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Do I need to hire a consultant to write a business plan?
Not necessarily, but you might.
A Business Plan is a tool where management outlines what the company will do and how it plans to achieve its goals.
Generally, a bank needs to be confident that you can execute the plan. While we focus on the term “business plan,” the lender wants to know, “if we advance this money, how do we know it will be paid back?”
Banks don’t like to take risks because larger loans carry greater risk. The greater the loan, the more detail they will want.
Let’s say you want to borrow $10,000, and your record with your bank has a reliable history. The plan could be simple, like a summary of your goals with a three-year projection of income and expenses.
If you want to borrow more, the business plan must contain more detail and instill confidence.
Okay, so how do you go about it.
There is lots of help available for those who want to create their own plan. This link to the Business Development Bank of Canada has an excellent framework that you can use for free. Your bank will likely have a “fill in the blank” template or a plan builder that will walk you through the process. You will also find many websites offering the same format. Doing it yourself will take time to research and compile the information you need.
The option is to pay someone else to write the business plan for you. It could be an independent consultant or a trusted associate. Your accountant may be able to direct you to someone (maybe in their firm) who can undertake the job.
So, which is the best option?
The business owner should create as much as possible using one of the business plans noted earlier. Once complete, you can meet with the consultant to polish a plan that meets your needs and the banks. The consultant can bring value to the process by challenging your thinking and asking the right questions.
Writing the plan is done over time. When you work with the consultant, they ask the questions, and you provide the answers. This might sound like you are still doing the work, but after all, it is your plan. You cannot expect a stranger to create one without the background in your business that you have.
It is critical that you understand the statements made in the plan and be able to justify the financial projections. Your bank manager will ask some questions, and if you are fuzzy on any details, your chances of success will be diminished.
When all is done, you will want a business plan that fully articulates your plans, helps you assess your idea’s feasibility and helps convince the bank.
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