If you are thinking of starting a business as a minority or female, you will have no doubt read that step one is writing a business plan. It is extremely important to plan, research, set goals, and gather your thoughts. A business plan is also required if you plan to raise money in the future, and with the barriers that Black, Latino, women, and other minority disadvantaged businesses already face when it comes to applying for funds, it is always better to be overprepared than not. As Ben Franklin said, “If you fail to plan, you are planning to fail”.

But if this is your first business venture, you may not know how to go about writing a business plan. After all, the Small Business Administration reports that there are over 500,000 new entrepreneurs each year, with about 70% of those companies started by immigrants, minorities, or women. If you want to get your new startup company off to a good start, you need to (1) know what a Business Plan is and (2) find steps that you will need to take when writing your business plan. Find steps and tips below that minority and women owned companies can follow.

What is a Business Plan?

A business plan is a written document that will in effect “force” you to think about all aspects of your startup idea. It is a document that will guide you along the process of starting a company or even going into business for yourself as a sole-proprietor. Considering the many challenges and biases already faced by minorities, including Blacks, Asians, Latinos, and females or veterans, it is even more important for those disadvantaged groups to plan up front. The document can be as short as a couple pages or as long as several or tens of pages. The point is to brainstorm and write stuff down.

Black owned businesses are over 90% sole-proprietorships according to the Census Bureau and those have no paid employees. Over 80% of Latino and female owned businesses are sole-proprietorships with zero employees. Even a sole proprietorship should create a business plan – but it can be less detailed.

There are sections of a business plan that discuss market research, your competitors, pricing, your niche/differentiator, revenue and expense projections, and many other topics as noted below. The Business Plan can be as short/simple/“high level” or as detailed as you want it to be – the point being is to get something in writing to ensure you think about your idea, business, market potential, product/service, goals and competitors among other things.

The Small Business Administration reports that entrepreneurs with business plans, including minority and females, will help a new business be successful. In fact, about 50% of businesses fail within the first five years. Those with a business plan have a failure rate of “only” around 30%. While that may still seem like a high failure rate, having a business plan is a 60% improvement in your chances of succeeding (based on past startup companies).

Fail to plan - planning to fail at business

How to write a Business Plan for minority or women owned companies

There are steps to take below. As noted, it can be as short or detailed as you want. The point being to plan and research your idea. No two business plans are the same. If you need help or want counseling, there are free counseling and mentoring services for females and minorities, including from SCORE, Veteran Centers and PCV. Find free mentoring for minority and female entrepreneurs.

1. Do Your Research- This is Critical

Always keep this in mind – Failing to Plan is Planning to Fail. Therefore, step one for writing a business plan is to research your market and your idea. Research your customers and your current or future competition. Be thorough and objective. You can and should expect to spend more time doing your research than you will spend on writing your plan.

Talk to friends and family from all backgrounds, ages, and races, including the Black, Asian, White, and other communities. Open your mind. Do google search using focused search queries and try different variations, and analyze the results…not just the top couple from a google search. Search google trends to see what other people are looking for.

Use you library for free tools to search on customers and demographics, including from companies such as Mergent Intellect, ESRI, and Statista which provide data on demographic, lifestyle, crime, incomes, behavioral, consumer spending, and roadway traffic data. Or search for US patents using free tools.

If you do your research well, you will find it easier to gain the confidence of investors, banks, and suppliers, which is unfortunately even more important for minorities and women. Thorough research will also help you confirm the viability of your business idea.

2. Write an Executive Summary as a minority or female owner

Although the executive summary appears as the first item in a business plan, it should be the last thing that you write. As the name suggests, the executive summary will summarize the crucial points about your new business that are detailed later in the plan.

The summary should include details of the female as well as minority owner(s) of the company and any key employees. There should also be a description of the products or services that are to be offered and the problem those products/services (i.e. your business) will solve and/or the niche they will fill. And an overview of the marketing plan. The executive summary should be clear and concise, and, as a rough guide, it should not be any more than two pages long.

3. Develop a Business Description

The business description section of your plan should outline the nature of your venture. This part of your business plan is where you will go into more detail about the products and services that you plan to offer as a minority or female owned, disadvantaged company.

You will also need to discuss the market that you will be targeting and the benefits of what you are offering. Will you be focused on a niche market, such as other minorities or cultures? The business description section is also where you can identify how you will differentiate your offering from that of your competitors.

