Writing Your Own Business Plan: Thrifty or Foolish?

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It might sound like an easy task to write your own business plan — after all, you know what you are planning, right? Unfortunately, it's not really that simple.

A business plan is a much more complex document than it sounds. It is an overview of the existing market and how your business will fit into it, including the competitive advantage that will encourage customers to buy from you instead of the competition. It includes a detailed description of your target market and their habits, an analysis of what marketing methods will best reach them, and projected financials for the next few years. All of these things serve not only to help you grow your business and stay on track for the next few years, but also to justify why investors should finance your business venture.

Obviously, there is a lot riding on your business plan, so the last thing you want is one that is poorly written or doesn't provide all of the expected information. This doesn't mean you can't do it yourself, however. On the contrary, if you are motivated and detailed enough, you can do the research and write your business plan. But it will take a lot of work. However, there are two instances when you should not write your own business plan.

1. When you will lose money by doing it yourself

At first glance, it would seem that by writing your own business plan, you are saving the money you would spend on hiring someone else to do it. But in business, there is something called an opportunity cost — that is, the money you are losing by not being available to do something else, in this case the work you would normally do.

Learning how to write a business plan for the first time is time consuming and can take you away from your other obligations. If you have not yet started your business, are not accepting any work, and write the business plan in the evenings after you come home from your regular salaried job, you probably aren't losing any potential income by writing the business plan yourself. But if you have already launched the business, and researching and writing your business plan takes you away from clients and work you already have, you could actually be losing money.

In order to determine whether the opportunity cost is greater than the amount you will be saving if you don't hire a business plan writer, you will need to estimate how long it will take you to research and write your own business plan. Be generous, since you will also need to account for the learning curve — you will be learning all this stuff as you go along, and that takes additional time!

In order to calculate the opportunity cost, you will need to know approximately how much you net an hour. If you charge by the hour, this is fairly easy to do, but if you quote per project, you will need to estimate how long it takes you to do said project. Don't forget to deduct business expenses for that time, and then multiply your hourly net income by the number of hours you think it will take you to write your business plan. If this amount is greater than what it would cost to hire a business plan writer, you are better off paying someone else to do it for you so that you can keep working!

2. When you can't do as good a job as a professional

It is more difficult to determine whether you can really do the job the way it is supposed to be done, as this is more of an arbitrary decision. There are no calculations that will show you definitively that you will lose money by writing your own business plan

For example, you could decide to eliminate the opportunity cost by working on your business plans only in the evening, instead of watching TV. Granted, you wouldn't lose any money that way, but let's say that you work long, hard hours, and as a result, you aren't at the top of your game in the evenings. You are, therefore, only working on your business plan when you are already exhausted, which in turn affects the accuracy of the research and the quality of the finished document.

Likewise, let's say that although you own an engineering business and consider yourself a very smart person, writing and marketing aren't exactly your strong suits. In this case, you are probably better off hiring a professional to write your business plan for you. A poorly written business plan can ruin your chances of getting financing, as well as handicap your business in other ways. For instance, incomplete market research could result in failed marketing campaigns, and inaccurate financial projections could lead you to run your business into the ground before even realizing you had a budgeting problem.

Recognizing when the quality of your business plan will suffer is a difficult call to make, but that doesn't mean you should ignore these concerns. A poorly researched and written business plan may have lasting repercussions for you and your business. It is much better to spend the money and have it done right from the very beginning.

Should you write your own business plan?

Whether or not it makes financial sense to write your own business plan is different for every person, every situation. Be sure to consider your options carefully, and be honest with yourself about whether this is something you can do. Think also about the potentially hidden financial costs of writing your own business plan. If you are confident that you can do it right and save yourself money at the same time, more power to you — but be willing to recognize when it's not a good idea, too.