Describing Your Products or Services in Your Business Plans
The products and services section of your business plan describes your products and services, how they are better than existing offerings, and most importantly, how they solve a problem or fill an unmet need for your target customers.
Describing your Products or Services
In the introduction of your business plan, you will have referred to the problem your company solves and the market or market segment you’ll be addressing. Now it’s time to tell your readers about your products and services in more detail. Here again, you’ll want to keep the focus on how your products or services solve a real problem or fill an unmet need in the marketplace.
This section is typically the one that future business owners are most comfortable writing. As a result, a common mistake is to make this the primary focus of the business plan or to convey too many details. Follow the guidelines below to strike the right balance.
A business plan outline for the products and services section should include the following:
- Brief description of products or services
- Problem solved, or unmet need filled
- Unique selling proposition
- Other differentiators
Write it For Your Audience
In the description of your products and services, remember that your business plan will address potential investors or lenders, not consumers. This section will convey that this is a good business, not that they should want to become a customer. Similarly, this section should describe the benefits of your products and services without trying to provide training or instructional information on how to use them.
Example of Products and Services Description
So, if you’re starting a bakery, you might explain how you offer ready-to-eat sandwiches, specialty bread, and dinner rolls. You can emphasize that your products meet customers’ needs by making baked goods with all-natural ingredients, freshly made products, and seasonal and ethnic offerings. Callout that you also offer low-sugar and gluten-free choices. Further, you would explain that these products include options to address all three mealtimes: breakfast, lunch, and dinner.
If there are factors that help control costs at your bakery, include them. Such things would improve margins and therefore be important to a lender or investor.
This approach will be much more meaningful than telling a banker how your dinner rolls are made with double-zero flour, and all ingredients are measured in grams, not ounces, or that doughs rise for 3 hours in your rising room. Unless your banker is a baker, these details probably won’t improve your business plan.
If you have sales literature, a flier, brochure, or advertisement, include it as an appendix to your business plan and reference it in this section.
Problem Solved or Unmet need Filled.
The most crucial aspect of your business plan is convincing readers that your company solves a real problem or fills an unmet need, so much so that people will be willing to take their money and give it to you. Sadly, the world is full of businesses offering “solutions” for which there are no problems, which are not attractive to investors. So don’t simply describe your solution. Defining your business and your products in terms of the problem or need to be addressed in the marketplace will be essential.
Let’s go back to the bakery example from the section above. The bakery might describe the problem solved in this way:
Our bakery is located within one-half mile of three major office complexes. Over 50% of the workers are from households where two partners work, leaving them little time for preparing fresh-baked goods. Because our baked goods are prepared at 6 AM every morning, working people can come in for a pastry or a sandwich for the afternoon and take away a fresh loaf of bread to serve with dinner that evening.
Working people don’t have time to go to the store daily—which is what it takes to enjoy genuinely fresh baked goods. They have the money and the appetite for high-quality pastries and bread; they don’t have time for the daily stop required to enjoy them.
Now, the groundwork has been laid to talk about the unique selling proposition.
Unique Selling Proposition
The unique selling proposition or “USP” refers to what makes your business different from all the others. An excellent unique selling proposition answers the question, “Why will people buy from you?” Don’t overlook the word “unique.” Does this mean your business has to be the only one of its kind? No. However, it does need to solve the problem in a unique way for the segment of the market you intend to address.
The opposite of this would be a “same here” business in a crowded market of competitors offering similar products. Investors shy away from these types of companies because it’s unclear why customers will buy from them.
The previous section on the problem solved or unmet need filled is the setup for the unique selling proposition. Let’s use our bakery example again. We established above that the problem is time, and working people don’t have time. Now, let’s see our baker’s unique selling proposition in the form of an answer to the question, “Why will people buy from you?”
Premium quality baked goods must be consumed within 24 hours to retain their peak freshness. Two-income households have the money but lack time to go to the grocery store daily. They also care about quality ingredients and healthy options.
Because our bakery is near three major office complexes, we save customers time by letting them address two or even three needs in one stop. Customers will buy from our bakery because, in one visit, they can get a fresh sandwich for the day’s lunch, pick up a freshly baked loaf of bread for dinner, and a bag of freshly baked cinnamon rolls for tomorrow’s breakfast.
We satisfy our customers’ appetite for quality baked goods and help solve their problem of too little time by combining breakfast, lunch, and dinner options in one stop, five minutes from where they work.
Most entrepreneurs have several aspects of their business that make them stand apart from competitors. Customers buy for different reasons so these differentiators can be important. Also, as mentioned before, investors shy away from “me too” companies that are just like every other competitor. For these reasons, including additional differentiators in your business plan is important.
The most important differentiators are those that can be expressed in the format outlined above, those that speak to a problem or need that is addressed, and the unique selling proposition. Isolate those differentiators from the others by including them in the section above and have the others here under the category “Other Differentiators.”
In this section of your business plan, you can also discuss future products and services, the target markets you aim to serve, and any intellectual property you possess, such as copyright or patent protections.
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