively is an important key to success. And, since experience is the best teacher, you are better off finding resources that will teach you more than just what needs to be done, but also how to be an entrepreneur.