Before Hanging Out Your Shingle... - Black Enterprise

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Black Enterprise Magazine September/October 2018 Issue

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Whether you are just starting a business or have been in operation for 20 years, you need a sound business plan. If done correctly, the document serves as the blueprint for nearly all business decisions, ranging from securing financing to setting management goals and recruiting employees (see “The Do’s and Don’ts of Writing a Winning Business Plan,” April 1996). However, many businesses continue to operate without them.

“I’ve talked to so many people who have been in business 10, 15, 20 years and have never written one,” says Kimberly Johnson, a business management consultant and author of The Start of Something Big: Your Ultimate Guide to Writing a Dynamic Business Plan (Noted Concepts, $22.95; 619-296-2426). “Some people don’t do a plan until they get into the business and decide they need to borrow money.”

Business plans provide a road map for guiding your operation. Among other things, they communicate company goals and values, outline sales and marketing strategies and determine financial needs.
This series will walk you through the process of crafting this critical document. Each part will look at a different component of the plan.

A business plan is a living document that should be updated as your operation changes and grows. Generally 20-50 pages in length, it should be typed and bound or placed in a three-ring binder. Business plans should begin with a single cover page identifying your company name, logo, address and telephone number. It should also have a table of contents.

A business plan can easily take six months or more to complete. And while these documents can vary depending on the type of venture, there are some basic elements.

Executive summary. It includes your company’s mission statement, the objective of your business plan and a company description. There’s also a three- to four-sentence summation of each of the components of the business plan. The entire section is two to four pages in length.

Operating plan. This section outlines your product/service, its purpose, how it will be produced and the facilities to be used. Charts, graphs and other information that describes your product/service should also be included.

Marketing plan. It should describe in detail the market potential of the product/service you are offering, its market potential and how you intend to make sales. A competitive analysis should also be included.
Management plan. Your management team and key employees (including outside consultants such as CPAs and attorneys) are described here. Organizational flow charts that break down the duties of each principal can be included, as well as biographies and brief job descriptions.

Financial plan. This section includes your current financial status as well as future projections. Other important figures include operating budgets, income statements, balance sheets and generally three- to five- year projections on cash flow and profit and loss.

Long-range plan. Also known as strategic planning, this section takes a look at the future of your operation. It should discuss new goals and objectives or a revision of ones that have already been established. All your goals should be measurable and quantifiable.

Succession plan. The primary

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