Tag Archives: business plan consulting

Going Into Consulting? Prepare for Scope Creep

Are you new to consulting? Planning to start soon? Beware of scope creep. It’s a real problem in a lot of professional services. I ran into it in my years of consulting related to high-end planning and market research.

Scope creep is what happens when you’ve done the consulting (or programming, design, engineering, etc.) you promised but your client wants more. I ran into it a lot during my consulting years, doing business plans for clients. Imagine my disappointment as I delivered a finished plan along with an invoice for my fees, only to be asked for more work. Suddenly, my money was being held hostage. And, in my case, the kids needed shoes. But the client said assumptions had changed, or the product had been revised, or the financial analysis needed more scenarios.

You Can Avoid, and Manage, Scope Creep

It’s always worse with new clients. With repeat business with existing clients, you know each other, and you can take some of this for granted.

At the outset,

  1. define the deliverables carefully, with specific, concrete, agreed-upon definitions for each step, with approvals and approval process laid out.
  2. And while you’re on the subject, you should also build timing of deliverables in terms that protect you from the client’s delays, such as having milestone 2 coming due not on a specified date, but rather on a specified amount of days after approval of milestone 1.
  3. And, better yet, that plus days after receipt of payment for milestone 1 (solving another problem while you’re at it).
  4. And also, point out from the beginning that things do change, and progress can lead to change, and when things change requiring work different from what is specified, that takes place at a given billing rate.

Then, as the engagement rolls on, you have to stick to it.

Very Hard To Do After the Fact

What’s difficult is that you have to deal with scope creep in the beginning, with the way you define the engagement, and your billing structure. It’s very hard to manage when you’re delivering, and your terms of engagement haven’t built the precautions into it, ahead of time.

If you get into that situation, of course you know you are dealing with ambiguity. Reasonable people can disagree about what’s a prototype and how that relates to the entire product. Details that should have been specified weren’t. So now what do you do?

Try to configure your response as “yes, we can do that for you … and here’s how much it will cost.” Follow that with details of the difference between what you promised and what more they want. Be specific. Have a good list of additional development required to go from your vision to theirs. Try to explain your point of view. If you have to, it will save the relationship, and you can afford to, offer a big discount on additional work. Take the high road, blame yourself for the misunderstanding, and keep the client happy.

Remember that repeat business is the life’s blood of professional services. Try not to lose your client.

The client is not always right

You may run into a client whose demands are unreasonable. The first time is the client’s fault. From then on it’s your fault, not the clients. Specify your jobs better and stick to your policies.

You might find this helpful: in my years of consulting, I ran into one client who played scope creep on me more than once. I guess it had become a standard tool in his toolbox, to get more work from consultants for less money. After the second time I started taking the price I would have charged to anybody else, and tripling that price for him when he asked me for consulting. I didn’t get the engagements, but also I didn’t have the aggravation. I was better off.

But I also, for my own peace of mind, stuck with the general rule for consulting: you don’t say no. You say yes, and here’s how much it will cost. Build the aggravation into the price. Make it so that if you do take it on, it’s worth the extra problems.

Business Plan Yes, Comprehensive and Detailed, Not So Much

Funny how sometimes what sounds like good advice isn’t. I was browsing online when I caught the alleged business plan tip shown here (although I added the red circle over it). It says you should write a “comprehensive, detailed business plan.” And I say probably not; only in special circumstances. 

business plan tip, business plan, agile and flexible

Instead, develop a streamlined, flexible, agile, lean, just-big-enough business plan and use it as the start of a forever-after business plan process. 

Set a schedule to review it and revise it at least once a month. Understand that it gets obsolete in weeks. 

Keep it on your computer where you can refer to it easily and keep it up to date. 

Focus on metrics, accountability, priorities, strategy, without a lot of text. For example, don’t ever write text describing your company or management team in a plan that won’t be read by anybody outside your company or your management team. That’s a waste of time. 

Of course you should know your business, your team, your strengths and weaknesses, and your market. That’s absolutely essential. But do you take the business time to describe it in comprehensive detail, with edited text, statistics and formal research? No. Not unless you have to communicate it to outsiders. If you’re jumping through hoops for a bank or investors, then maybe there’s an underlying business value to the extra description. 

But this kind of hype about big scary masters-thesis-weight business plans does a disservice to all the real business people out there who could use business planning to manage their business better — set priorities, develop accountability, move forward strategically — who unfortunately put off planning because of the mythology of the big formal document that feels as inviting as a high-school term paper. 

It’s business: Form follows function. If you don’t know why you need a comprehensive, detailed business plan document then you probably don’t. But don’t let that off-putting tippery keep you from using business planning to manage your business better. 

