Business Description Section

Your business plan must be able to present a clear portrait to angel investors of what your company does. Your business description is your corporate vision and should include: who you are, what you will offer, what market needs you will address, and why your business idea is viable. Too many business owners have difficulty giving a business description and will provide a long, rambling description or a few stock phrases when asked for one. A brief, easy-to-understand description of your company will help your business plan as well as your corporate vision. A comprehensive business description should include:

• An overview of your industry
• A discussion of your company
• Descriptions of your products/services
• Your positioning
• Your pricing strategy

A comprehensive business description should include:

• an overview of your industry
• a discussion of your company
• descriptions of your products/services
• your positioning
• your pricing strategy

INDUSTRY OVERVIEW

When talking about your industry, discuss the present condition of the industry as well as future possibilities. You should also focus on existing market segments and their potential impact on your business. Also include any products or developments that could possibly benefit or hurt your business. Tips

• Be dramatic – get the reader's attention using strong, exciting language that will make them interested in your industry and your business. However, do not over-exaggerate or fabricate information about your opportunity. Nothing is more annoying to investors than a liar.
• Save discussion of your competition for later in your competitive analysis section. Simply provide a picture of the industry in which you will compete with other companies.
• Answering "why" makes a statement stronger. For example, saying that "the market will grow at a rate of 20% annually" may sound impressive, but what caused the growth? Adding "...because an increasing number of baby boomers now eat out instead of cooking at home" strengthens your statement.
• Include negative information about your industry. Discussing the possible challenges your company might face shows angel investors that you have a comprehensive and realistic view of the market
• Many entrepreneurs writing business plans make the mistake of basing their market observations on assumptions. Instead, you will want to research your industry and back up your ideas with facts. Be sure to note all sources.

DISCUSSION OF YOUR COMPANY

The discussion of your company should begin with your mission statement - a one or two sentence description of the purpose of your business and your target market. Once you have presented your mission statement, you can discuss the more "technical" aspects of your company. Even though there are specific areas you will need to cover, you will want to keep this section lively and interesting. Questions you should address include:

• What type of business is it?
• When and how was the company founded?
• What is your business' legal structure?
• Who are the company's principals and what experience do they bring?
• What market needs will you meet? Who will you sell to?
• How will your product(s) or service(s) be sold?

Tips

• Your company's focus often depends on your market – smaller markets allow a wide focus, while large markets necessarily require greater specialization.
• If you're an established company, give a brief history, including citing prior sales and profit figures. If you've had any setbacks, explain why they occurred and what is being done to correct them.
• Don’t include a complete resume for each principal – that will be discussed in detail later in the plan. Simply provide a short description of each principal, including valuable experience and past positions.

PRODUCTS/SERVICES

Describe each of your products or services, focusing on how each will be used. Go into as much detail as is necessary to give the reader a clear idea of what you are selling. Emphasize the features or variations of your products. Be sure to stress your USP - Unique Selling Proposition. Your USP is the distinctive quality that sets your product or service apart from your competition. Tips

• Focus on why you believe your products or services will be successful in the marketplace.
• If you are selling a product, include full specifications and a quality photograph, if available.
• If your competition might begin offering products or services that also have your unique features, discuss how you plan to remain ahead.
• Be specific – don’t just say something like "we aim to provide faster service." Describe how you will do so and why that distinguishes you from your competitors.

POSITIONING

Position is your identity in the marketplace: how you want the market and your competitors to perceive your product or service. While your USP is based on features of your product or service, your positioning is based on your customers and competition. If you run a delivery service you can be the fastest, the most dependable, the cheapest, or the business providing the best service. A retail clothing business can emphasize price, style, a flexible returns policy, unique products, or some combination of these. A salon may be positioned as hip, traditional, pampering, inexpensive, or convenient. Develop your position by answering the following questions with brief, direct statements:

• What is unique about your product or service?
• What customer needs does your product fulfill?
• How do you want people to view your products or services?
• How do your competitors position themselves?

Tips

• Research your competitors by shopping their stores or calling them to see what they offer and what they charge for it.
• Create a list of your competitors’ strengths and weaknesses, looking at areas such as distribution, pricing, value, and service.
• In order to position yourself in the market you will need to understand standard industry practices. This information is usually available from trade organizations.

PRICING STRATEGY

Discuss what you will charge for your product or service and how you determined the price. Once you have briefly explained your pricing and rationale, discuss how this pricing strategy compares to others in your industry offering similar products or services. Also include how your price will get the product or service accepted, and increase your market share, and produce profits. Tips

• Angels usually reject business plans in which an entrepreneur says the product or service they want to create will be higher in quality and lower in price than those of their competitors. This is undesirable because it's usually unrealistic. If you really do have a higher quality product, it will appear that you are underpricing it and will undersell.
• Do not underestimate costs. If you start out with low costs and low prices, you leave yourself with little room to maneuver.
• If you charge more than existing products or services that are similar, you will need to justify the higher price.
• If your price will be lower than that of an existing product or service, explain how you will maintain profitability.