Business Description for Your Business Plan
Posted on February 20, 2012 by Lola Rotimi-Sosanya
HOW TO WRITE A BUSINESS DESCRIPTION FOR YOUR BUSINESS PLAN
A business description is an overall understanding of the business industry and the business position in the industry. It is usually a few paragraphs to about a page depending on the type of business. A business description should explain who you are, why you are in business, and how you expect to make a profit. The business description is followed by the executive summary.
Here are guidelines to structure your business description:
1. Describe the industry: Start the business plan by describing the industry; and how the business fits with the industry. Discuss estimated sales in the industry in the current year and the following year. Make sure numbers are factual and realistic and not based on guess work. People who read the business plan should be able to trust it. Also make sure the statistics are reliable. It would be unfortunate for an investor who is familiar with the industry to notice that the growth rate has been exaggerated. That would be a red flag, and a potential investor could be lost. Also mention the industry’s target market size and its potential growth along with the size of the relevant target market as well.
2. Provide basic information about the business: The next step after describing the industry is to describe the business. State the name of the business and whether it is a new or established business. Briefly provide a background of the business and how it came about. Tell how long the company has been in business and the company’s performance level to date. State the legal form of business structure, for example sole proprietorship, partnership, limited liability, or a corporation. Mention who the principal owners or officers of the business are and how their expertise will contribute to the growth of the company. What industries does your business belong to: retail, manufacturer, wholesaler, and so on. How many employees are there? Describe the management’s structure?
3. State the business objective: Readers want to know what the business stands for and what direction the company will be heading. A mission statement is the purpose of a business, and it should be a couple of sentences. For example, Nike’s mission statement is “to bring inspiration and innovation to every athlete in the world.” When writing a mission statement, try to incorporate your target market, the location, and the company’s value system.
4. Describe the history of your business: Explaining the background of the business and how your idea came about. What major highlights took place that lead to the start of your business? Discuss the specific product or service that the business plans to sell, and state its competitive advantage (i.e., what makes this product different from the competition). For instance, the intention is to sell affordable shoes through an online shop; the shoes would cost less than the competitors and are of higher quality with free shipping ever other month.
5. The company’s long and short term goals: Discuss the company’s long-term and short-term goals. As a new or existing business, what goals does the business need to achieve this year to attain profitability and grow? Also, your long-term goals should indicate steps to expand and grow the business in the future.
A business description should not be technical or hard to read. It should be well organized and provide basics about your company in general. Keep the business description interesting so that readers or investors are always engaged as they go through the business plan.