Business Plan preparation: internally or outsourced?

Business Plan preparation: is it better to do it internally or to entrust it to specialized professionals in outsourcing?

A Business Plan is a document that summarizes the contents, feasibility, and characteristics of the new business project (including objectives, strategies, sales, marketing, and financial forecasts) and is essential for every new business. Below, we will try to give you some insights regarding the choice of outsource its preparation or do it internally. Enjoy the reading!

What is the difference between Business Model and Business Plan?

Before starting, we want to clarify the differences with the Business Model in order not to get confused.

Business Model and Business Plan are very important documents for companies:

In the Business Model, the company explains its founding values, the strategic and organizational solutions that allow it to create value for customers and, more generally, stakeholders, or anyone who has an interest in its activities (employees, shareholders, creditors, etc.).
In the Business Plan, on the other hand, the company illustrates what it will do to translate the Business Model into practice, defining in more detail how much time and capital it will take to start and establish itself on the competitive scenario.

What is the Business Plan?

The Business Plan is a process that aims to collect information, carry out analysis and make assessments. It is the result of the application of a set of traditional methodologies developed in the context of different disciplines, such as strategy, marketing and accounting, brought back within a unitary scheme.
For a startup, the realization of the Business Plan is a crucial step on the way to success as in today’s proliferation of contests and competition, the newly established companies compete and can obtain funds also thanks to a well-done Business Plan.

The Business Plan generally covers a time horizon ranging from 3 to 5 years. It is essential to consider it a dynamic document as it is subject to changes in the market and all the variables considered and at the basis of its preparation. It must be periodically updated to adapt it to new market conditions by systematically integrating the new knowledge acquired.

The Business Plan consists of two essential parts:

Descriptive part: it indicates the reference markets and the sector in which the company operates. It presents the company, the partners, and the project to be carried out, explains the objectives and the strategy to achieve them, and defines the relative operational plan. It must contain a summary of the business project, the company and the team, the product/service offered, the main competitors on the market, the methods of sale and marketing, the resources necessary to achieve the goals set in the plan.
Financial part: it contains the evaluation of the economic and financial sustainability of the project and estimates its profitability. It must translate the economic and financial aspects examined in the descriptive part into “numbers”. The validity of the hypotheses included in the descriptive part must be verified. In other words, the expected sales, the costs, the Break-Even Point (i.e., the level of turnover from which the company covers the initial costs and starts earning), the investments to be made with the relative funding sources and the cash flow must be indicated.

The functions of the Business Plan

The Business Plan has a double function:

External: promote the entrepreneurial project towards stakeholders and financial operators.
Internal: inform and guide management in decision-making processes.

The document should:

Verify the feasibility and profitability: with its realization, it is possible to verify how much the idea behind the project can be put into practice. The purpose of this verification is to establish the feasibility and profitability.
Be informative: for potential investors and financial institutions, who require a business plan to make decisions about the project. Furthermore, the business plan is also a decisive document for potential partners.
Have a roadmap: the document is a support tool both before and after the foundation of the company, acting as a guide to the implementation of the various phases. As a roadmap, it must indicate future objectives and considers new developments, allowing you to monitor the progresses of the project during its implementation.

Outsourced preparation of the Business Plan

A professional business plan is often essential if it is aimed at potential sponsors, investors and major financial institutions who are very sensitive to its presentation and configuration for granting loans. Consequently, entrepreneurs have a lower risk of having their proposal rejected.

There are many consulting firms and accountants specialized in preparing professional business plans.

Entrepreneurs can benefit from the experience and know-how of experts, who know how to avoid common mistakes, and are able to identify any weaknesses of the business idea.

A successful business plan requires, even if developed by professionals, close collaboration with the entrepreneur, who must provide information on the content, but is also actively responsible for important decisions and developments. The entrepreneur must understand his business plan in detail and be able to present its to external parties.

Outsourced preparation: advantages and disadvantages

Advantages:

Know-how and experts experience
Greater possibility of obtaining funding
Certainty of not forgetting fundamental parts of the project
Guarantee that contents and structure are correct

Disadvantages:

It can be very expensive
Danger of not being sufficiently integrated into the design and development process as a founder

Internal preparation of the Business Plan with the help of templates and tools

Due to the complexity of a business plan and the amount of time it takes, many who decide to develop the document themselves prefer to rely on ready-made templates and tools. Valid help given by templates and tools can be found online, with diversified offers, both free and paid, that differ in their application.

Business Plan templates

Business plan templates provide the user with a general structure as well as further information and advice on content requirements. The predefined structure of the document and the relative comments allow you to create it quickly and with little effort; however, these are of course general predefined templates which must always be customized.

