Who Can Help Out with a Business Plan?
Q. I have owned and operated (part-time) a mobile-home maintenance and repair business since 1988. I'm now trying to locate seed venture capital to buy a mobile-home park. The price is in the neighborhood of $1.2 million; I have approximately $40,000 in cash to invest. I do not have the knowledge to write a business plan, financial plan, or any of the other plans required to secure the funds needed for this venture. Where can I find someone to write these plans for me? I realize there will be a fee involved. --Michael Richcreek, owner of Rolling Wheels Mobile Home Repair, in Swayzee, Ind.
A. There may be no easier way for an entrepreneur to sabotage his or her request for capital than by failing to produce a comprehensive, well-researched, and, above all, credible business plan. For people who lack expertise in business-plan writing and other related financial-management skills, relying on a one-size-fits-all model from a software package or business guide may hurt rather than help their prospects.
Fortunately, entrepreneurs have a wide range of options to consider. Before choosing, though, it's essential to figure out what you want--and need--to get out of a business plan. On the most basic level, of course, Richcreek has a single aim: to raise funds. But given his lack of familiarity with the business-planning process, he could benefit in other ways as well by actively involving himself in a rigorous examination of his proposed business venture.
Chris Mercer, chief executive officer of Mercer Capital, based in Memphis, makes a good point: "A business plan," he says, "is not a miraculous conception. In order to write one, you need to be able to answer a lot of very tough questions that are typically based upon the history of your business, and its current operations and business prospects."
In Richcreek's case, those questions would probably include these: How does he know that the mobile-home park is worth its asking price of approximately $1.2 million? and, How can he show that the new venture will be a sound and profitable business? Mercer adds, "Any investor or lender would want this business plan to clearly demonstrate what this buyer plans to do to either extend the park's existing record of success or turn it around into a successful venture; how he'll create profits for himself and his investors; and what his strategy is for paying off any debt that he incurs along the way."
For an entrepreneur unable to answer those tough and pointed questions, what's needed is not so much a business plan as a business-planning adviser, someone accustomed to working with small companies, start-ups, and owners who lack financial-management expertise. "In cases like this one, the issue is, how do you access a knowledge base on a scale that won't swamp you," says Mercer. He adds, "This guy could go to big-time financial advisers and wind up spending his whole $40,000 nest egg just for a business plan."
Indeed, for someone who needs a lot of up-front guidance, nonprofit groups and government agencies may be the best places to start. Good free sources of business-planning assistance include the Small Business Administration, which offers a series of on-line business courses, and the Service Corps of Retired Executives, or SCORE (800-634-0245), which has offices in most cities and introduces business owners to volunteer experts who will advise them on matters such as financial planning. Local economic-development groups, which may focus on certain geographic locations, minorities, or female entrepreneurs, are also worth consulting.
For those business owners who need less in the way of basic training, other avenues may prove more rewarding. If your company is ready to compete for funds from professional investors, for example, you may want to consider approaching an investment banker or financial intermediary that will draw up a business plan as part of its overall fund-raising efforts on your behalf.
The downside to that strategy is that it will cost you: you may pay an hourly fee as well as either a contingency percentage based upon the amount of funds raised or even an equity stake. But a well-chosen intermediary will have contacts you lack, as well as a market- driven sense of how to fine-tune your business plan to fit the preferences of different investors. The right adviser may even help you reformulate your business plan entirely.
Take one vision of Richcreek's proposal: "You may think he doesn't have a chance of raising that much capital when he's only got $40,000," says A. Gordon Tunstall, chief executive of Tunstall Consulting, in Tampa. "But if his business plan can demonstrate what he'll be able to achieve by vertically integrating his mobile-home repair business with the mobile-home park, he might be able to convince potential investors that the newly combined company will be much more profitable than either one was on its own." That's just one aim a good business plan can help you achieve. --Jill Andresky Fraser