Writing A Business Plan - Describing Your Industry, Business and Products / Services
Your business description should create a clear and concise portrait of your business and company vision by providing the reader with information regarding: your industry, your company and why it is viable, a description of your products and services, your targeted market and position in the marketplace, and your intended pricing strategy. This is an important first step because putting that vision down on paper is often more difficult than one might think. In addition to serving as a vital component in any business plan, a concise business description will also benefit you in other business situations, including networking. A typical business description will include:
- An overview of your industry;
- A discussion of your company and its vision;
- A short description of your products and services;
- A brief description of your position in the market; and
- An introduction into your pricing strategy
A Business Plan Should First Describe Your Industry
Your business description should begin with a brief overview of your industry. Ultimately, you want to impart why you are in a "hot" industry with an excellent long-term outlook. You also want to set the stage for your market description by showing where you fit in the marketplace.
In this Section do not focus on your competition. Instead, impart both the present situation and future possibilities in the industry and your market segment(s), with a particular focus on the potential impact on your business. Do not be afraid to include negative information about your industry, because sophisticated investors want to know that you are aware of the possible roadblocks. You may also want to ask and answer the following questions:
- Are there any new products or other developments that will benefit, or hurt, my business.
- Are there new markets and/or customers for my company?
- What are the national trends and economic factors that will impact my business?
Substantiate the information you provide about your industry with cited research and facts from such sources as trade associations and general business newspapers and magazines (e.g., The Wall Street Journal or Business Week). If you cite information from a specific newspaper or magazine article, consider including a copy in the appendix to your business plan.
A Business Plan Should Then Describe Your Company
Oncee you have described your industry, its time to focus in on your company. The discussion of your company should begin with a clear and concise one to two line mission statement that describes the purpose of your business and to whom your product or service is targeted. Once you have your mission statement, you can then discuss the more "technical" aspects of your company. Remember to keep the discussion interesting. Some items you should mention in this section include:
- The type of business (avoid labels), its legal structure, and the benefits its structure provides and to whom;
- If a start-up, when the company was founded and the story behind it; If an established company, when the company was founded, a brief history, and prior sales and profit figures with an explanation of why any losses were incurred and what the company is doing to prevent future losses;
- A brief description of the company’s principals and their pertinent experience;
- An overview of your targeted market and how your products/services will be sold; and
- Any support systems you will provide (e.g., customer service, technical support, advertising, promotion, etc.).
A Business Plan Must Inform The Reader About Your Products and/or Services
The description of your company should be followed by a brief discussion of your company’s products and services, which in this section should emphasize your unique selling position, that is what features of your product or service sets you apart from your competitors. Each product and service should be described with a particular focus on how it will be used and why it will be successful in the marketplace. Determining and defining your unique selling position is not only what a potential investor wants to see, but a critical base to your sales and marketing strategies. If practical, add your product specifications and a photo. Remember, you will go into more detail about your products and services later.
A Business Plan Should Also Illuminate Your Positioning- Identity in the Marketplace
Once you have described your industry, your company, and your products and services, you should then relay your position or identity in the marketplace. That is, how you want the market and your competitors to perceive your products and/or services. For example, both CNN and FOX report on many of the same news stories, but FOX claims it is "fair and balanced…we report, you decide." If you run a car wash, you can be the cheapest, or you can provide the best service. If you run a dry cleaners, you can be the fastest and the cheapest, or again in the business of providing the best service. To position yourself in the market, you need to: (1) know your competitor's strengths and weaknesses, and (2) thoroughly understand standard industry practices, such as: pricing, billing, and distribution. Once you have done the necessary research, you may want to ask yourself the following questions:
- What is unique about our product or service?
- What customer needs is our product fulfilling?
- How do you want people to view our products or services?
- How do our competitors position themselves?
You answers to these types of questions should appear in this portion of your business plan.
A Business Plan Should Detail Your Pricing Scheme
After describing your industry, your company, your products and services, and your position or identity in the marketplace, it s time to discuss your pricing scheme. In this section, you should impart what you will charge for your product(s) and/or service(s) and how you derived the price. If you are charging more or less than your competitors, explain why. Investors know that it is unrealistic to claim your product will be higher in quality, yet lower in price than those of your competitors, so be careful not to underestimate your costs. Once you have briefly explained your pricing scheme and the basis for it, discuss where this pricing strategy places you in the spectrum of your competitors. Then explain how your price will: get the product or service accepted, increase your market share in the face of competition, and produce profits.
Go to Writing a Business Plan, Part III – The Market.