You can download business plan templates from websites that offer free business plans in MS Excel differentiated by type of business.

Business Plan tools

If this is your first time developing a business plan, it is preferable to use a tool that will guide you through all the salient points step by step: just answer the questions that are asked.

The business plan tools also work with a plausibility check, which highlights possible flaws or weaknesses hidden in your idea. Thanks to the predefined templates you can combine all the data entered and create a single scrolling text using the tool.

The choice of the most appropriate tool can be made on the basis of the functions offered:

Some tools allow you to create only the financial plan.
Others allow you to develop the entire business plan, including financial and liquidity plans.

Internal preparation: advantages and disadvantages

Advantages:

Intensive commitment to your own project
There is no risk of forgetting important details

Disadvantages:

The complexity of the preparation can take a long time
Templates and tools only provide general formulations and content, while particularities and focus points must be processed manually
The possible lack of experience in developing a business plan

General guidelines for the preparation

When developing the business plan, you must take into consideration that:

The business plan is a strategic planning document that allows to carry out the economic and financial planning of the project and has the purpose of defining a specific business project, identifying the objectives to be achieved and the strategic lines to be used to achieve them.
Establishing the strategy is fundamental to achieve the objectives that have been defined.
The strategies to be used to achieve the set objectives depend on the means available; therefore, the plan must indicate the means that the entrepreneur already has available and which ones are needed through equity investments or loans and, based on these, define the most appropriate strategy to achieve them.

Among objectives, means and strategies there is a bond of interdependence since one of the elements influences the other two and all three influence each other. When the resources available to achieve a goal are not enough, it is necessary to be pragmatic and to reprogram a goal consistent with the resources available. Developing the business plan allows you to become aware of any difficulties in the market or within the company organization and to “anticipate” the arrival of any problem to be ready to take the most appropriate countermeasures.

Developing a business plan is the basis for the success of the company. A successful business plan must be well structured in content and form, with a clear and logical explanation to make it easily understandable.

A clear and compact structure testifies a clarity of purpose and therefore a well-thought-out foundation.

The document should not exceed 50 pages, although obviously it depends on the type and size of the project and related information.

Here are some tips for the preparation of the Business Plan:

Simple and essential style
Attach documents that describe some aspects (generally technical) in detail if their presence is considered essential
Always make explicit the assumptions on which the plan is based
It must contain truthful, accurate and useful information
Elaborate the structure by defining the essential contents and the formal aspects to pay attention to.
Verify the consistency of the plan throughout the document. For example: Can the set turnover targets be achieved with the defined marketing action and staff planning? Are the infrastructure upgrades keeping up with growth? Have all necessary costs and investments been considered? Are the implementation times realistic?
Take into consideration, in the financial planning phase, various scenarios and the “Worst Case” to define the strategies for solving any problems.
Carry out a monthly controlling,e., a consistent comparison between the real situation and the nominal one, regarding contacts with customers, offers, assignments and the economic situation (turnover, costs and, above all, liquidity).
Update the document by adapting it to current conditions and new priorities and integrating the knowledge obtained with monthly controlling (at least once a year). The Business Plan is in fact a dynamic process.
Concentration of key points: the content of the business plan must be formulated as precisely and concisely as possible. It is best to eliminate non-essential information, so that potential investors can find the most important information quickly and easily.
Differentiation from the competition: the more the company can provide a product or service that is innovative or differs from competitive products, the more successful it will be.
Be realistic: it is important to write the business plan
Focus on visualization: use charts, diagrams, and images to express ideas immediately when it is useful and reasonable, and in all cases with moderation.

Below, there is the recommended structure for the Business Plan divided by sections:

Executive Summary
Description of the Business Model
Business and context description (products and services, sector, competition, and market analysis)
Marketing plan (positioning strategy, operational marketing plan and digital focus)
Operational plan for the realization of the business idea and time plan for the development of the activities
Corporate structure and Management organization
Financial Plan
Indication of the investors involved and the requested participation proposal
Any environmental impact of the project
Conclusions: the motivation
Attachments

Conclusions

Entrusting the preparation of the Business Plan to people inside the startup team or to external consultants is a very important choice and is not the same for everyone because a lot depends on the internal skills of the team. However, we hope that with this article we have highlighted the positive and negative aspects of the two choices, and we recommend that you always try to do it yourself initially and if the result doesn’t satisfy you, then it will be appropriate to evaluate to outsource it.

In the next articles, we will see in detail the individual sections that make up the Business Plan, so don’t miss them!

If you want to know more about the Business Plan, we recommend that you also visit the page Start your startup.