(Note: I posted this on Huffington Post this morning)

Business Plan Software and Business Plan Consultants

[Disclosure and bias alert: I’m conceptual author of Business Plan Pro and founder of the company that publishes it. If you read this blog regularly you know that I almost never post about my company’s products; but this post is special because it’s a point that needs to be made.]

My post here Friday about coaches and consultants reminded me of a pet peeve. I think it’s a shame that any business plan writer/ coach/ consultant ever works with a client without using business plan software as a shared tool that optimizes the work and the relationship. And I don’t mean dumb templates, or  fill-in-the-blanks rehash, but good software.

(For brevity, let’s just call that writer/coach/consultant the expert.)

The wrong way: client gets an idea and works on it in the middle of the night. He or she sends an email to the expert summarizing the thought. Now the expert has to incorporate that thought into a revision.

The right way: instead of writing an email, client opens up the latest version in the software, renames it to a new version, revises it, and send an email attaching the latest as a file, asking the expert to comment.

Consider how many wins come from the right way:

  1. The expert, whose hours are presumably expensive, isn’t billing for redundant tasks that don’t optimize the expertise. Billing is based on expertise only, so the amounts are less, the expertise is easier to buy, the expert sells what he or she is good at, and the client can afford a longer term relationship.
  2. The client owns the business plan. He or she never has to turn to the expert to answer questions about the plan.
  3. The business plan lives in the client’s space, where, whether or not the relationship with the expert continues, the client can get it, review it, revise it, and keep it alive as planning, not just a plan. Planning is management, and steering the company. A plan is just a document. Regular reviews and revisions turn a plan into the first step of planning.

Then ask yourself why any business plan expert does it the wrong way. With apologies in advance for showing a bit of contention here, here are some possibilities: What do you think?

  1. The client is too stupid to manage his or her own plan?
  2. The expert wants to control the relationship by building a dependence so the client can’t ever manage the ongoing plan without paying the expert?
  3. The expert wants to operate like the Wizard of Oz, with smoke and mirrors, so the client doesn’t realize what he or she is really getting?
  4. The expert has so little faith in his or her expertise that he or she is afraid that once the clients sees the software, the expert will become an unattractive option?

For the record, I was that expert for many years, and I practiced then what I now preach here. My first business plan engagement, which I’ve blogged about as my worst-ever business plan engagement, was the only one I did all by myself in a way that left the clients not fully realizing that it was their plan, not mine. I didn’t duplicate that mistake. Right after that, I developed spreadsheet templates that became eventually Business Plan Pro, so that my clients could share the tool, the work, and the thinking. I billed more than seven figures for business planning over a period of 11 years, without ever having a client not using the same software I was.

(Image: Velychko/Shutterstock)

What To Pay That Business Plan Consultant, Part 1

I was asked this question on Twitter yesterday and I can’t resist answering it here: “What should I pay a consultant to develop a business plan for my company?”

Start, please, by reading about my worst ever consulting engagement. That’s an old story now, about how one startup team misunderstood the place of the plan and the consultant, but it’s as true now as it ever was.

The moral of that story, which I really hope comes out loud and clear, is:

Never think of a business plan as a use-once document. It’s not a hurdle you get over. To make your company work you’ll need planning, not plan, and it’s best used like a steering wheel to manage your business.

That worst-ever engagement was my first in business plan consulting. I made my living as a business plan consultant, mostly (there’s almost always a mix of engagements when you’re on your own as a consultant) from 1983 through 1994. I learned fairly quickly that the best business plan consulting was done looking over the clients’ shoulder, making suggestions, asking good questions, facilitating, contributing to the clients’ planning process. Not writing a plan.

So my first answer to this question is this: don’t pay a consultant to develop a business plan. Do it yourself. And don’t think of it as a fancy polished document printed at Kinko’s and coil bound to be presented to investors once and then forgotten. Make your business plan short and practical and just big enough to cover for yourself your strategy, review schedule, milestones, tasks and responsibilities, and basic numbers including sales, costs, expenses, and cash flow. The plan is what’s going to happen. Do it organically, keep it on a computer, and expect it to change.

Think of that document as output of the real plan. Its just a snapshot of what the plan was on that particular day. You’ll be changing it regularly for as long as your business still exists. And in many cases it’s not even a document, but rather a pitch presentation – which doesn’t mean you don’t plan, but rather, that you customize the output to match the requirements of the moment.

You want a consultant? Do you have the budget? Get somebody who’s been through the startup process, raised money successfully, knows what works and doesn’t, and is willing to work with you providing that kind of expertise. That’s what’s usually missing. Not just writing a plan.

I have more on this for tomorrow.