How to Write a Business Plan

When you start a business, you need to have an official plan in place to make sure things don't go south. Having a business plan can help your business to grow, prepare for its financial future, understand your target audience or customers, reduce your risks, and more. Simply put, business plans can mean the difference between success and failure for many companies.

You'll also need the right kind of business insurance for your business, no matter what kind of company you run. An independent insurance agent can help you get set up with this coverage. First up, though, here's a breakdown of how to write a business plan and why your company needs one.

What Is a Business Plan?

A traditional business plan covers everything you currently have, need, and want for your company. Business plans provide the roadmap for how to get your business where you want it to go. You can structure it however you want, but it needs to accurately embody your business venture and include certain specific information.

A successful business plan should be no more than:

• Executive summary: This is your business plan's overview. 
• Business description: This section includes your business's purpose or mission and how it will achieve it.
• Industry analysis: This section analyzes your competition.
• Market analysis: This section analyzes your target consumers and audience.
• Leadership/organization description: This section dictates who on your team is in charge of what.
• Financials and projections: This section breaks down your business's current financial status and future financial projections.
• Financing request: This section details your business's financing. 
• Appendix: This section includes other documentation, sources, legal docs, etc.

Business plans can range from 30 to 40 pages and beyond, depending on your business's industry, operations, and more.

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How to Write a Business Plan

The actual process of writing a business plan can be broken down into eight simple steps. Following this process can help you streamline the creation of your business plan and eliminate wasted time. Here's how to write a business plan step-by-step.

Step 1. Create an executive summary

The executive summary is an overview of your business plan. Here's how to write an executive summary for a business plan.

Start by answering these questions:

• Who are you (as a business)?
• What kind of business is this?
• What’s your product or service, and why is it attractive to consumers or clients?
• How will you make money via that product or service?
• What do you have to offer that similar companies don’t?
• Where will the business operate?
• When do you plan to be operational?
• What makes all of this a good idea?

You’ll later expand on all the points you mention in the executive summary, so there’s no need to include every detail. Aim for no more than 10% of the length of the main text, and preferably half that.

Step 2. Describe your business and approach

When you describe your business, be specific. The point here is to present a thorough internal analysis, covering topics like:

• What does your business make or do?
• Why is that product or service desirable?
• How is your approach to that product or service unique?
• How/why did you develop that approach?
• What are your overall goals for the business?
• Where are you on the path to meeting them?
• What’s your plan for meeting them? 
• What’s your timeline for hitting milestones?

Be specific in timelines. You may not hit your original marks, but it helps with planning, and you’ll refine as you go.

Step 3. Analyze your industry

In the analysis section, you want to reveal a hole in the market that your product or service fills, citing industry and market research. This section should address:

• Who is your competition? Include specific companies here.
• What are they making/selling?
• How is that different from what you’re making/selling?
• Why would people pick yours over theirs?

Remember to properly cite your sources for your readers. It helps establish your business's credibility. 

Step 4. Analyze your market

Here you’ll talk about your customer base, answering questions like:

• Who’s going to buy what you're selling? Mention target demographics.
• What do they need?
• How does your product/service fill that need?
• How will you attract and keep their business?

When you describe your customer base, get specific again. You can reference research you’ve done yourself, too. 

Step 5. Describe your organization

In this section, describe your business structure, including who occupies key roles. You want to depict a sturdy setup and capable leadership team. Include information on:

The business

• Legal structure (sole proprietorship, partnership, C corporation, etc.)
• Accounting processes
• Technology setup

The team

• Brief biographies
• Background and experience
• Roles in the business
• Specific areas of responsibility

If you have any investors already, include them here, too. 

Step 6. Provide financial records

In this section, give a complete financial picture of your business in a logical series of tables, charts, and graphs. Include information on:

• How much money is currently in the bank and in assets
• How much money you need to get the business off the ground
• Where you plan to get startup capital
• Projected profit and loss 
• Budget for expenses 
• Sales forecast
• Break-even analysis on the original investment amount

You can make this section even stronger by including a 12-month income statement.

Step 7. Request financing (if applicable)

Most small and medium businesses are self-funded today. However, a small percentage still rely on funding to get started. If your business needs financing, include a brief overview of your business in case an investor only wants to see your financing request, not your entire business plan. 

After the overview, include the following:

• Business summary (i.e., your products/services, core team, target market, current financial state)
• Type of financing you want (i.e., loan or investment)
• How much money you need and what you need it for
• How and when you plan to repay it, with timelines

Get specific with your financing request timelines. You can always update these as things move along.

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Step 8. Build an appendix

Finally, gather supplementary information. The appendix holds all of the legal and supporting documents you referenced throughout the plan, such as:

• Partnership agreements 
• Articles of incorporation
• Contracts
• Bank statements
• Industry and market research 
• Patent and trademark registrations
• Receipts
• Credit history
• Tax documents

You'll likely be referencing this final section a lot later, so make sure it's well organized.

How to Write a Business Plan Template

There are many templates available online to help you write a business plan. The US Small Business Administration is a great resource to start with. Using a business plan template can help streamline the process for you and your team, and save you some much-needed time for other operations. 

How Long Does It Take to Write a Business Plan?

The time it takes to write a business plan can range from a couple of days to a couple of months, depending on how much information and documentation you already have gathered. You can hire a professional consultant to write your business plan for you, which may speed up the process, or you can have your business create it as a team. There's also the option of creating the whole business plan by yourself, but that might lengthen the process considerably unless you already have everything ready to go.

Getting the Right Business Insurance for Your Business

Once the business plan is finished, you still need to ensure that your company has the proper protection against common and unforeseen risks. An independent insurance agent can help you find the right type of business insurance for the job. An independent insurance agent can help you shop and compare business insurance policies from tons of different carriers for you, and then present only the best quotes together in one place.