4. Provide Your Market Research

The next section of a business plan should contain the market research that backs up the executive summary and business description. The data included in this section of the document will consist of things like target market demographics, the size of the market, and details of your pricing. Will you be selling in a small regional area or nationwide? Will you be focused on certain groups, such as Veterans, the Black community or females? You can also include an analysis of your competitors and how you plan to compete with those competitors.

5. Certified Minority or Woman Owned Business

The business plan should note whether you plan to or will apply for a government certified woman owned business enterprise (WBE) or a minority owned business enterprise (MBE), as those certifications can be differentiators from females, Native Americans, and black owned businesses among others. The certifications will help you get funding, increase sales, receive coaching type advice, and support.

One of the owners of the company needs to be 25% Asian-Pacific, Black, Asian-Indian, Hispanic, or Native American for the MBE designation. Female owned companies need to be 51% owned or controlled by one or more women to get WBE certification status.

Asian business owner - Business Plan for minorities

6. Describe the Management Structure in the Business Plan

You will now need to describe your management structure and provide details of your team. In this section, you will also explain the legal format of your company and provide details of the ownership of your business. Is it an LLC, Partnership, or sole-proprietorship?

The management structure section should lay out how your business will be run, and explain how the team (if applicable) that you have brought together has the experience and qualifications needed to make the enterprise a success. Who owns the women or minority founded company or LLC and the percent breakout of a partnership? You may also want to include how you will expand the team in the future to cope with the anticipated growth of the company.

7. Provide Full Details of Your Product or Service

You will need to provide details of how you plan to deliver your product or service. If you are manufacturing a product, for example, you will need to include details of any machinery that will be required. You will also need to discuss the availability and sourcing of raw materials, as well as anticipated production capacity. Are you selling a more unique item that may appeal to minorities, men, or women? If so, where will you get inventory from?

If you are selling a service, you will need to explain who will provide that service and provide details of how many productive days or hours will be available. If you have an online company, how will you ship the product? Where are you sourcing the items from on your online business?

8. Develop Your Sales and Marketing Overview

The next stage of writing a business plan is to provide details of how you intend to market your product or service. This section should include the type of advertising and marketing that you are planning, and it should contain the detail of the individuals who will be responsible for the selling. What is your monthly and annual budget for marketing? Online or offline marketing? What experience do they have?

The sales and marketing section is also the section to describe how you as a minority or female owned company will brand your business and how you will differentiate your offering from that of your competitors. Will you apply for certification as NMSDC (National Minority Supplier Development Council) or Small Business Administration’s 8(a) Business Development Program for minority or women owned businesses to help increase sales opportunities?

9. Create Your Financial Forecasts – Pro-formas

At the heart of any business plan, there must be realistic financial forecasts. You need to be realistic and objective. In this section, you should include a forecast profit and loss account as well as balance sheet and a cash flow projection going out at least several months. Then include a more mid-term pro-forma going out 2 years.

The crucial thing to bear in mind with your financial forecasts is that they need to be realistic, not wishful thinking. Brainstorm all possible expenses and list them…rent, website hosting, advertising, insurance, computers, supplies, utilities, etc. If you are seeking funding for your new minority or women owned venture, your budgets and forecasts will need to demonstrate the ability of the business to repay any loans, interest, or dividends.

10. Funding Requirements in your Business Plan

If you are planning on applying for a business loan or attracting investors as a Black, Latino or minority owned business, then you will need to lay out clearly what you are offering and why the funding is required. It needs to be clear due to the unequal access to capital that minority owned businesses face.

A potential investor or lender will need to understand how much funding you require and how you will repay the loan or provide a return on the investment. What will the funds be used for and how will they help you meet your business goals?

11. Add the Appendices

The final section of a business plan should be any appendices that would add further useful information to your business proposal. Maybe what unique skills you bring to the idea/company as a Latino, veteran, Asian or Black person. Or does your background as a women bring certain skills? Other items that you might include in your business plan as an appendix might consist of things like patents, contracts, or the resumes of key staff.

Conclusion for Females and Minority Startup Businesses

The above are the most crucial steps to take when creating a business plan for a women or minority business or start up There are no hard and fast rules that you must follow, though. But the point is to write something down as a guide, as it forces you to brainstorm and think through your idea – all the pros, cons, risks, and potential. There are some things to be wary of though, and find common mistakes to avoid.

So, the sections of your business plan may vary depending on the type of enterprise that you are setting up. The most crucial tip that you could learn about developing a female or minority owned or run company is to take your time, because a well thought out plan will help you make your business a success.

By Jon McNamara