Describing Your Products and Services
In the Introduction, you made reference 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. 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 most 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.
Business Plan Outline for Products and Services Section Should Include:
• Brief Description of Products or Services
• Problem Solved or Unmet Need Filled
• Unique Selling Proposition
• Other Differentiators
Description. In the description of your products and services, remember that your business plan will be addressing potential investors or lenders, not consumers. The purpose of this section will be to convey that this is a good business, not that they should want to become a customer.
So for example, if you’re starting a bakery, you might explain how you offer donuts, ready-to-eat sandwiches as well as specialty breads and dinner rolls. Further, you would explain that these products were chosen to address all three mealtimes: breakfast, lunch and dinner. This approach will be much more meaningful than telling a banker how your donuts will melt in their mouth, the sandwiches are piled high with fresh ingredients right off the farm, and the baked breads evoke the feeling of a summer in Tuscany. (Again, this may seem obvious, but experience tells us that the distinction needs to be made.)
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. Perhaps the most important 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 filled with businesses offering “solutions” for which there are no problems. These are not attractive to investors. So don’t simply describe your solution. It will be important to define your business and your products in terms of the problem or need addressed in the marketplace.
Let’s go back to the bakery example from the section above. They might describe the problem solved in this way:
Our bakery and retail store 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. Further, because our baked goods are prepared at 6:00 every morning, working people can come in for a pastry in the morning or 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 every day—which is what it takes to enjoy truly fresh baked goods. They have the money and the appetite for high-quality pastries and breads, they simply 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 refers to what makes your business different from all the others. A good unique selling proposition answers the question, “Why will people buy from you?” Don’t overlook the word “unique.” Does this mean that 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 “me too” business in a crowded market of competitors offering similar solutions. Investors shy away from these types of businesses because it’s not clear 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 one of time. 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 need to be consumed within 24 hours to retain their peak freshness. Two-income households have the money but not the time to go to the grocery store every day. Because our store is located near three major office complexes, we save customers time by letting them address two or even three needs with one stop. Customers will buy from our bakery because in one stop they can get a fresh sandwich for the day’s lunch, pick up a fresh baked loaf of bread for dinner, and a bag of fresh 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.
Other Differentiators. Most entrepreneurs have several aspects of their business that they believe make them stand apart from competitors. Customers do 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, it’s important to include additional differentiators in your business plan.
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 include the others here under the category, “Other Differentiators.”