Introduction
Business description is one of the most important parts of a business plan. It is the foundation of your business plan, and it is often the first thing a potential investor looks at.
In this chapter, you will learn:
– What a business description is
– How to write a good business description
– Why business descriptions are important
What is a Business Description?
A “business description” is a written document that describes your business. A business description can be as simple as a one-page document, or it can be several pages long. It can be a formal document, such as a “business plan”, or a more informal document, like an “elevator pitch”.
A business description should answer the following questions:
– What is your business?
– Who are your customers? What problems do they have? How can you help them? How will you make money? What are your products or services? How do they work? What do they look like? How much will they cost? How long will it take to get them to market? What will you do with the money you make? Who is your competition? How are you going to beat them?
– Where do you want to be in five years? Ten years? Twenty years? What does your business look like in five, ten, or twenty years? How does it compare to your competitors? How big is your market? How many customers do you need to make a profit? What is the size of your market compared to the total size of the market for your product or service? How large is your customer base compared to other businesses in your industry? What percentage of your customers are repeat customers? Are you a start-up or a well-established business? Do you have any patents, trademarks, or copyrights?
– How do you plan to get your customers to buy from you? What marketing strategies will you use to get new customers? Will you sell directly to your customers, or will you sell through distributors or resellers? What kind of business structure will you have? Will it be a sole proprietorship, a partnership, a corporation, a limited liability company (LLC), or some other type of business entity? Will your business be a “start-up” or a “well-established” business?
How to Write a Good Business Description
1. “Define your business”. What is it that you do? What problem does it solve? What makes your business different from your competitors’ businesses? What sets your business apart from other businesses that do the same thing? What gives your business a competitive advantage over other businesses? How did you come up with the idea for your business, and why do you think it will be successful? If you don’t know the answers to these questions, you may need to do some research before you write your business description.
2. “Describe your products and services”. How will your customers benefit from what you sell? Describe the products and/or services that you sell. What are they? Where do they come from? Who makes them? Who will they be sold to? Why should your customers buy them from you instead of someone else? Why are you the best person to sell these products or provide these services? Why would your customers want to buy your products? What benefits will they get from buying your products instead of buying something else? What features or benefits do your products have that other products don’t have? Why is your product/service better than your competitors’?
3. “List your competitors”. Describe your competitors. Who are they, and what do they do? Where are they located? How old are they and how long have they been in business? Are they bigger or smaller than you? Do they sell the same products or a different set of products? Are their products better or worse than yours? Why do your customers prefer your products over theirs? What advantages do you have over your competitors that make your products better? What disadvantages do your competitors have that make their products worse? What can you do to improve your products so that your customers will buy them instead of their competitors’ products? If your competitors are bigger than you, how will you compete with them? If they are smaller, how can you use that to your advantage? What steps will you take to make sure that your products are better than those of your competitors, and that you will be able to sell more of them than they are able to? If there are no other competitors in your market, what makes you think that you can sell more than they can? If other businesses are already selling your products, what can you offer your customers that they can’t get from them? Can you sell your products at a lower price, or at a higher price? If so, why? If not, why not? What would you have to do to make your prices lower, or to make them higher? What could you do that your competitors can’t do? How would you do it? How could you make your customers think that they are getting a better deal from you than they would if they bought the products from their competitors?
4. “What are your plans for the future?” What do you hope to accomplish in the next five years, ten years, twenty years, or more? What changes do you expect to see in your business over the next few years? Where will you be five years from now? Ten? Twenty? What has to happen for you to reach your goals? What obstacles will you face? What risks are you willing to take? What resources will you need in order to achieve your goals, and where will you get them? What skills and experience do you already have that will help you reach your goal? What new skills and experiences will you learn that will be useful to you in reaching your goal, and how will they help you?
Sample Business Description
Products: What products or services does the business offer? What are the benefits of the products? How are they different from other products in the same market? What problems does the product solve? How will the customer benefit from buying the product? Why does the customer need to buy the product from the business instead of from someone else in the market?
Services: How do the products benefit the customer? How can the customer use the products to solve their problems? What services will the business provide to its customers? What will the customers get in return for buying the products or using the services? How do these services differ from the services provided by other businesses in the industry? How does your product or service solve a problem that the customer didn’t know they had? How is your service or product better than the services or products provided by your competitors? What does your customer get from using your services or buying your product that he or she wouldn’t get if they used or bought the services and products of another business? What is unique about your product, service, or business that makes it different from the products, services, and businesses of other companies in your industry? What differentiates your business from the businesses that sell similar products or offer similar services?
Competitors: List the names, addresses, and phone numbers of your business’s competitors. How do they differ from your business? How big are they compared to you? What do they sell? How many employees do they have? How much money do they make? How long has each of them been in the business? Who are their customers? How well do they know their customers’ needs and wants? Do their customers prefer their products or their services? If their customers don’t like their products, why don’t they switch to the products of a competitor who does a better job of meeting their needs? If the customers like their services, why aren’t they switching to the services of a competing business? If you can’t answer these questions, what questions do you need to ask your customers to find out the answers to these questions? What questions should you ask your competitors to learn more about their businesses?
Location: Where is your business located? Is it in a big city, a small town, or a rural area? How far is it from the customer’s home or place of business? Do you have a physical location, or do you work from home? Is your business in a shopping center, on a main street, in a mall, in an office building, or in a warehouse? Where do you want to be in five years? Ten years? Twenty years? Why? What kind of location is best for your business, and why? What kinds of locations are available to you, and what are the advantages and disadvantages of each? What location do you plan to use in the near future? What other locations could you use? What locations would you like to use, but don’t have the money to buy or rent? Why can’t you use those locations? Where would you be willing to move your business if you couldn’t afford to stay where you are now? What can you do to improve the location that you are in now, and to make it more attractive to potential customers? Where can you afford to move to, and will it be worth the money you will have to spend to move there? Where could you move to that would be a better location than the one you’re in now? Why would it be better? Where else could you possibly move to? Why is that location better than any of the other locations you’ve considered? What makes that location the best one for you?